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Rule2024-06214

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

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Published

April 18, 2024

Effective

June 17, 2024

Issuing agencies

Environmental Protection Agency

Abstract

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

Full Text

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[Federal Register Volume 89, Number 76 (Thursday, April 18, 2024)]
[Rules and Regulations]
[Pages 27842-28215]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-06214]

[[Page 27841]]

Vol. 89

Thursday,

No. 76

April 18, 2024

Part II

Environmental Protection Agency

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40 CFR Parts 85, 86, 600, et al.

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

Federal Register / Vol. 89, No. 76 / Thursday, April 18, 2024 / Rules
and Regulations

[[Page 27842]]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 85, 86, 600, 1036, 1037, 1066, and 1068

[EPA-HQ-OAR-2022-0829; FRL-8953-04-OAR]
RIN 2060-AV49

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

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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

DATES: This final rule is effective on June 17, 2024. The incorporation
by reference of certain publications listed in this regulation is
approved by the Director of the Federal Register beginning June 17,
2024. The incorporation by reference of certain publications listed in
this regulation is approved by the Director of the Federal Register as
of March 27, 2023.

ADDRESSES: EPA has established a docket for this action under Docket ID
No. EPA-HQ-OAR-2022-0829. All documents in the docket are listed on the
<a href="https://www.regulations.gov">https://www.regulations.gov</a> website. Although listed in the index, some
information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, is not placed on the internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available electronically through <a href="https://www.regulations.gov">https://www.regulations.gov</a>.

FOR FURTHER INFORMATION CONTACT: Michael Safoutin, Office of
Transportation and Air Quality, Assessment and Standards Division
(ASD), Environmental Protection Agency, 2000 Traverwood Drive, Ann
Arbor, MI 48105; telephone number: (734) 214-4348; email address:
<a href="/cdn-cgi/l/email-protection#0e7d6f68617b7a6760206367656b4e6b7e6f20696178">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

A. Does this action apply to me?

Entities potentially affected by this rule include light-duty
vehicle manufacturers, independent commercial importers, alternative
fuel converters, and manufacturers and converters of medium-duty
vehicles (i.e., vehicles between 8,501 and 14,000 pounds gross vehicle
weight rating (GVWR)). Potentially affected categories and entities
include:

----------------------------------------------------------------------------------------------------------------
Category NAICS codes \a\ Examples of potentially affected entities
----------------------------------------------------------------------------------------------------------------
Industry................................ 336111 Motor Vehicle Manufacturers.
336112
Industry................................ 811111 Commercial Importers of Vehicles and Vehicle
811112 Components.
811198
423110
Industry................................ 335312 Alternative Fuel Vehicle Converters.
811198
Industry................................ 333618 On-highway medium-duty engine & vehicle (8,501-
336120 14,000 pounds GVWR) manufacturers.
336211
336312
----------------------------------------------------------------------------------------------------------------
\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 affected by this action. To
determine whether particular activities may be regulated by this
action, you should carefully examine the regulations. You may direct
questions regarding the applicability of this action to the person
listed in FOR FURTHER INFORMATION CONTACT.

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

This regulatory action was supported by influential scientific
information. EPA therefore conducted peer review in accordance with
OMB's Final Information Quality Bulletin for Peer Review. Specifically,
we conducted peer review on six analyses: (1) Optimization Model for
reducing Emissions of Greenhouse gases from Automobiles (OMEGA 2.0),
(2) Advanced Light-duty Powertrain and Hybrid Analysis (ALPHA3), (3)
Motor Vehicle Emission Simulator (MOVES), (4) The Effects of New-
Vehicle Price Changes on New- and Used-Vehicle Markets and Scrappage;
(5) Literature Review on U.S. Consumer Acceptance of New Personally
Owned Light-Duty Plug-in Electric Vehicles; (6) Cost and Technology
Evaluation, Conventional Powertrain Vehicle Compared to an Electrified
Powertrain Vehicle, Same Vehicle Class and OEM. All peer reviews were
in the form of letter reviews conducted by a contractor. The peer
review reports for each analysis are in the docket for this action and
at EPA's Science Inventory (<a href="https://cfpub.epa.gov/si/">https://cfpub.epa.gov/si/</a>).

Table of Contents

I. Executive Summary
A. Purpose of This Rule and Legal Authority
B. Summary of Light- and Medium-Duty Vehicle Emissions Programs
C. Summary of Emission Reductions, Costs, and Benefits
II. Public Health and Welfare Need for Emission Reductions
A. Climate Change From GHG Emissions
B. Background on Criteria and Air Toxics Pollutants Impacted by
This Rule
C. Health Effects Associated With Exposure to Criteria and Air
Toxics Pollutants

[[Page 27843]]

D. Welfare Effects Associated With Exposure to Criteria and Air
Toxics Pollutants Impacted by the Final Standards
III. Light- and Medium-Duty Vehicle Standards for Model Years 2027
and Later
A. Introduction and Background
B. EPA's Statutory Authority Under the Clean Air Act (CAA)
C. GHG Standards for Model Years 2027 and Later
D. Criteria Pollutant Emissions Standards
E. Modifications to the Medium-Duty Passenger Vehicle (MDPV)
Definition
F. What alternatives did EPA consider?
G. Certification, Compliance, and Enforcement Provisions
H. On-Board Diagnostics Program Updates
I. Coordination with Federal and State Partners
J. Stakeholder Engagement
IV. Technical Assessment of the Standards
A. What approach did EPA use in analyzing the standards?
B. EPA's Approach to Considering the No Action Case and
Sensitivities
C. How did EPA consider technology feasibility and related
issues?
D. Projected Compliance Costs and Technology Penetrations
E. How did EPA consider alternatives in selecting the final
program?
F. Sensitivities--LD GHG Compliance Modeling
G. Sensitivities--MD GHG Compliance Modeling
H. Additional Illustrative Scenarios
V. EPA's Basis That the Final Standards are Feasible and Appropriate
Under the Clean Air Act
A. Overview
B. Consideration of Technological Feasibility, Compliance Costs
and Lead Time
C. Consideration of Emissions of GHGs and Criteria Pollutants
D. Consideration of Impacts on Consumers, Energy, Safety and
Other Factors
E. Selection of the Final Standards Under CAA Section 202(a)
VI. How will this rule reduce GHG emissions and their associated
effects?
A. Estimating Emission Inventories in OMEGA
B. Impact on GHG Emissions
C. Global Climate Impacts Associated With the Rule's GHG
Emissions Reductions
VII. How will the rule impact criteria and air toxics emissions and
their associated effects?
A. Impact on Emissions of Criteria and Air Toxics Pollutants
B. How will the rule affect air quality?
C. How will the rule affect human health?
D. Demographic Analysis of Air Quality
VIII. Estimated Costs and Benefits and Associated Considerations
A. Summary of Costs and Benefits
B. Vehicle Technology and Other Costs
C. Fueling Impacts
D. Non-Emission Benefits
E. Greenhouse Gas Emission Reduction Benefits
F. Criteria Pollutant Health and Environmental Benefits
G. Transfers
H. U.S. Vehicle Sales Impacts
I. Employment Impacts
J. Environmental Justice
K. Additional Non-Monetized Considerations Associated With
Benefits and Costs
IX. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review and
Executive Order 14094: Modernizing Regulatory Review
B. Paperwork Reduction Act (PRA)
C. Regulatory Flexibility Act
D. Unfunded Mandates Reform Act
E. Executive Order 13132: ``Federalism''
F. Executive Order 13175: ``Consultation and Coordination with
Indian Tribal Governments''
G. Executive Order 13045: Protection of Children from
Environmental Health Risks and Safety Risks
H. Executive Order 13211: Energy Effects
I. National Technology Transfer and Advancement Act (NTTAA) and
1 CFR part 51
J. Executive Order 12898: Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income
Populations and Executive Order 14096: Revitalizing Our Nation's
Commitment to Environmental Justice for All
K. Congressional Review Act (CRA)
L. Judicial Review
M. Severability
X. Statutory Provisions and Legal Authority

I. Executive Summary

A. Purpose of this Rule and Legal Authority

The Environmental Protection Agency (EPA) is finalizing
multipollutant emissions standards for light-duty passenger cars and
light trucks and for Class 2b and 3 vehicles (``medium-duty vehicles''
or MDVs) under its authority in section 202(a) of the Clean Air Act
(CAA), 42 U.S.C. 7521(a). The program establishes new, more stringent
vehicle emissions standards for criteria pollutant and greenhouse gas
(GHG) emissions from motor vehicles for model years (MYs) 2027 through
2032 and beyond.
Section 202(a) requires EPA to establish standards for emissions of
air pollutants from new motor vehicles which, in the Administrator's
judgment, cause or contribute to air pollution which may reasonably be
anticipated to endanger public health or welfare. Standards under
section 202(a) take effect ``after such period as the Administrator
finds necessary to permit the development and application of the
requisite technology, giving appropriate consideration to the cost of
compliance within such period.'' Thus, in establishing or revising
section 202(a) standards designed to reduce air pollution that
endangers public health and welfare, EPA also must consider issues of
technological feasibility, the cost of compliance, and lead time. EPA
also considers safety, consistent with CAA section 202(a)(4), and may
consider other factors, and in previous vehicle standards rulemakings
as well as in this rule, has considered impacts on the automotive
industry, impacts on vehicle purchasers/consumers, oil conservation,
energy security, and other relevant considerations.
This final rule follows a Notice of Proposed Rulemaking published
on May 5, 2023.\1\ EPA has conducted extensive engagement with the
public, including a wide range of interested stakeholders to gather
input which we considered in developing both the proposal and this
final rule. In developing this final rule, EPA considered comments
received during the public comment process, including the public
hearings. EPA held three days of virtual public hearings on May 9-11,
2023, and heard from approximately 240 speakers. During the public
comment period that ended on July 5, 2023, EPA received more than
250,000 written comments. Through the public comment process, we
received comments, data and analysis from a variety of stakeholders
including auto manufacturers, state and local governments, non-
governmental organizations (NGOs), labor organizations, environmental
justice groups, suppliers, consumer groups, academics, and others.
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\1\ 88 FR 29184, May 5, 2023.
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1. Need for Continued Emissions Reductions Under 202(a) of the Clean
Air Act
Since 1971, EPA has, at Congress' direction, been setting emissions
standards for motor vehicles. The earliest standards were for light-
duty vehicles for hydrocarbons, nitrogen oxides (NO<INF>X</INF>), and
carbon monoxide (CO), requiring a 90 percent reduction in emissions.
Since then, EPA has continued to set standards for the full range of
vehicle classes (including light-duty, medium-duty and heavy-duty
vehicles and passenger, cargo and vocational vehicles) to reduce
emissions of pollutants for which the Administrator has made an
endangerment finding pursuant to CAA section 202. In 2009, EPA made an
endangerment finding for GHG, and in 2010 issued the initial light-duty
GHG standards. More recently, in 2014, EPA finalized criteria pollutant
standards for light-duty vehicles (``Tier 3'') that were designed to be
implemented alongside the GHG standards for light-duty vehicles that
EPA had adopted in 2012

[[Page 27844]]

for model years 2017-2025.\2\ In 2020, EPA revised the GHG standards
that had previously been adopted for model years 2021-2026,\3\ and in
2021, EPA conducted a rulemaking (the ``2021 rulemaking'') \4\ that
again revised GHG standards for light-duty passenger cars and light
trucks for MYs 2023 through 2026, setting significantly more stringent
standards for those MYs than had been set by the 2020 rulemaking, and
somewhat more stringent than the standards adopted in 2012.
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\2\ 79 FR 23414, April 28, 2014, ``Control of Air Pollution From
Motor Vehicles: Tier 3 Motor Vehicle Emission and Fuel Standards.
\3\ 85 FR 24174, April 30, 2020, ``The Safer Affordable Fuel-
Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger
Cars and Light Trucks.''
\4\ 86 FR 74434, December 30, 2021, ``Revised 2023 and Later
Model Year Light-Duty Vehicle Greenhouse Gas Emissions Standards.''
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Despite the significant emissions reductions achieved by these and
other rulemakings, air pollution from motor vehicles continues to
impact public health, welfare, and the environment. Motor vehicle
emissions contribute to ozone, particulate matter (PM), and air toxics,
which are linked with premature death and other serious health impacts,
including respiratory illness, cardiovascular problems, and cancer.
This air pollution affects people nationwide, as well as those who live
or work near transportation corridors. In addition, the effects of
climate change represent a rapidly growing threat to human health and
the environment, and are caused by GHG emissions from human activity,
including motor vehicle transportation. Addressing these public health
and welfare needs will require substantial additional reductions in
criteria pollutants and GHG emissions from the transportation sector.
Recent trends and developments in vehicle technologies that reduce
emissions indicate that more stringent emissions standards are feasible
at reasonable cost and would lead to significant improvements in public
health and welfare.
Addressing the public health impacts of criteria pollutants
(including particulate matter (PM), ozone, and NO<INF>X</INF>) will
require continued reductions in these pollutants (and their precursors)
from the transportation sector. In 2023, mobile sources accounted for
approximately 54 percent of anthropogenic NO<INF>X</INF> emissions, 5
percent of anthropogenic direct PM<INF>2.5</INF> emissions, and 23
percent of anthropogenic volatile organic compound (VOC) emissions
nationwide.5 6 7 Light- and medium-duty vehicles accounted
for approximately 23 percent, 20 percent, and 52 percent of 2023 mobile
source NO<INF>X</INF>, PM<INF>2.5</INF>, and VOC emissions,
respectively.6 7 7 The benefits of reductions in criteria
pollutant emissions accrue broadly across many populations and
communities. As of November 30, 2023, there are 12 PM<INF>2.5</INF>
nonattainment areas with a population of more than 32 million people
\8\ and 54 ozone nonattainment areas with a population of more than 119
million people. The importance of continued reductions in these
emissions is detailed at length in section II of this preamble.
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\5\ U.S. Environmental Protection Agency (2021). 2016v1 Platform
(<a href="https://www.epa.gov/air-emissions-modeling/2016v1-platform">https://www.epa.gov/air-emissions-modeling/2016v1-platform</a>).
\6\ U.S. Environmental Protection Agency (2021). 2017 National
Emissions Inventory (NEI) Data. <a href="https://www.epa.gov/air-emissions-inventories/2017-national-emissions-inventory-nei-data">https://www.epa.gov/air-emissions-inventories/2017-national-emissions-inventory-nei-data</a>.
\7\ U.S. Environmental Protection Agency (2023). MOVES 4.0.0.
<a href="https://www.epa.gov/moves">https://www.epa.gov/moves</a>.
\8\ The population total is calculated by summing, without
double counting, the 1997, 2006 and 2012 PM<INF>2.5</INF>
nonattainment populations contained in the Criteria Pollutant
Nonattainment Summary report (<a href="https://www.epa.gov/green-book/green-book-data-download">https://www.epa.gov/green-book/green-book-data-download</a>).
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The transportation sector is the largest U.S. source of GHG
emissions, representing 29 percent of total GHG emissions.\9\ Within
the transportation sector, light-duty vehicles are the largest
contributor, at 58 percent, and thus comprise 16.5 percent of total
U.S. GHG emissions,\10\ even before considering the contribution of
medium-duty Class 2b and 3 vehicles which are also included under this
rule. GHG emissions have significant impacts on public health and
welfare as evidenced by the well-documented scientific record and as
set forth in EPA's Endangerment and Cause or Contribute Findings under
CAA section 202(a).\11\ Additionally, major scientific assessments
continue to be released that further advance our understanding of the
climate system and the impacts that GHGs have on public health and
welfare both for current and future generations, as discussed in
section II.A of this preamble, making it clear that continued GHG
emission reductions in the motor vehicle sector are needed to protect
public health and welfare.
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\9\ Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-
2021 (EPA-430-R-23-002, published April 2023).
\10\ Ibid.
\11\ 74 FR 66496, December 15, 2009; 81 FR 54422, August 15,
2016.
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In addition to and separate from this final rule, the
Administration has recognized the need for action to address climate
change. Executive Order 14008 (``Tackling the Climate Crisis at Home
and Abroad,'' January 27, 2021) recognizes the need for a government-
wide approach to addressing the climate crisis, directing Federal
departments and agencies to facilitate the organization and deployment
of such an effort. On April 22, 2021, the Administration announced a
new target for the United States to achieve a 50 to 52 percent
reduction from 2005 levels in economy-wide net greenhouse gas pollution
in 2030, consistent with the goal of limiting global warming to no more
than 1.5 degrees Celsius by 2050 and representing the U.S. Nationally
Determined Contribution (NDC) under the Paris Agreement. These actions,
while they do not inform the standards established here, serve to
underscore the importance of EPA acting pursuant to its Clean Air Act
authority to address pollution from motor vehicles.
EPA is establishing both criteria pollutant and GHG standards in
this rulemaking given the need for additional reductions in emissions
of these air pollutants to protect public health and welfare and based
on EPA's assessment of the suite of available control technologies for
those pollutants, some of which are effective in controlling both GHGs
and criteria pollutant emissions. Under these performance-based
emissions standards, manufacturers have the discretion to choose the
mix of technologies that achieve compliance across their fleets. EPA's
modeling provides information about several potential compliance paths
manufacturers could use to comply with the standards, based on multiple
inputs and assumptions (e.g., in what we have termed the central case,
that manufacturers will seek the lowest cost compliance path). EPA's
central analysis shows that both within the product lines of individual
manufacturers and for different manufacturers across the industry,
manufacturers will make use of a diverse range of technologies,
including advanced gasoline engines (reducing engine-out emissions),
improvements to tailpipe controls, additional electrification of
gasoline powertrains, and electric powertrains. EPA recognizes that,
although it has modeled individual compliance paths for each
manufacturer, manufacturers will make their own assessment of the
vehicle market and their own decisions about which technologies to
apply to which vehicles for any given model year. The standards are
performance-based, and while EPA finds modeling useful in evaluating
the feasibility of the standards, it is manufacturers who will decide
the ultimate mix of vehicle

[[Page 27845]]

technologies to comply. Although EPA cannot model every possible
compliance scenario, EPA did model several sensitivity analyses which
identify a number of example alternative compliance scenarios for the
industry. EPA has evaluated these alternative scenarios and has
concluded that the lead time and estimated costs to manufacturers under
each of these alternative compliance scenarios are reasonable and
appropriate for standards under CAA 202(a). Furthermore, EPA finds that
it would be technologically feasible to meet these standards without
additional zero-emission vehicles beyond the volumes already sold
today.\12\ Although our modeling projects that such a fleet would not
be the lowest cost alternative for complying with the standards, the
fact that it would comply underscores both the feasibility and the
flexibility of the standards, and confirms that manufacturers are
likely to continue to offer vehicles with a diverse range of
technologies, including advanced gasoline technologies as well as zero-
and near-zero emission vehicles for the duration of these standards and
beyond.
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\12\ EPA has analyzed this scenario as an illustrative scenario,
which we refer to as the ``No additional BEVs above base year
fleet'' scenario. For further details, please refer to Section IV.H
of this preamble.
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The Administrator finds that the standards herein are consistent
with EPA's responsibilities under the CAA and appropriate under CAA
section 202(a). EPA has carefully considered the statutory factors,
including technological feasibility and cost of the standards and the
available lead time for manufacturers to comply with them. Our analysis
for this action supports the conclusion that the final standards are
technologically feasible and that the costs of compliance for
manufacturers will be reasonable. The standards will result in
significant reductions in emissions of criteria pollutants, GHGs, and
air toxics, resulting in significant benefits for public health and
welfare. We also estimate that the standards will result in reduced
vehicle operating costs for consumers and that the benefits of the
program will exceed the costs. Based on EPA's analysis, it is the
agency's assessment that the standards are appropriate and justified
under CAA section 202(a).
2. Recent and Ongoing Advancements in Technology Enable Further
Emissions Reductions
Over five decades of setting standards, EPA has developed extensive
expertise in assessing the availability of new and existing
technologies to control pollution from motor vehicles. In some cases,
EPA has adopted standards based on its judgment that the industry could
further develop and commercialize technologies. In others, EPA has
based standards on the further deployment of existing technologies,
rather than on the further development of new technologies. Both
approaches are consistent with EPA's general authority for emissions
standards under section 202(a)(1)-(2), although Congress has specified
under 202(a)(3) that for heavy-duty criteria standards the
Administrator should identify the greatest degree of emissions
reduction achievable, taking into consideration certain factors.
In 2000, EPA adopted the Tier 2 standards, which required passenger
vehicles to be 77 to 95 percent cleaner (and encouraged certification
of zero-emitting vehicles through the establishment of ``Bin 1'', which
is now referred to as ``Bin 0'').\13\ More recently, in 2014, EPA
adopted Tier 3 emissions standards, which required a further reduction
of 60 to 80 percent of emissions (depending on pollutant and vehicle
class).\14\ Similar to the prior Tier 2 standards, Tier 3 established
``bins'' of Federal Test Procedure (FTP) standards, including bins for
zero-emitting vehicles.
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\13\ 65 FR 6698 (Feb. 10, 2000).
\14\ 79 FR 23414 (Apr. 28, 2014).
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EPA has also consistently set GHG emission standards applicable to
light-duty vehicles pursuant to CAA section 202(a), beginning with the
2010 rule, and continuing through subsequent rulemakings in 2012, and
2021.\15\ These rules achieved very significant reductions of GHGs
(with significant anticipated impacts on liquid fuel consumption and
costs to manufacturers which were, in some cases, comparable to or
greater than the impacts anticipated under this rule).
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\15\ See 75 FR 25324 (May 7, 2010) (setting GHG standards
applicable to model year 2012-2016 LD vehicles); 77 FR 62624 (Oct.
15, 2012) (setting GHG standards for model year 2017-2025 LD
vehicles and ``building on the success of the first phase of the
National program for these vehicles''); 86 FR 774434 (Dec. 30, 2021)
(revising GHG standards for model year 2023 and later light-duty
vehicle).
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In designing the scope, structure, and stringency of these
standards, the Administrator again considered a comprehensive array of
updated, real-world information related to advancements in vehicle
emissions control technologies. These include previous standards and
their impacts on emissions control technologies; the activities,
investments, and plans of manufacturers and other entities regarding
the adoption of new technologies related to vehicle emissions control;
trends in technology adoption by vehicle owners and operators,
including individual consumers and fleets; and related legal
requirements and government incentives, including most notably
Congress's recent actions in the Bipartisan Infrastructure Law (BIL)
and the Inflation Reduction Act (IRA). This action continues EPA's
longstanding approach of establishing an appropriate and achievable
trajectory of emissions reductions by means of performance-based
standards, for both criteria pollutant and GHG emissions, that can be
achieved by employing feasible and available emissions-reducing vehicle
technologies for the model years for which the standards apply.
CAA section 202(a) directs EPA to regulate emissions of air
pollutants from new motor vehicles and engines, which in the
Administrator's judgment cause or contribute to air pollution that may
reasonably be anticipated to endanger public health or welfare. While
standards promulgated pursuant to CAA section 202(a) are based on
application of technology, the statute does not specify a particular
technology or technologies that must be used to set such standards;
rather, Congress has authorized and directed EPA to adapt its standards
to emerging technologies. Thus, as with prior rules, EPA has assessed
the feasibility of the standards considering current and anticipated
progress by automakers in developing and deploying new technologies.
The levels of stringency for the standards established in this rule
continue the trend of increased emissions reductions which have been
adopted by prior EPA rules. For example, the Clean Air Act of 1970
required a 90 percent reduction in emissions, which drove development
of entirely new engine and emission control technologies such as
exhaust gas recirculation and catalytic converters, which in turn
required a switch to unleaded fuel and the development of major new
infrastructure to support the delivery and segregated distribution of a
different fuel. Similarly, the 2014 Tier 3 standards achieved
reductions of up to 80 percent in tailpipe criteria pollutant emissions
by requiring cleaner fuel as well as improved catalytic emissions
control systems.
Compliance with the EPA GHG standards over the past decade has been
achieved through both the application of advanced technologies to
internal combustion engine (ICE) vehicles as well as the increasing
adoption of electrification technologies. Notably, as the EPA GHG
standards have increased in stringency, automakers have relied to

[[Page 27846]]

a greater degree on a range of electrification technologies,\16\
including idle stop-start, mild hybrid electric vehicles with a belt
integrated starter-generator, hybrid electric vehicles (HEVs) and, in
recent years, plug-in electric vehicles (PEVs), which include plug-in
hybrid electric vehicles (PHEVs) and battery-electric vehicles (BEVs).
As these technologies have been advancing rapidly in the past several
years, becoming more popular with consumers and benefiting from
continued declines in battery costs, automakers are now including PEVs
as an integral and growing part of their current and future product
lines. This has also led to an increasing diversity of PEVs already
available and with an increasing array of makes and models planned for
the market. As a result, zero- and near-zero emission technologies are
more feasible and cost-effective now than at the time of prior
rulemakings and, together with advanced gasoline technologies, offer
manufacturers a wider array of compliance technologies.
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\16\ Electrification technologies can range from electrification
of specific accessories (for example, electric power steering to
reduce engine loads by eliminating parasitic loss) to hybrid
electric vehicles, which use a combination of batteries and an
engine for propulsion energy, to electrification of the entire
powertrain (as in the case of a battery electric vehicle).
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Separately from this final rule, the Administration has recognized
the recent industry advancements in zero-emission vehicle technologies
and their potential to bring about dramatic reductions in emissions.
Executive Order 14037 (``Strengthening American Leadership in Clean
Cars and Trucks,'' August 5, 2021) identified a goal for 50 percent of
U.S. new vehicle sales to be zero-emission \17\ vehicles by 2030.\18\
Congress passed the Bipartisan Infrastructure Law \19\ in 2021, and the
Inflation Reduction Act \20\ in 2022, which together provide further
support for a government-wide approach to reducing emissions by
providing significant funding and support for emissions reductions
across the economy, including specifically, for the component
technology and infrastructure for the manufacture, sales, and use of
zero- and near-zero emission vehicles.
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\17\ The Executive Order (E.O.) defines zero-emission vehicles
to include battery electric, plug-in hybrid and fuel cell vehicles.
In this Preamble we refer to these vehicles collectively as zero-
emission and near-zero-emission vehicles.
\18\ This Executive Order does not delegate any legal authority
to EPA and this final rule is promulgated under and consistent with
EPA's CAA section 202(a)(1)-(2) authority.
\19\ Public Law 117-58, November 15, 2021.
\20\ Public Law 117-169, August 16, 2022.
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As an important addition to the suite of control technologies that
can reduce emissions, zero- and near-zero emission cars and trucks can
simultaneously reduce both criteria pollutant and GHG emissions by a
large margin. Production and sale of these vehicles is already
occurring both domestically and globally, due to significant
investments from automakers, increased acceptance by consumers, added
support from Congress and state governments, and emissions regulations
in other countries. EPA recognizes that these industry advancements,
along with the additional support provided by the BIL and the IRA,
represent an important opportunity for achieving the public health
goals of the Clean Air Act. Recognizing that these technologies reduce
both criteria pollutant and GHG emissions and are already forming an
increasing portion of the fleet, EPA finds it appropriate to coordinate
new standards for both criteria pollutants and GHG in a single
rulemaking, rather than continuing its prior approach of coordinating
the standards but setting them in separate regulatory actions.\21\
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\21\ We emphasize, however, as discussed further in Section X of
this preamble, that the standards are severable.
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In the U.S., recent trends in PEV production and sales show that
demand continues to increase. Even under current standards, BEVs and
PHEVs are becoming a rapidly increasing part of the new vehicle fleet.
On a production basis, PEVs are growing steadily, expected to be 11.8
percent \22\ of U.S. light-duty vehicle production for MY 2023,\23\ up
from 6.7 percent in MY 2022, 4.4 percent in MY 2021 and 2.2 percent in
MY 2020.\24\ On a sales basis, U.S. new PEV sales in calendar year 2023
alone surpassed 1.4 million,25 26 an increase of more than
50 percent over the 807,000 sales that occurred in 2022.\27\ This
represents 9.3 percent of new light-duty passenger vehicle sales in
2023, up from 6.8 percent in 2022 \28\ and 3.2 percent the year
before.\29\ As depicted in Figure 1, this continues the growth trend
seen in previous years. In California, new light-duty zero-emission
vehicle sales have reached 25.1 percent through the third quarter of
2023, after reaching 18.8 percent in 2022, up from 12.4 percent in
2021.30 31
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\22\ At time of this publication, MY 2023 production data is not
yet final. Manufacturers will be confirming production volumes
delivered for sale in MY 2023 later in calendar year 2024.
\23\ Environmental Protection Agency, ``The 2023 EPA Automotive
Trends Report: Greenhouse Gas Emissions, Fuel Economy, and
Technology since 1975,'' EPA-420-R-23-033, December 2023.
\24\ Environmental Protection Agency, ``The 2022 EPA Automotive
Trends Report: Greenhouse Gas Emissions, Fuel Economy, and
Technology since 1975,'' EPA-420-R-22-029, December 2022.
\25\ Argonne National Laboratory, ``Light Duty Electric Drive
Vehicles Monthly Sales Updates,'' January 30, 2024. Accessed on
March 7, 2024 at <a href="https://www.anl.gov/esia/light-duty-electric-drive-vehicles-monthly-sales-updates">https://www.anl.gov/esia/light-duty-electric-drive-vehicles-monthly-sales-updates</a>.
\26\ Department of Energy, ``FOTW #1327, January 29, 2024:
Annual New Light-Duty EV Sales Topped 1 Million for the First Time
in 2023,'' January 29, 2024. Accessed on February 2, 2024 at <a href="https://www.energy.gov/eere/vehicles/articles/fotw-1327-january-29-2024-annual-new-light-duty-ev-sales-topped-1-million">https://www.energy.gov/eere/vehicles/articles/fotw-1327-january-29-2024-annual-new-light-duty-ev-sales-topped-1-million</a>.
\27\ Colias, M., ``U.S. EV Sales Jolted Higher in 2022 as
Newcomers Target Tesla,'' Wall Street Journal, January 6, 2023.
\28\ Argonne National Laboratory, ``Light Duty Electric Drive
Vehicles Monthly Sales Updates,'' January 30, 2024. Accessed on
March 7, 2024 at <a href="https://www.anl.gov/esia/light-duty-electric-drive-vehicles-monthly-sales-updates">https://www.anl.gov/esia/light-duty-electric-drive-vehicles-monthly-sales-updates</a>.
\29\ Colias, M., ``U.S. EV Sales Jolted Higher in 2022 as
Newcomers Target Tesla,'' Wall Street Journal, January 6, 2023.
\30\ California Energy Commission, ``New ZEV Sales in
California'' online dashboard, viewed on February 13, 2023 at
<a href="https://www.energy.ca.gov/data-reports/energy-almanac/zero-emission-vehicle-and-infrastructure-statistics/new-zev-sales">https://www.energy.ca.gov/data-reports/energy-almanac/zero-emission-vehicle-and-infrastructure-statistics/new-zev-sales</a>.
\31\ California Energy Commission, ``New ZEV Sales in
California'' online dashboard, viewed on December 15, 2023 at
<a href="https://www.energy.ca.gov/data-reports/energy-almanac/zero-emission-vehicle-and-infrastructure-statistics/new-zev-sales">https://www.energy.ca.gov/data-reports/energy-almanac/zero-emission-vehicle-and-infrastructure-statistics/new-zev-sales</a>.

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[[Page 27847]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.000

Figure 1: U.S. PEV Sales by Calendar Year, 2010-2023 (Department of
Energy) \32\
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\32\ Department of Energy, ``FOTW #1327, January 29, 2024:
Annual New Light-Duty EV Sales Topped 1 Million for the First Time
in 2023,'' January 29, 2024. Accessed on February 2, 2024 at <a href="https://www.energy.gov/eere/vehicles/articles/fotw-1327-january-29-2024-annual-new-light-duty-ev-sales-topped-1-million">https://www.energy.gov/eere/vehicles/articles/fotw-1327-january-29-2024-annual-new-light-duty-ev-sales-topped-1-million</a>.
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Before the IRA became law, analysts were already projecting that
significantly increased sales of PEVs would occur in the United States
and in global markets. For example, in 2021, IHS Markit predicted a
nearly 40 percent U.S. PEV share by 2030.\33\ Projections made in 2022
by Bloomberg New Energy Finance suggested that under then-current
policy and market conditions, and prior to the IRA and this final rule,
the U.S. was on pace to reach 43 percent PEVs by 2030 and when adjusted
for the effects of the IRA, this estimate increased to 52
percent.34 35 Another study by the International Council on
Clean Transportation (ICCT) and Energy Innovation that includes the
effect of the IRA estimates that the share of BEVs will increase to 56
to 67 percent by 2032.\36\ These projections typically are based on
assessment of a range of existing and developing factors, including
state policies (such as the California Advanced Clean Cars II program
and its adoption by section 177 states); although the assumptions and
other inputs to these forecasts vary, they point to greatly increased
penetration of electrification across the U.S. light-duty fleet in the
coming years, without specifically considering the effect of increased
emission standards under this rule.
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\33\ IHS Markit, ``US EPA Proposed Greenhouse Gas Emissions
Standards for Model Years 2023-2026; What to Expect,'' August 9,
2021. Accessed on March 9, 2023 at <a href="https://www.spglobal.com/mobility/en/research-analysis/us-epa-proposed-greenhouse-gas-emissions-standards-my2023-26.html">https://www.spglobal.com/mobility/en/research-analysis/us-epa-proposed-greenhouse-gas-emissions-standards-my2023-26.html</a>. The table indicates 32.3 percent
BEVs and combined 39.7 percent BEV, PHEV, and range-extended
electric vehicle (REX) in 2030.
\34\ Bloomberg New Energy Finance (BNEF), ``Electric Vehicle
Outlook 2022,'' from chart labeled ``Global long-term EV share of
new passenger vehicle sales by market--Economic Transition
Scenario.''
\35\ Tucker, S., ``Study: More Than Half of Car Sales Could Be
Electric By 2030,'' Kelley Blue Book, October 4, 2022. Accessed on
February 24, 2023 at <a href="https://www.kbb.com/car-news/study-more-than-half-of-car-sales-could-be-electric-by-2030/">https://www.kbb.com/car-news/study-more-than-half-of-car-sales-could-be-electric-by-2030/</a>.
\36\ International Council on Clean Transportation, ``Analyzing
the Impact of the Inflation Reduction Act on Electric Vehicle Uptake
in the US,'' ICCT White Paper, January 2023. Available at <a href="https://theicct.org/wp-content/uploads/2023/01/ira-impact-evs-us-jan23.pdf">https://theicct.org/wp-content/uploads/2023/01/ira-impact-evs-us-jan23.pdf</a>.
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Recent analyses of the market penetration of plug-in electric
vehicles have been completed that include the effects of the IRA.
Researchers from Harvard University, MIT, and Cornell University
examined the effects of subsidies and tax incentives provided by the
BIL and the IRA to promote plug-in electric vehicle sales and the
deployment of charging infrastructure. This study predicted plug-in
electric vehicle sales shares of 55 to 58 percent in 2030 when both
sales and infrastructure subsidies and incentives were considered.\37\
In addition, the U.S. Department of Energy, Office of Policy provided
updated economy-wide analysis that represents IRA and BIL impacts in
which they project 49 to 65 percent zero emissions light-duty vehicle
sales shares in 2030.\38\ Bloomberg's EV Outlook for 2023 projects that
``a major push from the Inflation Reduction Act means EVs make up
nearly 28 percent of passenger vehicle sales by 2026.'' Finally, the
International Energy Agency estimates U.S. PEV sales share of
approximately 50 percent in 2030 in both stated policies and announced
pledges scenarios.\39\ As with earlier analyses that EPA cited in the
proposal, assumptions and inputs vary across forecasts. However, all of
these recent studies point to greatly increased penetration of PEVs
across the U.S. light-duty fleet in the coming years,

[[Page 27848]]

even more so when the IRA and BIL are considered, and before
considering the effect of the revised emissions standards under this
rule. As discussed in detail in section IV.C.1 of this preamble, these
trends echo an ongoing global shift toward electrification and indicate
that an increasing share of new vehicle buyers are concluding that a
PEV is the best vehicle to meet their needs.
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\37\ Cole, C., Droste, M., Knittel, C., Li, S., and James, J.H.,
``Policies for Electrifying the Light-Duty Vehicle Fleet in the
United States,'' AEA Papers and Proceedings 2023, 113 (pp.316-322).
\38\ U.S. Department of Energy, Office of Policy, ``Investing in
American Energy: Significant Impacts of the Inflation Reduction Act
and Bipartisan Infrastructure Law on the U.S. Energy Economy and
Emissions Reductions,'' August 16, 2023. Accessed on November 30,
2023 at <a href="https://www.energy.gov/policy/articles/investing-american-energy-significant-impacts-inflation-reduction-act-and">https://www.energy.gov/policy/articles/investing-american-energy-significant-impacts-inflation-reduction-act-and</a>.
\39\ International Energy Agency, ``Global EV Outlook 2023,'' p.
114, 2023. Accessed on November 30, 2023 at <a href="https://www.iea.org/reports/global-ev-outlook-2023">https://www.iea.org/reports/global-ev-outlook-2023</a>.
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Accompanying this trend has been a proliferation of announcements
by automakers in the past several years, signaling a rapidly growing
shift in product development focus toward electrification. For example,
in January 2021, General Motors announced plans to become carbon
neutral by 2040, including an effort to shift its light-duty vehicles
entirely to zero-emissions by 2035.\40\ In March 2021, Volvo announced
plans to make only electric cars by 2030,\41\ and Volkswagen announced
that it expects half of its U.S. sales will be all-electric by
2030.\42\ 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.\43\ In May 2021, Ford announced that they
expect 40 percent of their global sales will be all-electric by
2030.\44\ 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, including both BEVs and PHEVs,
across all of its brands.45 46 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.\47\ In December 2021, Toyota announced plans to introduce 30
BEV models by 2030.\48\ In August 2023, Subaru announced that its
previous plan to target 40 percent combined HEVs and BEVs was being
revised to 50 percent BEVs globally by 2030.\49\ Some automakers have
also indicated a strong role for PHEVs in their product planning. For
example, Toyota continues to anticipate PHEVs forming an increasing
part of their offerings,\50\ and Stellantis will be introducing a plug-
in version of its Ram pickup for MY 2024.\51\ As discussed in more
detail in section IV.C.1 of this preamble, the number of PHEV and BEV
models has steadily grown and manufacturer announcements signal the
potential for significant growth in the years to come.
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\40\ General Motors, ``General Motors, the Largest U.S.
Automaker, Plans to be Carbon Neutral by 2040,'' Press Release,
January 28, 2021.
\41\ Volvo Car Group, ``Volvo Cars to be fully electric by
2030,'' Press Release, March 2, 2021.
\42\ 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>.
\43\ 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>.
\44\ 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.
\45\ 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.
\46\ Stellantis, ``Stellantis Intensifies Electrification While
Targeting Sustainable Double-Digit Adjusted Operating Income Margins
in the Mid-Term,'' Press Release, July 8, 2021.
\47\ Mercedes-Benz, ``Mercedes-Benz prepares to go all-
electric,'' Press Release, July 22, 2021.
\48\ Toyota Motor Corporation, ``Video: Media Briefing on
Battery EV Strategies,'' Press Release, December 14, 2021. Accessed
on December 14, 2021 at <a href="https://global.toyota/en/newsroom/corporate/36428993.html">https://global.toyota/en/newsroom/corporate/36428993.html</a>.
\49\ Subaru Corporation, ``Briefing on the New Management
Policy,'' August 2, 2023. Accessed on December 5, 2023 at <a href="https://www.subaru.co.jp/pdf/news-en/en2023_0802_1_2023-08-01-193334.pdf">https://www.subaru.co.jp/pdf/news-en/en2023_0802_1_2023-08-01-193334.pdf</a>.
\50\ Toyota Motor Corporation, ``New Management Policy &
Direction Announcement,'' April 7, 2023. Accessed on December 5,
2023 at <a href="https://global.toyota/en/newsroom/corporate/39013233.html">https://global.toyota/en/newsroom/corporate/39013233.html</a>.
\51\ Stellantis, ``All-new 2025 Ram 1500 Ramcharger Unveiled
With Class-shattering Unlimited Battery-electric Range,'' Press
Release, November 7, 2023. Accessed on December 5, 2023 at <a href="https://media.stellantisnorthamerica.com/newsrelease.do?id=25436">https://media.stellantisnorthamerica.com/newsrelease.do?id=25436</a>.
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On August 5, 2021, many major automakers including Ford, GM,
Stellantis, BMW, Honda, Volkswagen, and Volvo, as well as the Alliance
for Automotive Innovation, expressed continued commitment to their
announcements of a shift to electrification, and expressed their
support for the goal of achieving 40 to 50 percent sales of zero-
emission vehicles by 2030.\52\ In September 2022, jointly with the
Environmental Defense Fund (EDF), General Motors (GM) announced a set
of recommendations including a recommendation that EPA establish
standards to achieve at least a 60 percent reduction in GHG emissions
(compared to MY 2021), and that the standards be consistent with
eliminating tailpipe pollution from new passenger vehicles by 2035.
These announcements have been accompanied by continued major
investments across the automotive industry in manufacturing facilities
for PEVs, production capacity for batteries, and sourcing of critical
minerals, as described further in sections IV.C.1 and IV.C.7 of this
preamble.
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\52\ The White House, ``Statements on the Biden Administration's
Steps to Strengthen American Leadership on Clean Cars and Trucks,''
August 5, 2021. Accessed on October 19, 2021 at <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/08/05/statements-on-the-biden-administrations-steps-to-strengthen-american-leadership-on-clean-cars-and-trucks/">https://www.whitehouse.gov/briefing-room/statements-releases/2021/08/05/statements-on-the-biden-administrations-steps-to-strengthen-american-leadership-on-clean-cars-and-trucks/</a>.
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In comments on the proposal, submitted in July 2023, manufacturers
reiterated their continued commitment to electrification. Ford, for
example, stated ``Ford is all-in on electrification. We are investing
more than $50 billion through 2026 to deliver breakthrough electric
vehicles (EVs)'' and expressed their support for a 2032 endpoint of
approximately 67 percent PEVs.\53\ GM's comments ``reiterate[ ] our
commitment'' to sell 50 percent EVs by 2030 as ``the appropriate path
toward all EVs by 2035.'' \54\ Stellantis stated it ``is unwavering in
its commitment to an all-electric portfolio and building an EV
dominated market'' including a 50 percent EV mix for passenger cars and
light trucks by 2030.\55\ Volkswagen expressed its goal of 20 percent
BEV sales globally by 2025, and more than 50 percent by 2030.\56\ Other
OEMs also restated their own significant commitments to
electrification, with Honda restating its commitment to selling 40
percent zero-emitting vehicles by 2030 and 80 percent by 2035 \57\ and
Hyundai noting their support for selling 50 percent PEVs in 2030.\58\
In addition there were automakers supporting stronger standards that
would lead to somewhat higher levels of BEVs in 2032,\59\ and some
making commitments to significantly reduce vehicle emissions without
identifying a particular level of PEVs they intend to sell.\60\
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\53\ Ford Motor Company, EPA-HQ-OAR-2022-0829-0605 at p. 1.
\54\ General Motors, LLC, EPA-HQ-OAR-2022-0829-0700 at p. 3-4.
\55\ Stellantis, EPA-HQ-OAR-2022-0829-0678 at p. 2.
\56\ Volkswagen Group of America, Inc., EPA-HQ-OAR-2022-0829-
0669 at p. 2.
\57\ American Honda Motor Co. Inc., EPA-HQ-OAR-2022-0829-0652 at
p. 3.
\58\ Hyundai Motor America, EPA-HQ-OAR-2022-0829-0599 at p. 2
\59\ Tesla, Inc., EPA-HQ-OAR-2022-0829-0792, at 2 (supporting
greater than 69% BEV penetration in 2032).
\60\ Toyota Motor North America, EPA-HQ-OAR-2022-0829-0620 at 1
(plan to reduce average CO<INF>2</INF> emissions for all new
vehicles worldwide by 33% by 2030 and by 50% by 2035, as compared to
2019).
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In the second half of 2023, some automakers announced changes to
previously announced investment plans and made statements suggesting
increased attention to PHEVs or HEVs in their future product plans. For
example, in mid-2023, Ford paused construction (and then restarted
construction in

[[Page 27849]]

November 2023, as discussed below) of their recently announced battery
plant in Marshall, Michigan,\61\ and in November 2023 announced a
reduction in the size of the plant from 50 GWh to 20 GWh.\62\ In 2024,
Ford also signaled a growing interest in producing HEVs and a shift
from large BEV SUVs toward smaller BEVs.63 64 65 66
Similarly, General Motors indicated increased attention toward
producing PHEVs in addition to BEVs,67 68 and in an earnings
call Mercedes suggested that it would reach 50 percent ``xEVs'' in
``the second half of the decade.'' 69 70 Some industry
analysts have commented on the possibility that these developments
indicated a drop in PEV demand or a weakening of manufacturer interest
in investing in PEV technology.71 72 73 74
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\61\ Reuters, ``Ford pauses work on $3.5 bln battery plant in
Michigan,'' September 25, 2023. Accessed on December 15, 2023 at
<a href="https://www.reuters.com/business/autos-transportation/ford-pauses-work-35-billion-battery-plant-michigan-2023-09-25/">https://www.reuters.com/business/autos-transportation/ford-pauses-work-35-billion-battery-plant-michigan-2023-09-25/</a>.
\62\ New York Times, ``Ford Resumes Work on E.V. Battery Plant
in Michigan, at Reduced Scale,'' November 21, 2023. Accessed on
December 15, 2023 at <a href="https://www.nytimes.com/2023/11/21/business/ford-ev-battery-plant-michigan.html">https://www.nytimes.com/2023/11/21/business/ford-ev-battery-plant-michigan.html</a>.
\63\ CNBC, ``Ford is reassessing its EV plans, including
vertical battery integration,'' February 6, 2024. Accessed on
February 7, 2024 at <a href="https://www.cnbc.com/2024/02/06/ford-reassessing-ev-plans-including-vertical-battery-integration.html">https://www.cnbc.com/2024/02/06/ford-reassessing-ev-plans-including-vertical-battery-integration.html</a>.
\64\ Reuters, ``Ford slows EVs, sends a truckload of cash to
investors,'' February 7, 2024. Accessed on February 14, 2024 at
<a href="https://www.reuters.com/business/autos-transportation/ford-offer-regular-supplemental-dividend-2024-02-06/">https://www.reuters.com/business/autos-transportation/ford-offer-regular-supplemental-dividend-2024-02-06/</a>.
\65\ Green Car Reports, ``Ford CEO: Hybrids will play
`increasingly important role' alongside EVs,'' February 7, 2024.
Accessed on February 9, 2024 at <a href="https://www.greencarreports.com/news/1142233_ford-ceo-hybrids-alongside-evs">https://www.greencarreports.com/news/1142233_ford-ceo-hybrids-alongside-evs</a>.
\66\ Green Car Reports, ``Ford seeks smaller, lower-cost EVs to
rival $25,000 Tesla, China,'' February 7, 2024. Accessed on February
9, 2024 at <a href="https://www.greencarreports.com/news/1142232_ford-smaller-lower-cost-ev-platform-tesla-china">https://www.greencarreports.com/news/1142232_ford-smaller-lower-cost-ev-platform-tesla-china</a>.
\67\ Forbes, ``GM Does a U-Turn: Plug-In Hybrids are Coming
Back,'' January 31, 2024. Accessed on February 14, 2024 at <a href="https://www.forbes.com/sites/michaelharley/2024/01/31/gm-does-a-u-turn-plug-in-hybrids-are-coming-back/">https://www.forbes.com/sites/michaelharley/2024/01/31/gm-does-a-u-turn-plug-in-hybrids-are-coming-back/</a>.
\68\ Detroit Free Press, ``General Motors to bring back hybrid
vehicles in North America, stay focused on EVs,'' January 30, 2024.
Accessed on February 14, 2024 at <a href="https://www.freep.com/story/money/cars/general-motors/2024/01/30/gm-hybrid-vehicles-north-america/72406811007/">https://www.freep.com/story/money/cars/general-motors/2024/01/30/gm-hybrid-vehicles-north-america/72406811007/</a>.
\69\ Reuters, ``Mercedes-Benz delays electrification goal, beefs
up combustion engine line-up,'' February 22, 2024. Accessed on March
6, 2024 at <a href="https://www.reuters.com/business/autos-transportation/mercedes-benz-hits-cars-returns-forecast-inflation-supply-chain-costs-bite-2024-02-22/">https://www.reuters.com/business/autos-transportation/mercedes-benz-hits-cars-returns-forecast-inflation-supply-chain-costs-bite-2024-02-22/</a>.
\70\ Mercedes-Benz Group, ``Outlook,'' February 22, 2024.
Accessed on March 6, 2024 at <a href="https://group.mercedes-benz.com/investors/share/outlook/">https://group.mercedes-benz.com/investors/share/outlook/</a>.
\71\ Reuters, ``US EV market struggles with price cuts and
rising inventories,'' July 11, 2023. Accessed on December 15, 2023
at <a href="https://www.reuters.com/business/autos-transportation/slow-selling-evs-are-auto-industrys-new-headache-2023-07-11/">https://www.reuters.com/business/autos-transportation/slow-selling-evs-are-auto-industrys-new-headache-2023-07-11/</a>.
\72\ Marketplace, ``Electric vehicles face reality check as
automakers dial back production targets,'' November 2, 2023.
Accessed on December 15, 2023 at <a href="https://www.marketplace.org/2023/11/02/ev-demand-production-reality-check/">https://www.marketplace.org/2023/11/02/ev-demand-production-reality-check/</a>.
\73\ The Wall Street Journal, ``EV Makers Turn to Discounts to
Combat Waning Demand,'' November 7, 2023. Accessed on December 15,
2023 at <a href="https://www.wsj.com/business/autos/ev-makers-turn-to-discounts-to-combat-waning-demand-3aa77535">https://www.wsj.com/business/autos/ev-makers-turn-to-discounts-to-combat-waning-demand-3aa77535</a>.
\74\ The Wall Street Journal, ``The Six Months That Short-
Circuited the Electric-Vehicle Revolution,'' February 14, 2024.
Accessed on February 15, 2024 at <a href="https://www.wsj.com/business/autos/ev-electric-vehicle-slowdown-ford-gm-tesla-b20a748e">https://www.wsj.com/business/autos/ev-electric-vehicle-slowdown-ford-gm-tesla-b20a748e</a>.
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EPA acknowledges these recent announcements regarding investment
plans. We have carefully considered these announcements, in light of
the larger universe of information about manufacturer plans including
comments submitted by the manufacturers on this rulemaking and our
ongoing engagement with the manufacturers. Overall, EPA finds that
these recent announcements do not reflect a significant change in
manufacturer intentions regarding PEVs generally or specifically
through the 2027-2032 timeframe of this rule. We also take into
consideration that sales of PEVs have increased dramatically in recent
years so periods where demand and supply of vehicles are temporarily
misaligned (either creating shortages or an over-supply of vehicles) is
not unexpected. Ford has since restarted construction of its plant;
\75\ at about the same as time Ford announced the delay, Toyota
announced an $8 billion increase in investment in its North Carolina
plant.\76\ Nor are U.S. PEV sales data for 2023 (presented previously
in Figure 1) consistent with a reduction in PEV demand,77 78
with sales up by 50 percent from 2022 to 2023, consistent with and
slightly larger than the 46 percent increase from 2021 to 2022 and in
line with the average year-over-year increase of 52 percent from 2012
to 2023.\79\ Both Ford and GM have characterized their recent moves as
complementary to their continued plans to electrify an increasing
portion of their product lines. For example, GM stated that it is
``deploying plug-in technology in strategic segments,'' and that ``for
calendar year 2024, EV is our focus,'' \80\ while Ford stated that its
next generation of BEVs ``will be profitable and return their cost of
capital.'' \81\ It is also difficult to draw conclusions about
industry-wide PEV demand or investment from only these two examples.
Specific factors have been active during the same period, such as the
2023 United Auto Workers strike,\82\ and an increase in inventories for
light-duty vehicles of all types,\83\ which may be related to economic
conditions such as high interest rates and higher average transaction
prices.84 85 86 Economic conditions across the industry have
also been cited in relation to manufacturers' recent investment
decisions.87 88 89 For

[[Page 27850]]

example, Mercedes-Benz cited slower economic growth, 48-volt component
shortages, European policy uncertainty, lower than expected demand in
China, and trade tensions with China as all affecting its earnings
outlook.90 91 Meanwhile, some other manufacturers have seen
strong BEV demand and have reaffirmed their plans, for example, Hyundai
and Kia have indicated strong demand and are maintaining or
accelerating investment plans,92 93 and Stellantis reported
making a profit on EVs globally and stated that it is ``keeping full
speed on electrification.'' 94 95 At the same time,
automakers continue to compete in a global market where emission
reduction targets and PEV demand continue to spur investments in these
technologies. Given the unprecedented rate and size of recent
investment activity in PEV technology, adjustments to previously
announced plans would ordinarily be expected to occur, and to date have
included both reductions and increases in investment amounts and
pacing. Our assessment of the feasibility of the standards is based on
our assessment of the full record as discussed in sections III and IV
of this preamble and in the RIA, and EPA does not consider such
adjustments to be indicative of any broad trend that would change our
assessment of PEV feasibility as an emission control technology.
Further, the rulemaking establishes performance-based standards, which
manufacturers can meet using a variety of technologies, including ICE
vehicles across a range of electrification, and the sensitivity
analyses confirm that the standards are feasible and appropriate under
a range of future circumstances. At the same time, the final standards
incorporate a reduced rate of stringency increase in the early years as
compared to the proposed standards, providing additional lead time
which supports the kinds of product planning changes described in these
recent announcements.\96\
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\75\ CBS News, ``Ford resuming construction of Michigan EV
battery plant delayed by strike, scaling back jobs,'' November 21,
2023. Accessed on December 15, 2023 at <a href="https://www.cbsnews.com/detroit/news/ford-resuming-construction-of-michigan-ev-battery-plant-delayed-by-strike-scaling-back-jobs/">https://www.cbsnews.com/detroit/news/ford-resuming-construction-of-michigan-ev-battery-plant-delayed-by-strike-scaling-back-jobs/</a>.
\76\ Toyota Newsroom, ``Toyota Supercharges North Carolina
Battery Plant with New $8 Billion Investment,'' Press Release,
October 31, 2023. Available at <a href="https://pressroom.toyota.com/toyota-supercharges-north-carolina-battery-plant-with-new-8-billion-investment/">https://pressroom.toyota.com/toyota-supercharges-north-carolina-battery-plant-with-new-8-billion-investment/</a>.
\77\ Fortune, ``EV sales expected to hit new U.S. record in
2023--but Germany, China and Norway still lead the way,'' November
23, 2023. Accessed on December 11, 2023 at <a href="https://fortune.com/2023/11/23/us-electric-vehicle-sales-2023-record/">https://fortune.com/2023/11/23/us-electric-vehicle-sales-2023-record/</a>.
\78\ BloombergNEF, ``Four Takeaways on the Future of the Global
EV Market,'' June 8, 2023. Accessed on December 8, 2023 at <a href="https://www.bloomberg.com/news/articles/2023-06-08/global-ev-sales-have-soared-as-overall-new-car-sales-sag">https://www.bloomberg.com/news/articles/2023-06-08/global-ev-sales-have-soared-as-overall-new-car-sales-sag</a>.
\79\ Derived from the yearly sales depicted in Figure 1.
\80\ Detroit Free Press, ``General Motors to bring back hybrid
vehicles in North America, stay focused on EVs,'' January 30, 2024.
Accessed on February 14, 2024 at <a href="https://www.freep.com/story/money/cars/general-motors/2024/01/30/gm-hybrid-vehicles-north-america/72406811007/">https://www.freep.com/story/money/cars/general-motors/2024/01/30/gm-hybrid-vehicles-north-america/72406811007/</a>.
\81\ Reuters, ``Ford slows EVs, sends a truckload of cash to
investors,'' February 7, 2024. Accessed on February 14, 2024 at
<a href="https://www.reuters.com/business/autos-transportation/ford-offer-regular-supplemental-dividend-2024-02-06//">https://www.reuters.com/business/autos-transportation/ford-offer-regular-supplemental-dividend-2024-02-06//</a>.
\82\ CBS News, ``Ford resuming construction of Michigan EV
battery plant delayed by strike, scaling back jobs,'' November 21,
2023. Accessed on December 15, 2023 at <a href="https://www.cbsnews.com/detroit/news/ford-resuming-construction-of-michigan-ev-battery-plant-delayed-by-strike-scaling-back-jobs/">https://www.cbsnews.com/detroit/news/ford-resuming-construction-of-michigan-ev-battery-plant-delayed-by-strike-scaling-back-jobs/</a>.
\83\ National Automobile Dealers Association, ``NADA Market
Beat,'' November 2023. Accessed on December 11, 2023 at <a href="https://www.nada.org/nada/nada-headlines/nada-market-beat-new-light-vehicle-inventory-reaches-20-month-high">https://www.nada.org/nada/nada-headlines/nada-market-beat-new-light-vehicle-inventory-reaches-20-month-high</a>.
\84\ Reuters, ``More alarm bells sound on slowing demand for
electric vehicles,'' October 25, 2023. Accessed on December 15, 2023
at <a href="https://www.reuters.com/business/autos-transportation/more-alarm-bells-sound-slowing-demand-electric-vehicles-2023-10-25/">https://www.reuters.com/business/autos-transportation/more-alarm-bells-sound-slowing-demand-electric-vehicles-2023-10-25/</a>.
\85\ CNBC, ``Sparse inventory drives prices for new, used
vehicles higher,'' October 17, 2023. Accessed on December 15, 2023
at <a href="https://www.cnbc.com/2023/10/17/sparse-inventory-drives-prices-for-new-used-cars-higher.html">https://www.cnbc.com/2023/10/17/sparse-inventory-drives-prices-for-new-used-cars-higher.html</a>.
\86\ San Diego Union-Tribune, ``Has enthusiasm for electric cars
waned?,'' October 27, 2023. Accessed on December 15, 2023 at <a href="https://www.sandiegouniontribune.com/business/story/2023-10-27/has-enthusiasm-for-electric-cars-waned">https://www.sandiegouniontribune.com/business/story/2023-10-27/has-enthusiasm-for-electric-cars-waned</a>.
\87\ Reuters, ``Hyundai, Kia see strong demand for EVs, despite
rivals' concerns,'' November 17, 2023. Accessed on February 14, 2024
at <a href="https://www.reuters.com/business/autos-transportation/hyundai-kia-see-strong-demand-evs-despite-rivals-concerns-2023-11-17/">https://www.reuters.com/business/autos-transportation/hyundai-kia-see-strong-demand-evs-despite-rivals-concerns-2023-11-17/</a>.
\88\ Reuters, ``Mexico gives Tesla land-use permits for
gigafactory, says state government,'' December 12, 2023. Accessed on
February 14, 2024 at <a href="https://www.reuters.com/business/autos-transportation/mexico-gives-tesla-land-use-permits-gigafactory-says-state-government-2023-12-13/">https://www.reuters.com/business/autos-transportation/mexico-gives-tesla-land-use-permits-gigafactory-says-state-government-2023-12-13/</a>.
\89\ Mexico Now, ``Taxes and global economy stop Tesla plant in
Nuevo Leon,'' October 23, 2023. Accessed on February 14, 2024 at
<a href="https://mexico-now.com/taxes-and-global-economy-stop-tesla-plant-in-nuevo-leon/">https://mexico-now.com/taxes-and-global-economy-stop-tesla-plant-in-nuevo-leon/</a>.
\90\ Mercedes-Benz Group, ``Outlook,'' February 22, 2024.
Accessed on March 6, 2024 at <a href="https://group.mercedes-benz.com/investors/share/outlook/">https://group.mercedes-benz.com/investors/share/outlook/</a>.
\91\ Seeking Alpha, ``Mercedes-Benz Group AG (MBGAF) Q4 2023
Earnings Call Transcript,'' February 22,2024. Accessed on March 6,
2024 at <a href="https://seekingalpha.com/article/4672324-mercedes-benz-group-ag-mbgaf-q4-2023-earnings-call-transcript">https://seekingalpha.com/article/4672324-mercedes-benz-group-ag-mbgaf-q4-2023-earnings-call-transcript</a>.
\92\ Reuters, ``Hyundai sticks to EV rollout plans, sees solid
growth this year,'' October 26, 2023. Accessed on February 14, 2024
at <a href="https://www.reuters.com/business/autos-transportation/hyundai-motors-q3-net-profit-rises-151-beats-forecasts-2023-10-26/">https://www.reuters.com/business/autos-transportation/hyundai-motors-q3-net-profit-rises-151-beats-forecasts-2023-10-26/</a>.
\93\ Reuters, ``Hyundai, Kia see strong demand for EVs, despite
rivals' concerns,'' November 17, 2023. Accessed on February 14, 2024
at <a href="https://www.reuters.com/business/autos-transportation/hyundai-kia-see-strong-demand-evs-despite-rivals-concerns-2023-11-17/">https://www.reuters.com/business/autos-transportation/hyundai-kia-see-strong-demand-evs-despite-rivals-concerns-2023-11-17/</a>. We
note that Hyundai submitted a late comment on November 1, 2023
reiterating its support for a mechanism to potentially revise the
stringency of the standards in future years in light of developments
(EPA-HQ-OAR-2022-0829-5102) but neither Hyundai nor any other
automaker submitted additional comments after the close of the
comment period indicating they were adjusting their plans for future
PEV products and sales.
\94\ CNN, ``A traditional automaker just turned a profit on
EVs,'' February 15, 2024. Accessed on February 15, 2024 at <a href="https://www.cnn.com/2024/02/15/business/stellantis-earnings-electric-vehicles/index.html">https://www.cnn.com/2024/02/15/business/stellantis-earnings-electric-vehicles/index.html</a>.
\95\ The Wall Street Journal, ``Chrysler-Parent Stellantis
Staying the Course on EVs, Despite Slowdown,'' February 15, 2024.
Accessed on February 16, 2024 at <a href="https://www.wsj.com/livecoverage/stock-market-today-dow-jones-02-15-2024/card/chrysler-parent-stellantis-staying-the-course-on-evs-despite-slowdown-pCHVXXe6Igo4do3pBFoQ">https://www.wsj.com/livecoverage/stock-market-today-dow-jones-02-15-2024/card/chrysler-parent-stellantis-staying-the-course-on-evs-despite-slowdown-pCHVXXe6Igo4do3pBFoQ</a>.
\96\ Of course, as with any rulemaking, the Administrator has
the discretion to propose modifications to the program through the
public notice and comment process, in the case that modifications
are found to be appropriate in the future to address any constraints
that might have developed.
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Electrification plans are not limited to light-duty vehicles.
Electrification of MDVs is also increasing rapidly, primarily within
the area of last-mile delivery. MDV delivery vans using dedicated
battery-electric vehicle (BEV) architectures are beginning to enter the
U.S. market, with the first mass-produced models having become
available for MY 2023 and additional production volume and models
announced for MY 2024. Initial dedicated BEV van chassis have been
predominantly targeted towards parcel delivery and include the GM
BrightDrop Zevo 400 and Zevo 600; and the Rivian EDV 500 and EDV
700.97 98
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\97\ <a href="https://www.gobrightdrop.com/">https://www.gobrightdrop.com/</a>.
\98\ <a href="https://rivian.com/fleet">https://rivian.com/fleet</a>.
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Numerous commitments to purchase all-electric medium-duty delivery
vans have also been announced by large fleet owners including
FedEx,\99\ Amazon,\100\ and Walmart,\101\ in partnerships with various
OEMs. For example, Amazon has deployed thousands of electric delivery
vans in over 100 cities, with the goal of 100,000 vans by 2030. Many
other fleet electrification commitments that include large numbers of
medium-duty and heavier vehicles have been announced by large
corporations in many sectors of the economy, including not only
retailers like Amazon and Walmart but also consumer product
manufacturers with large delivery fleets (e.g., IKEA, Unilever), large
delivery firms (e.g., DHL, FedEx, USPS), and numerous firms in many
other sectors including power and utilities, biotech, public
transportation, and municipal fleets across the country.\102\ As
another example, Daimler Trucks North America announced in 2021 that it
expected 60 percent of its sales in 2030 and 100 percent of its sales
by 2039 would be zero-emission.\103\
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\99\ BrightDrop, ``BrightDrop Accelerates EV Production with
First 150 Electric Delivery Vans Integrated into FedEx Fleet,''
Press Release, June 21, 2022.
\100\ Amazon Corporation, ``Amazon's Custom Electric Delivery
Vehicles from Rivian Start Rolling Out Across the U.S.,'' Press
Release, July 21, 2022.
\101\ Walmart, ``Walmart To Purchase 4,500 Canoo Electric
Delivery Vehicles To Be Used for Last Mile Deliveries in Support of
Its Growing eCommerce Business,'' Press Release, July 12, 2022.
\102\ Environmental Defense Fund and ERM, ``Electric Vehicle
Market Update: Manufacturer Commitments and Public Policy
Initiatives Supporting Electric Mobility in the U.S. and
Worldwide,'' September 2022.
\103\ Carey, N., ``Daimler Truck 'all in' on green energy as it
targets costs,'' May 20, 2021.
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Investments in PEV charging infrastructure have likewise grown
rapidly in recent years and are expected to continue to climb.
According to BloombergNEF, total cumulative global investment in PEV
charging reached almost $55 billion in 2022 and was estimated to reach
nearly $93 billion in 2023.\104\ U.S. infrastructure spending has also
grown significantly over the past several years with estimated public
charging investments of $2.7 billion in 2023 alone.\105\
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\104\ BloombergNEF, ``Zero-Emission Vehicles Factbook, A
BloombergNEF special report prepared for COP28,'' December 2023, at
<a href="https://assets.bbhub.io/professional/sites/24/2023-COP28-ZEV-Factbook.pdf">https://assets.bbhub.io/professional/sites/24/2023-COP28-ZEV-Factbook.pdf</a>.
\105\ BloombergNEF, ``Zero-Emission Vehicles Factbook, A
BloombergNEF special report prepared for COP28,'' December 2023, at
<a href="https://assets.bbhub.io/professional/sites/24/2023-COP28-ZEV-Factbook.pdf">https://assets.bbhub.io/professional/sites/24/2023-COP28-ZEV-Factbook.pdf</a>.
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As described in the next section, the U.S. government is making
large investments in infrastructure through the Bipartisan
Infrastructure Law \106\ and the Inflation Reduction Act.\107\ However,
we expect that private investments will also play a critical role in
meeting future infrastructure needs. Private charging companies have
already attracted billions globally in venture capital and mergers and
acquisitions indicating strong interest in the future of the charging
industry.\108\ And Bain projects that by 2030, the U.S. market for
electric vehicle charging will be ``large and profitable'' with both
revenue and profits estimated to grow

[[Page 27851]]

by a factor of twenty relative to 2021.\109\ The White House estimates
over $25 billion in commitments to expand the U.S. charging network has
been announced as of January 2024.\110\ This includes more than $10
billion in private sector investments from automakers, charging
companies, and retailers among others. See section IV.C.4 of this
preamble and Chapter 5 of the Regulatory Impact Analysis (RIA) \111\
for a discussion of public and private infrastructure investments.
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\106\ <a href="https://www.congress.gov/117/plaws/publ58/PLAW-117publ58.pdf">https://www.congress.gov/117/plaws/publ58/PLAW-117publ58.pdf</a>.
\107\ <a href="https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf">https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf</a>.
\108\ Hampleton, ``Autotech & Mobility M&A market report
1H2023''. Accessed March 4, 2023, at <a href="https://www.hampletonpartners.com/fileadmin/user_upload/Report_PDFs/Hampleton-Partners-Autotech-Mobility-Report-1H2023-FINAL.pdf">https://www.hampletonpartners.com/fileadmin/user_upload/Report_PDFs/Hampleton-Partners-Autotech-Mobility-Report-1H2023-FINAL.pdf</a>.
\109\ Zayer, E. et al., ``EV Charging Shifts into High Gear,''
Bain & Company, June 20, 2022. Accessed March 4, 2023, at <a href="https://www.bain.com/insights/electric-vehicle-charging-shifts-into-high-gear/">https://www.bain.com/insights/electric-vehicle-charging-shifts-into-high-gear/</a>.
\110\ The White House, ``FACT SHEET: Biden-Harris Administration
Announces New Actions to Cut Electric Vehicle Costs for Americans
and Continue Building Out a Convenient, Reliable, Made-in-America EV
Charging Network'', January 19, 2024. Accessed at <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2024/01/19/fact-sheet-biden-harris-administration-announces-new-actions-to-cut-electric-vehicle-costs-for-americans-and-continue-building-out-a-convenient-reliable-made-in-america-ev-charging-network/">https://www.whitehouse.gov/briefing-room/statements-releases/2024/01/19/fact-sheet-biden-harris-administration-announces-new-actions-to-cut-electric-vehicle-costs-for-americans-and-continue-building-out-a-convenient-reliable-made-in-america-ev-charging-network/</a>.
\111\ Multi-Pollutant Emissions Standards for Model Years 2027
and Later Light-Duty and Medium-Duty Vehicles--Regulatory Impact
Analysis; EPA-420-R-24-004.
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Taken together, these developments indicate that proven
technologies such as BEVs and PHEVs are already poised to become a
rapidly growing segment of the U.S. fleet, as manufacturers continue to
invest in these technologies and integrate them into their product
plans, and infrastructure continues to be developed. Accordingly, EPA
considers these technologies to be available and feasible for
controlling motor vehicle emissions, and expects that these
technologies will likely play a significant role in meeting the
standards for both criteria pollutants and GHGs.
At the same time, EPA anticipates that a compliant fleet under the
final performance-based emissions standards will include a diverse
range of technologies. The advanced gasoline technologies that have
played a fundamental role in meeting previous standards will continue
to play an important role going forward 112 113 114 as they
remain key to reducing the criteria and GHG emissions of ICE, mild HEV,
strong HEV and PHEV powertrains. PHEVs also provide a technology option
that combines the benefits of both electric and ICE technology. EPA's
standards are performance-based and allow each manufacturer to choose
the array of technologies it wishes to use, without requiring any
particular technology for any particular vehicle category. The final
standards will also provide regulatory certainty to support the many
private automaker announcements and investments in PEVs that have been
outlined in the preceding paragraphs. In developing these standards,
EPA also considered many of the key issues associated with growth in
penetration of PEVs, including charging infrastructure, consumer
acceptance, critical minerals and mineral security, and others, as well
as the emissions from the wide range of ICE-based vehicle technologies
(e.g., non-hybrid ICE, mild HEVs, strong HEVs) that will continue to be
produced during the timeframe of these standards. We discuss each of
these issues in more detail in respective sections of the preamble and
RIA.
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\112\ Wards Auto, ``GM Investing Billions in ICE Truck, SUV
Production,'' June 13, 2023. Accessed on January 5, 2024 at <a href="https://www.wardsauto.com/industry-news/gm-investing-billions-ice-truck-suv-production">https://www.wardsauto.com/industry-news/gm-investing-billions-ice-truck-suv-production</a>.
\113\ Forbes, ``GM To Put Nearly $1 Billion More Into Production
of Internal Combustion Engines,'' January 20, 2023. Accessed on
January 5, 2024 at <a href="https://www.forbes.com/sites/edgarsten/2023/01/20/internal-combustion-engine-production-wins-nearly-all-1-billion-of-new-gm-plant-investments/?sh=ec7346969383">https://www.forbes.com/sites/edgarsten/2023/01/20/internal-combustion-engine-production-wins-nearly-all-1-billion-of-new-gm-plant-investments/?sh=ec7346969383</a>.
\114\ Wards Auto, ``BMW `Not Ready' to Give Up on ICE,'' August
3, 2023. Accessed on January 5, 2024 at <a href="https://www.wardsauto.com/industry-news/bmw-not-ready-give-ice">https://www.wardsauto.com/industry-news/bmw-not-ready-give-ice</a>.
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3. The Bipartisan Infrastructure Law and Inflation Reduction Act
A particular consideration with regard to the increased penetration
of zero-emission vehicle technology is Congress' passage of the
Bipartisan Infrastructure Law (BIL) 115 116 in 2021 and the
Inflation Reduction Act (IRA) \117\ in 2022. These measures represent
significant Congressional support for investment in expanding the
manufacture, sale, and use of zero-emission vehicles by addressing
elements critical to the advancement of clean transportation and clean
electricity generation in ways that will facilitate and accelerate the
development, production and adoption of zero-emission technology during
the time frame of this rule. Congressional passage of the BIL and IRA
represent pivotal milestones in the creation of a broad-based
infrastructure instrumental to the expansion of clean transportation,
including light- and medium-duty zero-emission vehicles, and we have
taken these developments into account in assessing the feasibility of
the standards.
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\115\ <a href="https://www.congress.gov/117/plaws/publ58/PLAW-117publ58.pdf">https://www.congress.gov/117/plaws/publ58/PLAW-117publ58.pdf</a>.
\116\ Also known as the Infrastructure Investment and Jobs Act
(IIJA).
\117\ <a href="https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf">https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf</a>.
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The BIL became law in November 2021 and includes a wide range of
programs and significant funding for infrastructure investments, many
of which are oriented toward reducing GHG emissions across the U.S.
transportation network, upgrading power generation infrastructure, and
making the transportation infrastructure resilient to climate impacts
such as extreme weather. Notably, in support of light-duty zero-
emissions transportation, the BIL included $7.5 billion in funding for
installation of public charging and other alternative fueling
infrastructure. This will have a major impact on feasibility of PEVs
across the U.S. by improving access to charging and other
infrastructure, and it will further support the Administration's goal
of deploying 500,000 PEV chargers by 2030. It also includes $5 billion
for electrification of school buses through the Clean School Bus
Program, providing for further reductions in emissions from the heavy-
duty sector.118 119 To help ensure that clean vehicles are
powered by clean energy, it also includes $65 billion to upgrade the
power infrastructure to facilitate increased use of renewables and
clean energy. Further, the BIL allocated an additional $10.5 billion to
DOE's Grid Deployment Office (GDO) and the Grid Resilience and
Innovation Partnerships program (GRIP) for investments to increase the
flexibility, efficiency and reliability of the electric power system,
which will further support PEV adoption.
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\118\ <a href="https://www.epa.gov/cleanschoolbus">https://www.epa.gov/cleanschoolbus</a>. Accessed February 14,
2023.
\119\ U.S. EPA, ``EPA Clean School Bus Program Second Report to
Congress,'' EPA 420-R-23-002, February 2023.
---------------------------------------------------------------------------

The IRA became law in August 2022, bringing significant new
momentum to clean vehicles (PEVs and fuel cell electric vehicles
(FCEVs)) through measures that reduce the cost to purchase and
manufacture them, incentivize the growth of manufacturing capacity and
onshore sourcing of critical minerals and battery components needed for
their manufacture, incentivize buildout of public charging
infrastructure for PEVs, and promote modernization of the electrical
grid that will power them. It includes significant consumer incentives
of up to $7,500 for new clean vehicles (Clean Vehicle Credit or
Internal Revenue Code (IRC) 30D, and Commercial Clean Vehicle Credit or
IRC 45W) and up to $4,000 for used vehicles (Used Clean Vehicle Credit
or IRC 25E). These credits will have a strong and immediate impact on
the upfront affordability of these vehicles for a wide range of
customers, including buyers at over 10,000 dealers that have registered
to offer the 30D or

[[Page 27852]]

25E credits at the point of sale,\120\ buyers of vehicles for
commercial and fleet use under 45W, and indirectly to lessees of
vehicles purchased for lease to consumers. Manufacturer production tax
incentives of $35 per kWh for U.S. production of battery cells, $10 per
kWh for U.S. production of modules, and 10 percent of production cost
for U.S.-made critical minerals and electrode active materials
(Production Tax Credit, IRC 45X), will significantly reduce the
manufacturing cost of these battery components, further reducing PEV
and FCEV cost for consumers. In addition, the IRA includes significant
tax credits for certain charging and hydrogen infrastructure equipment
(Alternative Fuel Vehicle Refueling Infrastructure Property Tax Credit,
IRC 30C), and sizeable incentives for investment in and production of
clean electricity.
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\120\ U.S. Department of the Treasury, ``Remarks by Assistant
Secretary for Tax Policy Lily Batchelder on Phase Three of
Implementation of the Inflation Reduction Act's Clean Energy
Provisions,'' January 31, 2024. Accessed February 4, 2024 at <a href="https://home.treasury.gov/news/press-releases/jy2070">https://home.treasury.gov/news/press-releases/jy2070</a>.
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With respect to sourcing of critical minerals and battery
components, and building a secure supply chain for clean vehicles and
refueling infrastructure, the IRA also includes provisions that will
greatly reduce reliance on imports by strongly supporting the continued
development of a domestic and North American supply chain, as well as
securing sources among Free Trade Agreement (FTA) countries and other
trade partners and allies. Manufacturers who want their customers to
take advantage of the Clean Vehicle Credit (30D) must assemble the
vehicles in North America, must meet a gradually increasing value
requirement for sourcing of critical minerals from U.S. or free-trade
countries, and battery components from within North America, and cannot
utilize content acquired from foreign entities of concern (FEOCs).\121\
Manufacturer eligibility for the Production Tax Credit (45X) for cells
and modules is conditioned on their manufacture in the U.S., as is
eligibility for the 10 percent credit on the cost of producing critical
minerals and electrode active materials. Manufacturers are already
taking advantage of these opportunities to improve their sales and
reduce their production costs by securing eligible sources of critical
mineral content and siting new production facilities in the
U.S.122 123 124 125 126 127 128 129 130 Although 45W is not
subject to the sourcing requirements of 30D, the latter remains highly
influential in manufacturer siting decisions; for example, Hyundai has
increased the leasing of vehicles to consumers while also continuing
plans to site battery and vehicle manufacturing in the U.S.,\131\ and
the Korean battery industry is renegotiating ventures to comply with
FEOC restrictions that impact 30D.132 133 According to ANL's
most recent analysis of public announcements of cell manufacturing
plants in North America through January 2024, cell manufacturers in the
United States could supply about 10 million new light-duty electric
vehicles each year by 2030, assuming an average pack size of 80 to 100
kWh.\134\ There is a coordinated effort by Executive Branch agencies,
including the Department of Energy and the National Laboratories, to
provide guidance and resources and to administer funding to support
this collective effort to further develop a robust supply chain for
clean vehicles and the infrastructure that will support
them.135 136 137 138 139 140 Section IV.C.7 of this preamble
and Chapters 3.1.3 and 3.1.4 of the RIA discuss these provisions and
measures in more detail.
---------------------------------------------------------------------------

\121\ Foreign entities of concern include entities (individuals
and businesses) ``owned by, controlled by, or subject to
jurisdiction or direction of'' a ``covered nation'' (defined in 10
U.S. Code 2533(c)(d)(2) as the Democratic People's Republic of North
Korea, the People's Republic of China, the Russian Federation, and
the Islamic Republic of Iran).
\122\ Green Car Congress, ``Ford sources battery capacity and
raw materials for 600K EV annual run rate by late 2023, 2M by end of
2026; adding LFP,'' July 22, 2022.
\123\ Ford Motor Company, ``Ford Releases New Battery Capacity
Plan, Raw Materials Details to Scale EVs; On Track to Ramp to 600K
Run Rate by '23 and 2M+ by '26, Leveraging Global Relationships,''
Press Release, July 21, 2022.
\124\ Green Car Congress, ``GM signs major Li-ion supply chain
agreements: CAM with LG Chem and lithium hydroxide with Livent,''
July 26, 2022.
\125\ Grzelewski, J., ``GM says it has enough EV battery raw
materials to hit 2025 production target,'' The Detroit News, July
26, 2022.
\126\ Hall, K., ``GM announces new partnership for EV battery
supply,'' The Detroit News, April 12, 2022.
\127\ Hawkins, A., ``General Motors makes moves to source rare
earth metals for EV motors in North America,'' The Verge, December
9, 2021.
\128\ Piedmont Lithium, ``Piedmont Lithium Signs Sales Agreement
With Tesla,'' Press Release, September 28, 2020.
\129\ Subramanian, P., ``Why Honda's EV battery plant likely
wouldn't happen without new climate credits,'' Yahoo Finance, August
29, 2022.
\130\ LG Chem, ``LG Chem to Establish Largest Cathode Plant in
US for EV Batteries,'' Press Release, November 22, 2022.
\131\ Korea Economic Daily, ``Hyundai Motor to boost EV leasing
in US for tax credits from 2023,'' December 30, 2022. Accessed on
February 14, 2024 at <a href="https://www.kedglobal.com/electric-vehicles/newsView/ked202212300014">https://www.kedglobal.com/electric-vehicles/newsView/ked202212300014</a>.
\132\ Nikkei Asia, ``U.S. rules force South Korea's EV battery
makers to rethink China deals,'' December 8, 2023. Accessed on
February 14, 2024 at <a href="https://asia.nikkei.com/Business/Business-Spotlight/U.S.-rules-force-South-Korea-s-EV-battery-makers-to-rethink-China-deals">https://asia.nikkei.com/Business/Business-Spotlight/U.S.-rules-force-South-Korea-s-EV-battery-makers-to-rethink-China-deals</a>.
\133\ Korea Economic Daily, ``US regulations push Korean battery
industry to cut reliance on China,'' December 12, 2023. Accessed on
February 14, 2024 at <a href="https://www.kedglobal.com/batteries/newsView/ked202312120008">https://www.kedglobal.com/batteries/newsView/ked202312120008</a>.
\134\ Argonne National Laboratory, ``Light Duty Electric Drive
Vehicles Monthly Sales Updates'', January 2024. Accessed February 2,
2024 at <a href="https://www.anl.gov/esia/light-duty-electric-drive-vehicles-monthly-sales-updates">https://www.anl.gov/esia/light-duty-electric-drive-vehicles-monthly-sales-updates</a>.
\135\ Executive Order 14017, Securing America's Supply Chains,
February 24, 2021. <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/02/24/executive-order-on-americas-supply-chains/">https://www.whitehouse.gov/briefing-room/presidential-actions/2021/02/24/executive-order-on-americas-supply-chains/</a>.
\136\ The White House, ``FACT SHEET: Biden-Harris Administration
Driving U.S. Battery Manufacturing and Good-Paying Jobs,'' October
19, 2022. Available at: <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/19/fact-sheet-biden-harris-administration-driving-u-s-battery-manufacturing-and-good-paying-jobs/">https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/19/fact-sheet-biden-harris-administration-driving-u-s-battery-manufacturing-and-good-paying-jobs/</a>.
\137\ Department of Energy, ``Biden Administration, DOE to
Invest $3 Billion to Strengthen U.S. Supply Chain for Advanced
Batteries for Vehicles and Energy Storage,'' February 11, 2022.
Available at: <a href="https://www.energy.gov/articles/biden-administration-doe-invest-3-billion-strengthen-us-supply-chain-advanced-batteries">https://www.energy.gov/articles/biden-administration-doe-invest-3-billion-strengthen-us-supply-chain-advanced-batteries</a>.
\138\ Department of Energy, ``Supply Chains Progress Report,''
August 2023. <a href="https://www.energy.gov/sites/default/files/2023-08/Supply%20Chain%20Progress%20Report%20-%20August%202023.pdf">https://www.energy.gov/sites/default/files/2023-08/Supply%20Chain%20Progress%20Report%20-%20August%202023.pdf</a>.
\139\ Argonne National Laboratory, ``Quantification of
Commercially Planned Battery Component Supply in North America
through 2035,'' ANL-24/14, March 2024. <a href="https://publications.anl.gov/anlpubs/2024/03/187735.pdf">https://publications.anl.gov/anlpubs/2024/03/187735.pdf</a>.
\140\ Argonne National Laboratory, ``Securing Critical Materials
for the U.S. Electric Vehicle Industry: A Landscape Assessment of
Domestic and International Supply Chains for Five Key EV Battery
Materials,'' ANL-24/06, February 2024. <a href="https://publications.anl.gov/anlpubs/2024/03/187907.pdf">https://publications.anl.gov/anlpubs/2024/03/187907.pdf</a>.
---------------------------------------------------------------------------

Incentives provided by the IRA, along with manufacturers'
strategies to meet consumer demand, are expected to result in even
greater adoption of electrification technologies. Our No Action case
(i.e., without this rule) includes effects of the IRA. The third-party
estimates to which we compare our No Action case are all very recent
and include the IRA. Importantly, they do not include these standards,
but do differ in other assumptions such as state level policies and
consideration of manufacturer announced plans. We project PEV
penetration of 42 percent in 2030 in the No Action case, while mid-
range third-party projections we have reviewed range from 48 to 58
percent in 2030.141 142 143 144 145 146 147 We consider

[[Page 27853]]

our No Action case projections to be somewhat more conservative than
these third-party estimates, although generally consistent given the
differences in treatment of state-level policies and manufacturer
announced plans. Nevertheless, the very substantial rates of PEV
penetration under the No Action scenario underscore that a shift to
widespread use of electrification technologies is already well
underway, which contributes to the feasibility of further emissions
controls under these standards.
---------------------------------------------------------------------------

\141\ Cole, Cassandra, Michael Droste, Christopher Knittel,
Shanjun Li, and James H. Stock. 2023. ``Policies for Electrifying
the Light-Duty Fleet in the United States.'' AEA Papers and
Proceedings 113: 316-322. doi:<a href="https://doi.org/10.1257/pandp.20231063">https://doi.org/10.1257/pandp.20231063</a>.
\142\ IEA. 2023. ``Global EV Outlook 2023: Catching up with
climate ambitions.'' International Energy Agency.
\143\ Forsythe, Connor R., Kenneth T. Gillingham, Jeremy J.
Michalek, and Kate S. Whitefoot. 2023. ``Technology advancement is
driving electric vehicle adoption.'' PNAS 120 (23). doi:<a href="https://doi.org/10.1073/pnas.2219396120">https://doi.org/10.1073/pnas.2219396120</a>.
\144\ Bloomberg NEF. 2023. ``Electric Vehicle Outlook 2023.''
\145\ U.S. Department of Energy, Office of Policy. 2023.
``Investing in American Energy: Significant Impacts of the Inflation
Reduction Act and Bipartisan Infrastructure Law on the U.S. Energy
Economy and Emissions Reductions.''
\146\ Slowik, Peter, Stephanie Searle, Hussein Basma, Josh
Miller, Yuanrong Zhou, Felipe Rodriguez, Claire Buysse, et al. 2023.
``Analyzing the Impact of the Inflation Reduction Act on Electric
Vehicle Uptake in the United States.'' International Council on
Clean Transportation and Energy Innovation Policy & Technology LLC.
\147\ Mid-range third-party estimates exclude more extreme
scenarios, which did not include all IRA incentives or were
described as ``High'' or ``Advanced'' by respective study authors.
See RIA Chapter 4.1.2.
---------------------------------------------------------------------------

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

EPA is establishing new emissions standards for both light-duty and
medium-duty vehicles. The light-duty vehicle category includes
passenger cars and light trucks consistent with previous EPA criteria
pollutant and GHG rules. In this rule, heavy-duty Class 2b and 3
vehicles are referred to as ``medium-duty vehicles'' (MDVs) to
distinguish them from Class 4 and higher vehicles, which remain under
the heavy-duty program. EPA has not previously used the MDV
nomenclature, referring to these larger vehicles in prior rules as
light-heavy-duty vehicles,\148\ heavy-duty Class 2b and 3
vehicles,\149\ or heavy-duty pickups and vans.\150\ In the context of
this rule, the MDV category includes primarily large pickups and vans
with a gross vehicle weight rating (GVWR) of 8,501 to 14,000 pounds and
excludes vehicles used primarily as passenger vehicles (which are
called medium-duty passenger vehicles, or MDPVs, and which are covered
under the light-duty program).
---------------------------------------------------------------------------

\148\ 66 FR 5002.
\149\ 79 FR 23414.
\150\ 76 FR 57106.
---------------------------------------------------------------------------

The program consists of several key elements: more stringent
emissions standards for GHGs, more stringent emissions standards for
criteria pollutants, changes to certain optional credit programs,
durability provisions for light-duty and medium-duty electrified
vehicle batteries, warranty provisions for both electrified vehicles
and diesel engine-equipped vehicles, and various improvements to
several elements of the existing light-duty and medium-duty programs.
For both light- and medium-duty vehicles, the levels of stringency
established by this rule continue the trend over the past 50 years (for
criteria pollutants) and over the past 14 years (for GHGs) of EPA
establishing numerically lower performance-based emissions standards in
recognition of both the continued threat to human health and welfare
from pollution and continued advancements in emissions control
technology that make it possible to achieve important emissions
reductions at a reasonable cost. EPA has also continued its
longstanding approach of allowing manufacturers flexibilities, such as
averaging, banking and trading, to reduce their cost of reducing
emissions while producing a diverse fleet meeting consumers' varied
preferences. In addition to advanced ICE technologies, including hybrid
electric vehicles, the feasibility assessment for this rule recognizes
the increasing availability of zero and near-zero tailpipe emissions
technologies, including PEVs, as cost-effective compliance
technologies. The technological feasibility of PEVs is further
supported by the economic incentives provided in the IRA and the auto
manufacturers' stated plans for significantly increasing the production
of zero and near-zero emission vehicles, including PEVs, independent of
this rule. This increased feasibility of PEVs, in addition to ICE and
advanced ICE technologies, is one of the factors EPA considered in
setting the stringency of the standards.
Through the public comment process, EPA heard from a wide range of
stakeholders and individuals who provided a diversity of views on a
broad range of issues, including stringency and pace of the standards;
availability and readiness of the industry to support the needs of
electrified vehicles (such as battery critical minerals, charging
infrastructure, electric grid, and consumer acceptance); and specific
elements of EPA's analysis (such as potential PEV adoption rates,
battery costs, BIL and IRA impacts, and other areas). As part of their
comments, many stakeholders, including NGOs, industry groups, and
others, provided detailed technical analyses for EPA to consider.
Many commenters strongly supported the proposal overall. Comments
from organizations representing environmental, public health, and
consumer groups, as well as numerous state and local governments and
associations, emphasized the importance of air pollution emissions
reductions to protect public health and welfare and combat climate
change, and noted that emissions reductions are especially critical in
communities overburdened by air pollution. Many of these commenters
recommended adopting the strongest standards possible for both GHGs and
criteria pollutants. Some of these commenters supported light-duty GHG
standards even more stringent than the proposal's most stringent
alternative. Similarly, automakers that produce only electric vehicles
(including Tesla, Rivian, and Lucid) and commenters representing the
electric vehicle industry also expressed strong support for the
proposal, with some of these stakeholders also advocating standards
more stringent than the proposal's most stringent alternative.
Automotive suppliers largely expressed strong support for performance-
based standards for GHG and criteria pollutants. Some suggested that
the GHG standards should phase-in more gradually, relying on increased
ICE technology in the near term. Suppliers also strongly supported the
proposed particulate matter (PM) emissions standard, attested to the
feasibility and readiness of gasoline particulate filter technology
expected to be used to meet the standard, and urged that the standard
be phased in even sooner than proposed. Several commenters provided
supportive data on development of the battery supply chain, critical
minerals, grid readiness, and charging infrastructure.
Comments from automakers that historically have produced primarily
ICE vehicles, such as comments by the Alliance for Automotive
Innovation (hereafter referred to as ``the Alliance'') as well as
comments by several individual automakers, generally expressed the auto
industry's strong commitment to the goals of the proposed rule and to
the transition to zero emission vehicles, as well as their support for
continued efforts to reduce emissions from ICE vehicles that will
continue to be produced during the transition to electrification. Many
auto companies described their significant R&D investments in clean
transportation and their corporate commitments to carbon neutrality and
transitioning their vehicle offerings to electrified vehicles. The
Alliance and many auto companies expressed their concern that the
proposed standards would be very challenging to meet. A common theme
was that the proposed GHG standards

[[Page 27854]]

``moved the goalposts'' with respect to the Administration's goal of 50
percent zero emission vehicle sales by 2030, which the automakers had
supported. These commenters noted that automakers' support for the
Administration's goal was premised on various developments important to
electrification, as well as governmental support for such developments,
that they believe are unlikely to be ready in time to meet the proposed
standards (for example, development of charging infrastructure,
critical minerals, consumer acceptance, and readiness of the electric
grid). Several auto manufacturers, including Ford, supported the MY
2032 end point for the proposed standards, but indicated that a more
gradual ramp rate in early years (such as the proposal's Alternative 3)
is needed to align with their anticipated scaling of the electric
vehicle (EV) supply chain and manufacturing base. Another common theme
from many auto manufacturers was that meeting the proposed criteria
pollutant standards in addition to GHG standards could divert the auto
manufacturers' investments away from electrification and toward ICE
technology.
The United Auto Workers (UAW) expressed support for the transition
to a cleaner auto industry and believes that regulations that push the
industry to adopt cleaner technologies are important to create a strong
domestic manufacturing base. Both UAW and the United Steelworkers
expressed concern regarding the pace of the proposed standards and its
possible effects on employment. These organizations believed that the
pace of technology transition under the proposed standards could lead
to job disruptions and lower-quality jobs, and generally suggested that
EPA pursue GHG standards that phase in more gradually over a longer
time period. The United Steelworkers expressed strong support for the
proposed PM standard.
In contrast to the strong support expressed by many state and local
governments described above, several other state and local governments
and a group of state Attorneys General expressed strong concerns with
the proposal. These comments included that they question EPA's
authority to set standards that would promote production of electric
vehicles, believe there are significant hurdles to widespread EV
adoption, and otherwise raise concerns with various aspects of EPA's
analysis.
Commenters representing the fuels industry (petroleum and/or
biofuels) expressed many concerns with the proposal, in particular the
levels of increased BEV penetrations projected. Other themes included
questions regarding EPA's Clean Air Act authority related to electric
vehicles and fleet averaging, concerns about dependence on imports of
critical minerals, concerns about grid reliability, infrastructure
needs, and safety. Many of the fuel industry commenters recommended
that EPA adopt a life cycle analysis approach to setting standards and
give greater consideration to the role of low carbon fuels.
Utility organizations generally indicated that the proposal sends
appropriate signals to support continued infrastructure buildout.
Investor-owned utilities believe they can accommodate localized power
needs at the pace of customer demand, provided customer engagement and
enabling policies are in place. Not-for-profit electric cooperatives
serving rural areas and underserved communities highlighted the
substantial grid upgrade investments needed to support increased
transportation electrification and urged EPA to account for these
costs.
EPA has thoroughly considered the public comments, including the
data and information submitted by commenters, as well as our updated
analysis based on this public record and the best available
information. This preamble, together with the accompanying Response to
Comments (RTC) document, responds to the comments we received on the
proposed rule. This final rule reflects the input we received through
the public comment process and is also supported by updated analyses
for which EPA considered the most recent and best available technical
and scientific data.
The following sections summarize at a high level each of the
standards and program provisions finalized in this rule. Section III of
this preamble includes a more detailed discussion of each of these
elements and how we considered public comments and updated information
in determining the final standards and program provisions.
1. GHG Emissions Standards
EPA is establishing GHG standards for both light-duty vehicles and
medium-duty vehicles for MYs 2027 through 2032 that are more stringent
than the prior standards applicable under the 2021 rule. For light-duty
vehicles, EPA is finalizing standards that increase in stringency each
year over a six-year period, from MYs 2027-2032. The standards are
projected to result in an industry-wide average target for the light-
duty fleet of 85 grams/mile (g/mile) of CO<INF>2</INF> in MY 2032,
representing a nearly 50 percent reduction in projected fleet average
GHG emissions target levels from the existing MY 2026 standards. Table
1 presents a summary of the projected industry average targets for the
light-duty GHG standards for MY 2027-2032 for cars, trucks, and the
overall light-duty fleet.

Table 1--Projected Targets for Final Light-Duty Vehicle GHG Standards, by Regulatory Class
[CO2 grams/mile] \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
2026
(reference) 2027 2028 2029 2030 2031 2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cars.................................... 131 139 125 112 99 86 73
Trucks.................................. 184 184 165 146 128 109 90
Total Fleet............................. 168 170 153 136 119 102 85
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ This table does not reflect changes in credit flexibilities such as the phase-out of available off-cycle and A/C credits. Adjusted targets are shown
in section III.C.2.iv.b of the preamble.

In the NPRM, EPA requested comment on the proposed light-duty GHG
standards as well as three alternatives: a more stringent alternative
(Alternative 1), a less stringent alternative (Alternative 2), and an
alternative that landed at the same stringency as the proposal in MY
2032 but provided a linear ramp rate from MY 2027 to 2032 (Alternative
3). Alternative 3's linear ramp rate had less stringent light-duty GHG
standards than the proposed standards for MYs 2027-2031.
As discussed in this section above, in public comments, various
stakeholders had opposing views on the light-duty GHG standards
stringency alternatives.

[[Page 27855]]

Many environmental and public health NGOs, states, consumer groups,
BEV-only manufacturers, and PEV industry groups supported the strongest
possible standards, with many supporting standards even more stringent
than Alternative 1. The major automakers, in contrast, expressed
concern that the proposed standards were too ambitious, that EPA's
technical analysis was overly optimistic, and that the levels of
battery electric vehicles (BEVs) projected under the proposed standards
would be challenging to reach, especially given uncertainties in the
battery supply chain, market demand, and infrastructure buildout. Labor
groups urged a slower transition to PEVs to mitigate potential adverse
impacts on jobs. A few automakers, including Ford, supported the 2032
end point of the proposal, but believed that a slower ramp rate, like
Alternative 3, was necessary in the early years to allow for the scale
up of PEV supply chains and manufacturing. These companies recommended
that in addition to Alternative 3, EPA should slow the phase-down of
several credit provisions, such as the off-cycle credits and air
conditioning leakage credits, which would be additional ways to address
lead time in the early years.
Based on our consideration of the public comments and our updated
technical analysis, EPA is finalizing light-duty GHG standards that
land at the same stringency level as proposed in MY 2032 but have a
relatively more linear ramp rate of standards stringency, one that is
more gradual in the early years from MYs 2027-2031. Specifically, the
final standards are the proposal's Alternative 3 footprint
CO<INF>2</INF> standards curves. In addition, in response to auto
industry and labor group concerns about lead time, particularly for MYs
2027-2029, EPA is finalizing an extended phase-down for two optional
credit flexibilities: off-cycle credits and air conditioning leakage
credits. The extension of these two flexibility provisions will help to
address lead time issues in the early years of the program, by
providing additional paths for automakers to earn GHG credits that
contribute to compliance with the footprint-based CO<INF>2</INF>
standards. EPA also is delaying the phase-in of the revised PHEV
utility factor from MY 2027 until MY 2031, to provide additional
stability for the program, and to give manufacturers ample time to
transition to the new compliance calculation for PHEVs. EPA discusses
the light-duty GHG final standards in detail in section III.C.1 of this
preamble. The off-cycle credits, air conditioning credits, and PHEV
utility factor provisions are described in more detail in sections
III.C.4 through III.C.6 of this preamble.
For medium-duty vehicles, EPA is revising the existing standard for
MY 2027 given the increased feasibility of GHG emissions reducing
technologies in this sector in this time frame. EPA's standards for
MDVs increase in stringency year over year from MY 2027 through MY
2032. EPA is finalizing MDV GHG standards that land at the same
stringency as the proposal in MY 2032, but which have a more gradual
rate of stringency in the early years compared to the proposed
standards. These changes are responsive to comments from manufacturers
that recommended additional lead time in early years of the program.
When phased in, the MDV standards are projected to result in an average
fleet target of 274 grams/mile of CO<INF>2</INF> by MY 2032, which
represents a reduction of 44 percent compared to the current MY 2026
standards. Table 2 presents a summary of the industry average targets
projected for the medium-duty GHG standards for MYs 2027-2032, for
vans, MDV pickups, and the MDV fleet overall.

Table 2--Projected Targets for Final Medium-Duty Vehicle GHG Standards, by Body Style
[CO2 grams/mile]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2026
(reference) 2027 2028 2029 2030 2031 2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
Vans.................................... 423 392 391 355 317 281 245
Pickups................................. 522 497 486 437 371 331 290
Total Fleet............................. 488 461 453 408 353 314 274
--------------------------------------------------------------------------------------------------------------------------------------------------------

EPA emphasizes that its standards are performance-based, and
manufacturers are not required to use particular technologies to meet
the standards. There are many potential pathways to compliance with the
final standards manufacturers may choose that involve different
mixtures of vehicle technologies. The technology pathway in our central
case \151\ supporting the feasibility of the final rule standards
includes a projected mix of improvements to internal combustion engine
performance, as well as increases in use of powertrain electrification
technologies (across the range from mild hybrid to BEV). In addition,
to further assess the feasibility of the standards under different
potential scenarios and to illustrate that there are many potential
pathways to compliance with the final standards that include a wide
range of potential technology mixes, we evaluated examples of other
potential compliance pathways. Table 3 presents three such pathways as
examples, including: Pathway A, which reflects a higher level of BEVs
and a lower level of HEVs and PHEVs (and is also our central case
analysis); Pathway B, which achieves compliance at a lower level of BEV
production and a moderate level of HEVs and PHEVs; and Pathway C, which
achieves compliance with no additional BEVs beyond those projected in
the No Action case, and with a higher level of HEVs and PHEVs.\152\ EPA
also

[[Page 27856]]

evaluated additional technology pathways as sensitivities which are
presented fully in sections IV.F and G of this preamble and Chapter 12
of the RIA. In addition, we evaluated an illustrative scenario that
does not rely on any new BEV introductions beyond those in the existing
fleet (see section IV.H.1 of the preamble).
---------------------------------------------------------------------------

\151\ EPA recognizes that the pathway labeled as the central
case, shown as Pathway A in Table 3, features greater BEV
penetration than Pathways B and C, which feature greater use of
various ICE technologies. This does not mean that EPA requires or
prefers any manufacturer to adopt the pathway in this case over the
other cases. EPA has conducted significant analysis for each of the
cases. However, we had to identify a single case to subject to the
full scope of our analysis given practical limitations on agency
resources, the complexity and wide-ranging nature of the analysis,
and the importance of promulgating this rule in a reasonable
timeframe so as to address the significant public health and welfare
impacts associated with motor vehicle emissions. Moreover, the
reason Pathway A is the central case is not due to any a priori
agency inclination to any specific technology, but rather because
our evaluation of updated real-world information, described in this
section and throughout the record, shows that the market is most
likely to comply with increasing GHG emission standards through
increased BEV production and that BEV technologies are the most
cost-effective way to do so.
\152\ Specifically, Pathway B reflects a scenario in which
manufacturers limit production of BEVs and consumer adoption of
PHEVs is more prevalent than for BEVs, and Pathway C reflects a
scenario in which manufacturers sell approximately the number of
BEVs that we project to be sold under the No Action scenario for our
central case projection and thus produce a greater share of PHEVs
and HEVs under the standards. In our discussion of sensitivities in
section IV.F.5, Pathways B and C are titled ``Lower BEV Production''
and ``No Additional BEVs Beyond the No Action Case,'' respectively.
See sections IV.F and G of this preamble for additional description
of these and other sensitivity scenarios.
\153\ In this table, the ICE category includes ICE vehicles
(base ICE and advanced ICE) and mild HEVs. The Hybrids (HEVs)
category represent strong hybrids only. See section III.A of this
preamble for further clarification of definitions.

Table 3--Projected New Vehicle Technology Penetrations for Final Light-Duty Vehicle GHG Standards for Varying Scenarios \153\
--------------------------------------------------------------------------------------------------------------------------------------------------------
2027 2028 2029 2030 2031 2032
Pathway Technology (percent) (percent) (percent) (percent) (percent) (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pathway A--Higher BEV Pathway (central ICE.......................... 64 58 49 43 35 29
analysis case).
HEV.......................... 4 5 5 4 3 3
PHEV......................... 6 6 8 9 11 13
BEV.......................... 26 31 39 44 51 56
Pathway B--Moderate HEV and PHEV Pathway... ICE.......................... 62 56 49 39 28 21
HEV.......................... 4 4 3 6 7 6
PHEV......................... 10 12 15 18 24 29
BEV.......................... 24 29 33 37 41 43
Pathway C--Higher HEV and PHEV Pathway..... ICE.......................... 61 41 35 27 19 17
HEV.......................... 4 15 13 16 15 13
PHEV......................... 10 17 22 27 32 36
BEV.......................... 24 26 30 31 34 35
--------------------------------------------------------------------------------------------------------------------------------------------------------

EPA also sought comment on whether the standards should continue to
increase in stringency for future years, such as through MY 2035. While
a few commenters supported extending standards to MY 2035, many
commenters raised concerns with setting standards beyond 2032, pointing
to considerable uncertainty in projecting out ten or more years the
state of the BEV market and supporting conditions, such as charging
infrastructure buildout, given that the proposal had projected high
penetrations of BEVs. Other commenters suggested that if standards were
extended beyond MY 2032, that some form of mid-course review could be
necessary given the increased uncertainty. In consideration of these
comments and recognizing the increased uncertainty around emissions
technology developments and costs in the MYs 2033-2035 timeframe, EPA
is establishing standards in this action for MYs 2027 through 2032.
The light-duty CO<INF>2</INF> standards continue to be footprint-
based, with separate standards curves for cars and light trucks. EPA
has updated its assessment of the footprint standards curves to reflect
anticipated changes in the vehicle technologies that we project will be
used to meet the standards. EPA also has assessed ways to ensure future
fleet mix changes do not inadvertently provide an incentive for
manufacturers to change the size or regulatory class of vehicles as a
compliance strategy. EPA is finalizing the proposed approach to flatten
the slope of each footprint standards curve and to narrow the numerical
stringency difference between the car and truck curves. The medium-duty
vehicle standards continue to be based on a work-factor metric designed
for commercially-oriented vehicles, which reflects a combination of
payload, towing and 4-wheel drive equipment.
EPA has reassessed certain credit programs available under the
existing GHG programs considering the agency's experience with the
program implementation to date, trends in technology development,
recent related statutory provisions, and other factors. EPA is revising
the air conditioning (A/C) credits program in two ways. First, for A/C
system efficiency credits under the light-duty GHG program, EPA is
limiting the eligibility for these voluntary credits for tailpipe
CO<INF>2</INF> emissions control to ICE vehicles starting in MY 2027
(i.e., BEVs do not earn A/C efficiency credits because A/C efficiency
improvements do not result in any reduction in direct vehicle
emissions). Second, EPA is significantly reducing the magnitude of
available refrigerant-based A/C credits for light-duty vehicles
because, under a separate rulemaking, EPA has disallowed the use of
high Global Warming Potential (GWP) refrigerants under the Technology
Transitions Rule of October 2023, implemented under the American
Innovation and Manufacturing (AIM) Act of 2020. EPA is finalizing
provisions that phase-down the A/C refrigerant credits beginning in MY
2027. For MY 2031 and later, EPA is retaining small A/C refrigerant
credits designed to incentivize the continued application of A/C
refrigerant leakage mitigation countermeasures and the use of
refrigerants with GWP lower than that required under the Technology
Transitions Rule.
EPA is also sunsetting the off-cycle credits program for light-duty
vehicles as follows. First, EPA is phasing out menu-based credits by
reducing the menu credit cap year-over-year until it is fully phased
out in MY 2033. Specifically, EPA is setting a declining menu cap of
10/8/6/0 grams per mile (g/mile) for non-BEVs over MYs 2030-2033 such
that MY 2032 would be the last year manufacturers could generate
optional off-cycle credits. Second, EPA is eliminating the 5-cycle and
public process pathways for generating off-cycle credits starting in MY
2027. Third, EPA is limiting eligibility for off-cycle credits only to
vehicles with tailpipe emissions greater than zero (i.e., vehicles
equipped with IC engines) starting in MY 2027.
EPA is not reopening its averaging, banking, and trading
provisions, which continue to be a central part of its fleet average
standards compliance program, and which help manufacturers to employ a
wide range of compliance paths. EPA is also not reopening its existing
regulations which sunset in MY 2024 light-duty multiplier incentives
for BEVs, PHEVs and fuel cell vehicles. EPA is revising multiplier
incentives previously in place for MDVs for MY 2027 (established in the
heavy-duty Phase 2 rule) to end the multipliers one model year earlier,
such that MY 2026 is the last year that MDV multipliers will be in
effect. EPA is also finalizing regulatory text to ensure that
compliance with vehicle GHG emissions standards continues to be
assessed based on vehicle emissions. Under this final rule, BEVs and
the electric operation of PHEVs will continue to be counted as zero g/
mile in a

[[Page 27857]]

manufacturer's compliance calculation as has been the case since the
beginning of the light-duty GHG program in MY 2012.
Finally, EPA is establishing provisions for small volume
manufacturers (i.e., production of less than 5,000 vehicles per year)
to transition them from the prior approach of unique case-by-case
alternative standards to the primary program standards by MY 2032,
recognizing that this extended lead time is appropriate given the level
of the existing case-by-case alternative standards.
2. Criteria Pollutant Standards
EPA is finalizing more stringent emissions standards for criteria
pollutants \154\ for both light-duty and medium-duty vehicles that
begin in MY 2027. For light-duty vehicles, EPA is finalizing non-
methane organic gases (NMOG) plus nitrogen oxides (NO<INF>X</INF>)
standards \155\ that would phase-down to a fleet average level of 15
milligrams per mile (mg/mile) by MY 2032, representing a 50 percent
reduction from the existing 30 mg/mile standards for MY 2025
established in the Tier 3 rule in 2014. For medium-duty vehicles, EPA
is finalizing NMOG+NO<INF>X</INF> standards that require a fleet
average level of 75 mg/mile by MY 2031 representing a 58 percent to 70
percent reduction from the Tier 3 standards of 178 mg/mile for Class 2b
vehicles and 247 mg/mile for Class 3 vehicles. EPA is also finalizing
cold temperature (-7[deg]C) NMOG+NO<INF>X</INF> standards for all
light-duty vehicles and gasoline medium-duty vehicles to ensure robust
emissions control over a broad range of operating conditions.
---------------------------------------------------------------------------

\154\ In this notice, EPA is using ``criteria pollutants'' to
refer generally to criteria pollutants and their precursors,
including tailpipe NMOG, NO<INF>X</INF>, PM, and CO, as well as
evaporative and refueling HC.
\155\ Together referred to as NMOG+NO<INF>X</INF>.
---------------------------------------------------------------------------

For all light-duty vehicles and gasoline medium-duty vehicles, EPA
is finalizing a particulate matter (PM) standard of 0.5 mg/mile and a
requirement that the standard be met across three test cycles,
including a cold temperature (-7[deg]C) test. This standard revises the
existing PM standards established in the 2014 Tier 3 rule. Through the
application of readily available emissions control technology and
requiring compliance across the broad range of driving conditions
represented by the three test cycles, EPA projects the standards will
reduce tailpipe PM emissions from ICE vehicles by over 95 percent. In
addition to reducing PM emissions, the standards will reduce emissions
of mobile source air toxics.
EPA is finalizing in-use standards for medium-duty vehicles with
high gross combination weight rating (GCWR), changes to medium-duty
vehicle refueling emissions requirements for incomplete vehicles, and
several NMOG+NO<INF>X</INF> provisions aligned with the California Air
Resources Board (CARB) Advanced Clean Cars II program for light-duty
vehicles. EPA is finalizing changes to the carbon monoxide and
formaldehyde standards for light- and medium-duty vehicles, including
at -7[deg]C. EPA is not finalizing new limitations on the application
of commanded enrichment, but will revisit the issue as a follow-on to
this final rule. As with the GHG program, EPA is not reopening its
averaging, banking, and trading provisions for the criteria pollutant
program, excepting discrete provisions regarding how credits may be
transferred from the Tier 3 program.
3. Electrified Vehicle Battery Durability and Warranty Provisions
EPA is establishing new requirements related to battery durability
for PEVs, substantially as proposed. As described in more detail in
section III.G.2 of this preamble, the importance of battery durability
in the context of PEVs is well documented and has been cited by several
authorities in recent years. Because electrified vehicles are playing
an increasing role in automakers' compliance strategies, their
durability and reliability are important to achieving the full useful
life for which emissions reductions are projected under this program.
To this end we are establishing battery durability monitoring and
performance requirements for light-duty PEVs and battery durability
monitoring requirements for medium-duty PEVs. In addition, the agency
is including PEV batteries and associated electric powertrain
components under existing emission warranty provisions. Relatedly, EPA
is also finalizing the addition of two new grouping definitions for
PEVs (monitor family and battery durability family), new reporting
requirements, and a new calculation for the PHEV charge depletion test
to support the battery durability requirements. The background and
content of the battery durability and warranty provisions are outlined
in section III.G.2 of this preamble.
4. Light-Duty Vehicle Certification and Testing Program Improvements
EPA is finalizing various improvements to the current light-duty
program to clarify, simplify, streamline and update the certification
and testing provisions for manufacturers. These improvements include:
Clarification of the certification compliance and enforcement
requirements for CO<INF>2</INF> exhaust emission standards to more
accurately reflect the intention of the 2010 light-duty vehicle GHG
rule; a revision to the In Use Confirmatory Program (IUCP) threshold
criteria; changes to the Part 2 application; updating the On Board
Diagnostics (OBD) program to the latest version of the CARB OBD
regulation and the removal of any conflicting or redundant text from
EPA's OBD requirements; streamlining the test procedures for Fuel
Economy Data Vehicles (FEDVs); streamlining the manufacturer conducted
confirmatory testing requirements; updating the emissions warranty for
diesel powered vehicles (including Class 2b and 3 vehicles) by
designating major emissions components subject to the 8year/80,000 mile
warranty period; making the definition of light-duty truck consistent
between the GHG and criteria pollutant programs; and miscellaneous
other amendments. EPA is also establishing, as proposed, that gasoline
particulate filters (GPFs) qualify as specified major emission control
components for purposes of applying warranty requirements. These
changes are described in more detail in sections III.G and III.H of
this preamble.

C. Summary of Emission Reductions, Costs, and Benefits

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

[[Page 27858]]

The standards will result in substantial net reductions of
emissions of GHGs and criteria air pollutants in 2055, considering the
impacts from light- and medium-duty vehicles, power plants (i.e.,
electric generating units (EGUs)), and refineries. Table 4 shows the
GHG emission impacts in 2055 while Table 5 shows the cumulative impacts
for the years 2027 through 2055. CO<INF>2</INF> equivalent
(CO<INF>2</INF>e) values use 100-year global warming potential values
of 28 and 265 for CH<INF>4</INF> and N<INF>2</INF>O, respectively.\156\
We show cumulative impacts for GHGs because elevated concentrations of
GHGs in the atmosphere are resulting in warming and other changes in
the Earth's climate. Table 6 shows the criteria pollutant emissions
impacts in 2055, which include the substantial reduction in criteria
pollutants from vehicle and refinery emissions, and the significant
reduction in net criteria pollutant impacts as a result of this final
rule. As shown in Table 7, we also predict reductions in air toxic
emissions from light- and medium-duty vehicles. We project that GHG and
criteria pollutant emissions from EGUs will increase as a result of the
increased demand for electricity associated with the final rule,
although those projected impacts decrease over time because of
projected increases in clean electricity in the future power generation
mix. We also project that GHG and criteria pollutant emissions from
refineries will decrease as a result of the lower demand for liquid
fuel associated with the GHG standards. Notably, even at their highest
levels, the EGU emissions increases are more than offset by the large
reductions in vehicle emissions as well as reductions from the refinery
sector. Sections VI and VII of this preamble and Chapter 8 of the RIA
provide more information on the projected emission reductions for the
standards.
---------------------------------------------------------------------------

\156\ IPCC, 2014: Climate Change 2014: Synthesis Report.
Contribution of Working Groups I, II and III to the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change [Core
Writing Team, R.K. Pachauri and L.A. Meyer (eds.)], pp 87. Available
online: <a href="https://www.ipcc.ch/site/assets/uploads/2018/02/SYR_AR5_FINAL_full.pdf">https://www.ipcc.ch/site/assets/uploads/2018/02/SYR_AR5_FINAL_full.pdf</a>.

Table 4--Projected GHG Emission Impacts From the Final Rule in 2055
[Million metric tons] \a\
----------------------------------------------------------------------------------------------------------------
Pollutant Vehicle EGU Refinery Net impact Net impact (%)
----------------------------------------------------------------------------------------------------------------
CO2............................. -410 21 -16 -410 -37
CH4............................. -0.0079 0.00083 -0.00088 -0.0079 -34
N2O............................. -0.0071 0.0001 -0.00013 -0.0072 -38
CO2e............................ -410 21 -16 -410 -37
----------------------------------------------------------------------------------------------------------------
\a\ Percent changes reflect changes associated with the light- and medium-duty fleet, not total U.S.
inventories.

Table 5--Projected Cumulative GHG Emission Impacts From the Final Rule in 2027-2055
[Million metric tons] \a\
----------------------------------------------------------------------------------------------------------------
Pollutant Vehicle EGU Refinery Net impact Net impact (%)
----------------------------------------------------------------------------------------------------------------
CO2............................. -7,500 550 -280 -7,200 -21
CH4............................. -0.13 0.027 -0.016 -0.12 -15
N2O............................. -0.13 0.0034 -0.0023 -0.13 -23
CO2e............................ -7,500 550 -280 -7,200 -21
----------------------------------------------------------------------------------------------------------------
\a\ Percent changes reflect changes associated with the light- and medium-duty fleet, not total U.S.
inventories.

Table 6--Projected criteria air pollutant impacts from the final rule in 2055
[U.S. tons] \a\
----------------------------------------------------------------------------------------------------------------
Pollutant Vehicle EGU Refinery Net impact Net impact (%)
----------------------------------------------------------------------------------------------------------------
PM2.5........................... -8,500 1,500 -1,800 -8,700 -22
NOX............................. -35,000 5,500 -7,400 -36,000 -25
VOC............................. -140,000 930 -5,100 -150,000 -46
SOX............................. -1,900 1,300 -2,200 -2,800 -16
CO.............................. -1,700,000 0 -4,900 -1,700,000 -52
----------------------------------------------------------------------------------------------------------------
\a\ EPA did not have data available to calculate CO impacts from EGUs. Percent changes reflect changes
associated with the light- and medium-duty fleet, not total U.S. inventories.

Table 7--Projected vehicle air toxic impacts from the final rule in 2055
[U.S. tons] \a\
------------------------------------------------------------------------
Pollutant Vehicle Vehicle (%)
------------------------------------------------------------------------
Acetaldehyde............................ -740 -47
Benzene................................. -2,300 -51
Formaldehyde............................ -440 -47
Naphthalene............................. -90 -51
1,3-Butadiene........................... -290 -51

[[Page 27859]]

15 Polyaromatic Hydrocarbons............ -4 -78
------------------------------------------------------------------------
\a\ Percent changes reflect changes associated with the light- and
medium-duty fleet, not total U.S. inventories.

These GHG emission reductions will make an important contribution
to efforts to limit climate change and subsequently reduce the
probability of severe climate change related impacts including heat
waves, drought, sea level rise, extreme climate and weather events,
coastal flooding, and wildfires. People of color, low-income
populations and/or indigenous peoples may be especially vulnerable to
the impacts of climate change (see section VIII.J.2 of this preamble).
The decreases in vehicle emissions will reduce traffic-related
pollution in close proximity to roadways. As discussed in section
II.C.8 of this preamble, concentrations of many air pollutants are
elevated near high-traffic roadways, and populations who live, work, or
go to school near high-traffic roadways experience higher rates of
numerous adverse health effects, compared to populations far away from
major roads. An EPA study estimated that 72 million people live near
truck freight routes, which includes many large highways and other
routes where light- and medium-duty vehicles operate.\157\ Our
consideration of scientific literature indicates that people of color
and people with low income are disproportionately exposed to elevated
concentrations of many pollutants in close proximity to major roadways
(see section VIII.J.3.i of this preamble).
---------------------------------------------------------------------------

\157\ U.S. EPA (2021). Estimation of Population Size and
Demographic Characteristics among People Living Near Truck Routes in
the Conterminous United States. Memorandum to the Docket.
---------------------------------------------------------------------------

The changes in emissions of criteria and toxic pollutants from
vehicles, EGUs, and refineries will also impact ambient levels of
ozone, PM<INF>2.5</INF>, NO<INF>2</INF>, SO<INF>2</INF>, CO, and air
toxics over a larger geographic scale. As discussed in section VII.B of
this preamble, we expect that in 2055 the final rule will result in
widespread decreases in ozone, PM<INF>2.5</INF>, NO<INF>2</INF>, CO,
and some air toxics, even when accounting for the impacts of increased
electricity generation. We expect that in some localized areas,
increased electricity generation will increase ambient SO<INF>2</INF>,
PM<INF>2.5</INF>, ozone, or some air toxics. However, as the power
sector becomes cleaner over time, these impacts will decrease as a
result of the IRA as well as future policies that are not accounted for
in this analysis.
Climate benefits are monetized using estimates of the social cost
of greenhouse gases (SC-GHG), which in principle includes the value of
all climate change impacts (both negative and positive), however in
practice, data and modeling limitations naturally restrain the ability
of SC-GHG estimates to include all the important physical, ecological,
and economic impacts of climate change, such that the estimates are a
partial accounting of climate change impacts and will therefore, tend
to be underestimates of the marginal benefits of abatement. In our
proposal, EPA used interim Social Cost of GHGs (SC-GHG) values
developed for use in benefit-cost analyses until updated estimates of
the impacts of climate change could be developed based on the best
available science and economics. In response to recent advances in the
scientific literature on climate change and its economic impacts,
incorporating recommendations made by the National Academies of
Science, Engineering, and Medicine (National Academies, 2017), and to
address public comments on this topic, for this final rule we are using
updated SC-GHG values. EPA presented these updated values in a
sensitivity analysis in the December 2022 Oil and Gas Rule RIA which
underwent public comment on the methodology and use of these estimates
as well as external peer review. After consideration of public comment
and peer review, EPA issued a technical report in December 2023
updating the estimates of SC-GHG in light of recent information and
advances. This is discussed further in section VIII.E.1 of this
preamble and RIA Chapter 9.
EPA estimates that the total benefits of this action far exceed the
total costs with the annualized value of monetized net benefits to
society estimated at $99 billion through the year 2055, assuming a 2
percent discount rate, as shown in Table 8.\158\ The annualized value
of monetized emission benefits is $85 billion, with $72 billion of that
attributed to climate-related economic benefits from reducing emissions
of GHGs that contribute to climate change and the remainder attributed
to reduced emissions of criteria pollutants that contribute to ambient
concentrations of smaller particulate matter (PM<INF>2.5</INF>).
PM<INF>2.5</INF> is associated with premature death and serious health
effects such as hospital admissions due to respiratory and
cardiovascular illnesses, nonfatal heart attacks, aggravated asthma,
and decreased lung function.
---------------------------------------------------------------------------

\158\ All subsequent annualized costs and annualized benefits
cited in this executive summary refer to the values generated at a 2
percent discount rate.
---------------------------------------------------------------------------

The annualized value of vehicle technology costs is estimated at
$40 billion. Notably, this rule will result in significant savings in
vehicle maintenance and repair for consumers, which we estimate at an
annualized value of $16 billion (note that these values are presented
as negative costs, or savings, in the table). EPA projects generally
lower maintenance and repair costs for electric vehicles and those
societal maintenance and repair savings grow significantly over time.
We also estimate various impacts associated with our assumption that
consumers choose to drive more due to the lower cost of driving under
the standards, called the rebound effect (as discussed further in
section VIII of this preamble and in Chapters 4, 8 and 9 of the RIA).
Increased traffic noise and congestion costs are two such effects due
to the rebound effect, which we estimate at an annualized value of $1.2
billion.
EPA also estimates impacts associated with fueling the vehicles
under our standards. The rule will provide significant savings to
society through reduced fuel expenditures with annualized pre-tax fuel
savings of $46 billion. Somewhat offsetting those fuel savings is the
expected cost of EV chargers, or electric vehicle supply equipment
(EVSE), of $9 billion.
This rule includes other benefits not associated with emission
reductions. Energy security benefits are estimated at an annualized
value of $2.1 billion. The drive value benefit, which is the value of
consumers' choice to drive more under the rebound effect, has an
estimated annualized value of $2.1 billion. The refueling time impact
includes two effects: time saved refueling for ICE vehicles with lower

[[Page 27860]]

fuel consumption under our standards, and mid-trip recharging events
for electric vehicles. Our past GHG rules have estimated that refueling
time would be reduced due to the lower fuel consumption of new
vehicles; hence, a benefit. However, in this analysis, we are
estimating that refueling time will increase somewhat overall for the
fleet due to our additional assumption for mid-trip recharging events
for electric vehicles. Therefore, the refueling time impact represents
a disbenefit (a negative benefit) as shown, with an annualized value at
negative $0.8 billion. As noted in section VIII of this preamble and in
RIA Chapter 4, we have updated our refueling time estimates but still
consider that they may be conservatively high for electric vehicles
considering the rapid changes taking place in electric vehicle charging
infrastructure, including those driven by the Bipartisan Infrastructure
Law and the Inflation Reduction Act.
Note that some costs are shown as negative values in Table 8. Those
entries represent savings but are included under the ``costs'' category
because, in past rules, categories such as repair and maintenance have
been viewed as costs of vehicle operation; as discussed above, under
this rule we project significant savings in repair and maintenance
costs for consumers. Where negative values are shown, we are estimating
that those costs are lower under the final standards than in the No
Action case.

Table 8--Monetized Costs, Benefits, and Net Benefits of the Final Program for Calendar Years (CYs) 2027 Through 2055
[Billions of 2022 dollars] a, b, c, d
--------------------------------------------------------------------------------------------------------------------------------------------------------
CY 2055 PV, 2% PV, 3% PV, 7% AV, 2% AV, 3% AV, 7%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Vehicle Technology Costs................ $38 $870 $760 $450 $40 $39 $37
Insurance Costs......................... 1.9 33 28 15 1.5 1.4 1.2
Repair Costs............................ -7.1 -40 -32 -12 -1.8 -1.6 -0.99
Maintenance Costs....................... -35 -300 -250 -110 -14 -13 -9.3
Congestion Costs........................ 2.4 25 21 10 1.2 1.1 0.83
Noise Costs............................. 0.04 0.41 0.34 0.17 0.019 0.018 0.014
---------------------------------------------------------------------------------------------------------------
Sum of Costs........................ 0.59 590 530 350 27 28 29
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pre-tax Fuel Savings.................... 94 1,000 840 420 46 44 34
EVSE Port Costs......................... 8.6 190 160 96 9 8.8 7.9
---------------------------------------------------------------------------------------------------------------
Sum of Fuel Savings less EVSE Port 86 820 680 330 37 35 26
Costs..............................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Drive Value Benefits.................... 4.7 46 38 18 2.1 2 1.5
Refueling Time Benefits................. -1.7 -17 -15 -7.5 -0.8 -0.76 -0.61
Energy Security Benefits................ 4.1 47 39 20 2.1 2 1.6
---------------------------------------------------------------------------------------------------------------
Sum of Non-Emission Benefits........ 7 75 62 30 3.4 3.2 2.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Climate Benefits, 2% Near-term Ramsey... 150 1,600 1,600 1,600 72 72 72
PM2.5 Health Benefits................... 25 240 200 88 13 10 7.2
---------------------------------------------------------------------------------------------------------------
Sum of Emission Benefits............ 170 1,800 1,800 1,700 85 83 80
---------------------------------------------------------------------------------------------------------------
Net Benefits.................... 270 2,100 2,000 1,700 99 94 80
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Net benefits are emission benefits, non-emission benefits, and fuel savings (less EVSE port costs) minus the costs of the program. 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 (2027--2055) and discounted back to year 2027. Climate benefits are based on reductions in GHG emissions and are
calculated using three different SC-GHG estimates that assume either a 1.5 percent, 2.0 percent, or 2.5 percent near-term Ramsey discount rate. See
EPA's Report on the Social Cost of Greenhouse Gases: Estimates Incorporating Recent Scientific Advances (EPA, 2023). For presentational purposes in
this table, we use the climate benefits associated with the SC-GHG under the 2-percent near-term Ramsey discount rate. All other costs and benefits
are discounted using either a 2-percent, 3-percent, or 7-percent constant discount rate. For further discussion of the SC-GHGs and how EPA accounted
for these estimates, please refer to section VIII.E of this preamble and Chapter 6.2 of the RIA.
\b\ To calculate net benefits, we use the monetized suite of total avoided PM2.5-related health effects that includes avoided deaths based on the Pope
III et al., 2019 study, which is the larger of the two PM2.5 health benefits estimates presented in section VIII.F of this preamble.
\c\ The annual PM2.5 health benefits estimate presented in the CY 2055 column reflects the value of certain avoided health outcomes, such as avoided
deaths, that are expected to accrue over more than a single year discounted using a 3-percent discount rate.
\d\ We do not currently have year-over-year estimates of PM2.5 benefits that discount such annual health outcomes using a 2-percent discount rate. We
have therefore discounted the annual stream of health benefits that reflect a 3-percent discount rate lag adjustment using a 2-percent discount rate
to populate the PV, 2 percent and AV, 2 percent columns. The annual stream of PM2.5-related health benefits that reflect a 3-percent and 7-percent
discount rate lag adjustment were used to populate the PV/AV 3 percent and PV/AV 7 percent columns, respectively. See section VIII.F of this preamble
for more details on the annual stream of PM2.5-related benefits associated with this rule.

As described in section VII of this preamble and RIA Chapter 7, EPA
conducted an air quality modeling analysis of a light- and medium-duty
vehicle policy scenario in 2055. The results of that analysis found
that in 2055, consistent with the emission inventory results presented
in section VII of the preamble,\159\ the standards will result in
widespread decreases in criteria pollutant emissions that will lead to
substantial improvements in public health and welfare. We estimate that
in 2055, 1,000 to 2,000 PM<INF>2.5</INF>-related premature deaths will
be avoided as a result of the modeled policy scenario, depending on the
assumed long-term exposure study of PM<INF>2.5</INF>-related premature
mortality risk. We also estimate that the modeled policy scenario will
avoid 25 to 550 ozone-related premature deaths, depending on the
assumed study of ozone-related mortality risk. The monetized benefits
of the improvements in public health in 2055 related to the modeled
policy scenario (including reductions in both mortality and non-fatal
illnesses) are $16 billion to $36 billion assuming a 2 percent discount
rate (2022 dollars).
---------------------------------------------------------------------------

\159\ Section VII of the preamble presents emission inventory
results from OMEGA, EPA's light- and medium-duty GHG compliance and
effects model. We discuss OMEGA in detail in the RIA, specifically
Chapters 2, 4, 8 and 12.

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

[[Page 27861]]

EPA estimates the average upfront per-vehicle cost for
manufacturers to meet the light-duty standards to be approximately
$1,200 on average over the six-year rulemaking period between MYs 2027-
2032, and range from about $200 in MY 2027 to about $2,100 in MY 2032,
as shown in Table 9.\160\ We discuss per-vehicle cost in more detail in
section IV.C of this preamble and RIA Chapter 12. These costs are
attributable to our projection that the MY 2032 fleet will be made up
of a larger share of BEVs relative to ICE vehicles. However, after
considering purchase incentives and their lower operating costs
relative to ICE vehicles, BEVs are estimated to save vehicle owners
money over time. We estimate that the standards will save an average
consumer approximately $6,000 over the lifetime of a light-duty
vehicle, as compared to a vehicle meeting the MY 2026 standards.\161\
As another example, over an eight-year period (the average period of
first ownership), we estimate a MY 2032 PEV owner will, on average,
save $8,000 on purchase and operating costs compared to a gasoline
vehicle that meets these standards.\162\ We discuss ownership savings
and expenses in more detail in RIA Chapter 4.2.2.
---------------------------------------------------------------------------

\160\ Unless otherwise specified, all monetized values are
expressed in 2022 dollars.
\161\ This vehicle lifetime savings estimate takes into account
the fleet-wide average Federal purchase incentive under the final
standards and under the MY 2026 standards. See RIA Chapter 4.2.2 for
additional discussion.
\162\ This 8-year savings estimate includes the average Federal
purchase incentive of $6,000 for BEVs and PHEVs. See RIA Chapter
4.2.2.

Table 9--Average Incremental Vehicle Cost by Reg Class, Relative to the No Action Scenario, Light-Duty Vehicles
(2022 dollars)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2027 2028 2029 2030 2031 2032 6-year avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cars.................................... $135 $348 $552 $968 $849 $934 $631
Trucks.................................. 276 642 1,199 1,703 2,318 2,561 1,450
Total................................... 232 552 1,002 1,481 1,875 2,074 1,203
--------------------------------------------------------------------------------------------------------------------------------------------------------

For medium-duty vehicles, EPA estimates the average upfront per-
vehicle cost for manufacturers to be approximately $1,400 over the six-
year rulemaking period between MYs 2027-2032 and range from an average
cost of about $100 in MY 2027 to about $3,300 in MY 2032, as shown in
Table 10.
---------------------------------------------------------------------------

\163\ For more details on the medium-duty GHG standards, refer
to Section III.C.3 of the preamble.

Table 10--Average Incremental Vehicle Cost by Body Style, Relative to the No Action Scenario, Medium-Duty Vehicles
(2022 dollars) \163\
--------------------------------------------------------------------------------------------------------------------------------------------------------
2027 2028 2029 2030 2031 2032 6-year avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Vans.................................... $178 $185 $1,443 $2,732 $4,128 $4,915 $2,264
Pickups................................. 97 88 531 1,432 1,516 2,416 1,013
Total................................... 125 122 847 1,881 2,416 3,275 1,444
--------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, the standards will result in significant savings for
consumers from fuel savings for all vehicles and, for PEVs, reduced
vehicle repair and maintenance. These lower operating costs will offset
the upfront vehicle costs. The annualized retail fuel savings, which
include fuel taxes and therefore represents the amount consumers will
save through 2055, are estimated at $57 billion at a 2 percent discount
rate, see section VIII.C of this preamble. These savings are in
addition to the already mentioned savings associated with reduced
maintenance and repair costs (See section VIII.B of this preamble and
Chapter 4 of the RIA).

II. Public Health and Welfare Need for Emission Reductions

A. Climate Change From GHG Emissions

Elevated concentrations of greenhouse gases (GHGs) have been
warming the planet, leading to changes in the Earth's climate that are
occurring at a pace and in a way that threatens human health, society,
and the natural environment. While EPA is not making any new scientific
or factual findings with regard to the well-documented impact of GHG
emissions on public health and welfare in support of this rule, EPA is
providing in this section a brief scientific background on climate
change to offer additional context for this rulemaking and to help the
public understand the public health and environmental impacts of GHGs.
Extensive information on climate change is available in the
scientific assessments and the EPA documents that are briefly described
in this section, as well as in the technical and scientific information
supporting them. One of those documents is EPA's 2009 Endangerment and
Cause or Contribute Findings for Greenhouse Gases Under section 202(a)
of the Clean Air Act (CAA) (74 FR 66496, December 15, 2009). In the
2009 Endangerment Finding, the Administrator found under section 202(a)
of the CAA that elevated atmospheric concentrations of six key well-
mixed GHGs--CO<INF>2</INF>, methane (CH<INF>4</INF>), nitrous oxide
(N<INF>2</INF>O), HFCs, perfluorocarbons (PFCs), and sulfur
hexafluoride (SF6)--``may reasonably be anticipated to endanger the
public health and welfare of current and future generations'' (74 FR
66523, December 15, 2009). The 2009 Endangerment Finding, together with
the extensive scientific and technical evidence in the supporting
record, documented that climate change caused by human emissions of
GHGs threatens the public health of the U.S. population. It explained
that by raising average temperatures, climate change increases the
likelihood of heat waves, which are associated with increased deaths
and illnesses (74 FR 66497, December 15, 2009). While climate change
also increases the likelihood of reductions in cold-related mortality,
evidence indicates that the increases in heat mortality will be larger
than the decreases in cold mortality in the United States (74 FR 66525,
December 15, 2009). The 2009 Endangerment

[[Page 27862]]

Finding further explained that compared with a future without climate
change, climate change is expected to increase tropospheric ozone
pollution over broad areas of the United States, including in the
largest metropolitan areas with the worst tropospheric ozone problems,
and thereby increase the risk of adverse effects on public health (74
FR 66525, December 15, 2009). Climate change is also expected to cause
more intense hurricanes and more frequent and intense storms of other
types and heavy precipitation, with impacts on other areas of public
health, such as the potential for increased deaths, injuries,
infectious and waterborne diseases, and stress-related disorders (74 FR
66525, December 15, 2009). Children, the elderly, and the poor are
among the most vulnerable to these climate-related health effects (74
FR 66498, December 15, 2009).
The 2009 Endangerment Finding also documented, together with the
extensive scientific and technical evidence in the supporting record,
that climate change touches nearly every aspect of public welfare \164\
in the U.S., including: Changes in water supply and quality due to
changes in drought and extreme rainfall events; increased risk of storm
surge and flooding in coastal areas and land loss due to inundation;
increases in peak electricity demand and risks to electricity
infrastructure; and the potential for significant agricultural
disruptions and crop failures (though offset to some extent by carbon
fertilization). These impacts are also global and may exacerbate
problems outside the U.S. that raise humanitarian, trade, and national
security issues for the U.S. (74 FR 66530).
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\164\ The CAA states in section 302(h) that ``[a]ll language
referring to effects on welfare includes, but is not limited to,
effects on soils, water, crops, vegetation, manmade materials,
animals, wildlife, weather, visibility, and climate, damage to and
deterioration of property, and hazards to transportation, as well as
effects on economic values and on personal comfort and well-being,
whether caused by transformation, conversion, or combination with
other air pollutants.'' 42 U.S.C. 7602(h).
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In 2016, the Administrator issued a similar finding for GHG
emissions from aircraft under section 231(a)(2)(A) of the CAA.\165\ In
the 2016 Endangerment Finding, the Administrator found that the body of
scientific evidence amassed in the record for the 2009 Endangerment
Finding compellingly supported a similar endangerment finding under CAA
section 231(a)(2)(A), and also found that the science assessments
released between the 2009 and the 2016 Findings ``strengthen and
further support the judgment that GHGs in the atmosphere may reasonably
be anticipated to endanger the public health and welfare of current and
future generations'' (81 FR 54424).
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\165\ ``Finding That Greenhouse Gas Emissions From Aircraft
Cause or Contribute to Air Pollution That May Reasonably Be
Anticipated To Endanger Public Health and Welfare.'' 81 FR 54422,
August 15, 2016. (``2016 Endangerment Finding'').
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Since the 2016 Endangerment Finding, the climate has continued to
change, with new observational records being set for several climate
indicators such as global average surface temperatures, GHG
concentrations, and sea level rise. Additionally, major scientific
assessments continue to be released that further advance our
understanding of the climate system and the impacts that GHGs have on
public health and welfare both for current and future generations.
These updated observations and projections document the rapid rate of
current and future climate change both globally and in the United
States.\166\ \167\ \168\ \169\ \170\ \171\ \172\ \173\ \174\ \175\
\176\ \177\ \178\
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\166\ USGCRP, 2017: Climate Science Special Report: Fourth
National Climate Assessment, Volume I [Wuebbles, D.J., D.W. Fahey,
K.A. Hibbard, D.J. Dokken, B.C. Stewart, and T.K. Maycock (eds.)].
U.S. Global Change Research Program, Washington, DC, USA, 470 pp,
doi: 10.7930/J0J964J6.
\167\ USGCRP, 2016: The Impacts of Climate Change on Human
Health in the United States: A Scientific Assessment. Crimmins, A.,
J. Balbus, J.L. Gamble, C.B. Beard, J.E. Bell, D. Dodgen, R.J.
Eisen, N. Fann, M.D. Hawkins, S.C. Herring, L. Jantarasami, D.M.
Mills, S. Saha, M.C.
\168\ USGCRP, 2018: Impacts, Risks, and Adaptation in the United
States: Fourth National Climate Assessment, Volume II [Reidmiller,
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K.
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research
Program, Washington, DC, USA, 1515 pp. doi:10.7930/NCA4.2018.
\169\ IPCC, 2018: Global Warming of 1.5 [deg]C. An IPCC Special
Report on the impacts of global warming of 1.5 [deg]C above pre-
industrial levels and related global greenhouse gas emission
pathways, in the context of strengthening the global response to the
threat of climate change, sustainable development, and efforts to
eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. P[ouml]rtner,
D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C.
P[eacute]an, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X.
Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T.
Waterfield (eds.)].
\170\ IPCC, 2019: Climate Change and Land: an IPCC special
report on climate change, desertification, land degradation,
sustainable land management, food security, and greenhouse gas
fluxes in terrestrial ecosystems [P.R. Shukla, J. Skea, E. Calvo
Buendia, V. Masson-Delmotte, H.-O. P[ouml]rtner, D. C. Roberts, P.
Zhai, R. Slade, S. Connors, R. van Diemen, M. Ferrat, E. Haughey, S.
Luz, S. Neogi, M. Pathak, J. Petzold, J. Portugal Pereira, P. Vyas,
E. Huntley, K. Kissick, M. Belkacemi, J. Malley, (eds.)].
\171\ IPCC, 2019: IPCC Special Report on the Ocean and
Cryosphere in a Changing Climate [H.-O. P[ouml]rtner, DC Roberts, V.
Masson-Delmotte, P. Zhai, M. Tignor, E. Poloczanska, K. Mintenbeck,
A. Alegr[iacute]a, M. Nicolai, A. Okem, J. Petzold, B. Rama, N.M.
Weyer (eds.)].
1 IPCC, 2023: Summary for Policymakers. In: Climate Change 2023:
Synthesis Report. Contribution of Working Groups I, II and III to
the Sixth Assessment Report of the Intergovernmental Panel on
Climate Change [Core Writing Team, H. Lee and J. Romero (eds.)].
IPCC, Geneva, Switzerland, pp. 1-34, doi:10.59327/IPCC/AR6-
9789291691647.001.
\172\ National Academies of Sciences, Engineering, and Medicine.
2016. Attribution of Extreme Weather Events in the Context of
Climate Change. Washington, DC: The National Academies Press.
<a href="https://doi.org/10.17226/21852">https://doi.org/10.17226/21852</a>.
\173\ National Academies of Sciences, Engineering, and Medicine.
2017. Valuing Climate Damages: Updating Estimation of the Social
Cost of Carbon Dioxide. Washington, DC: The National Academies
Press. <a href="https://doi.org/10.17226/24651">https://doi.org/10.17226/24651</a>.
\174\ National Academies of Sciences, Engineering, and Medicine.
2019. Climate Change and Ecosystems. Washington, DC: The National
Academies Press. <a href="https://doi.org/10.17226/25504">https://doi.org/10.17226/25504</a>.
\175\ Blunden, J., T. Boyer, and E. Bartow-Gillies, Eds., 2023:
``State of the Climate in 2022''. Bull. Amer. Meteor. Soc., 104 (9),
Si-S501 <a href="https://doi.org/10.1175/2023BAMSStateoftheClimate.1">https://doi.org/10.1175/2023BAMSStateoftheClimate.1</a>.
\176\ EPA. 2021. Climate Change and Social Vulnerability in the
United States: A Focus on Six Impacts. U.S. Environmental Protection
Agency, EPA 430-R-21-003.
\177\ Jay, A.K., A.R. Crimmins, C.W. Avery, T.A. Dahl, R.S.
Dodder, B.D. Hamlington, A. Lustig, K. Marvel, P.A. M[eacute]ndez-
Lazaro, M.S. Osler, A. Terando, E.S. Weeks, and A. Zycherman, 2023:
Ch. 1. Overview: Understanding risks, impacts, and responses. In:
Fifth National Climate Assessment. Crimmins, A.R., C.W. Avery, D.R.
Easterling, K.E. Kunkel, B.C. Stewart, and T.K. Maycock, Eds. U.S.
Global Change Research Program, Washington, DC, USA.<a href="https://doi.org/10.7930/NCA5.2023.CH1">https://doi.org/10.7930/NCA5.2023.CH1</a>.
\178\ Jay, A.K., A.R. Crimmins, C.W. Avery, T.A. Dahl, R.S.
Dodder, B.D. Hamlington, A. Lustig, K. Marvel, P.A. M[eacute]ndez-
Lazaro, M.S. Osler, A. Terando, E.S. Weeks, and A. Zycherman, 2023:
Ch. 1. Overview: Understanding risks, impacts, and responses. In:
Fifth National Climate Assessment. Crimmins, A.R., C.W. Avery, D.R.
Easterling, K.E. Kunkel, B.C. Stewart, and T.K. Maycock, Eds. U.S.
Global Change Research Program, Washington, DC, USA.<a href="https://doi.org/10.7930/NCA5.2023.CH1">https://doi.org/10.7930/NCA5.2023.CH1</a>.
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The most recent information demonstrates that the climate is
continuing to change in response to the human-induced buildup of GHGs
in the atmosphere. These recent assessments show that atmospheric
concentrations of GHGs have risen to a level that has no precedent in
human history and that they continue to climb, primarily because of
both historical and current anthropogenic emissions, and that these
elevated concentrations endanger our health by affecting our food and
water sources, the air we breathe, the weather we experience, and our
interactions with the natural and built environments. For example,
atmospheric concentrations of one of these GHGs, CO<INF>2</INF>,
measured at Mauna Loa in Hawaii and at other sites around the world
reached an annual mean of 419 parts per million (ppm) in 2022 (nearly
50 percent higher than preindustrial levels) \179\ and have continued
to rise at a rapid rate. Global average temperature has increased by
about 1.1 [deg]C (2.0 [deg]F) in the 2011-2020

[[Page 27863]]

decade relative to 1850-1900.\180\ The years 2015-2022 were the warmest
8 years in the 1880-2022 record.\181\ The Intergovernmental Panel on
Climate Change (IPCC) determined (with medium confidence) that this
past decade was warmer than any multi-century period in at least the
past 100,000 years.\182\ Global average sea level has risen by about 8
inches (about 21 centimeters (cm)) from 1901 to 2018, with the rate
from 2006 to 2018 (0.15 inches/year or 3.7 millimeters (mm)/year)
almost twice the rate over the 1971 to 2006 period, and three times the
rate of the 1901 to 2018 period.\183\ The rate of sea level rise over
the 20th century was higher than in any other century in at least the
last 2,800 years.\184\ Higher CO<INF>2</INF> concentrations have led to
acidification of the surface ocean in recent decades to an extent
unusual in the past 2 million years, with negative impacts on marine
organisms that use calcium carbonate to build shells or skeletons.\185\
Arctic sea ice extent continues to decline in all months of the year;
the most rapid reductions occur in September (very likely almost a 13
percent decrease per decade between 1979 and 2018) and are
unprecedented in at least 1,000 years.\186\ Human-induced climate
change has led to heatwaves and heavy precipitation becoming more
frequent and more intense, along with increases in agricultural and
ecological droughts \187\ in many regions.\188\
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\179\ <a href="https://gml.noaa.gov/webdata/ccgg/trends/co2/co2_annmean_mlo.txt">https://gml.noaa.gov/webdata/ccgg/trends/co2/co2_annmean_mlo.txt</a>.
\180\ IPCC, 2021: Summary for Policymakers. In: Climate Change
2021: The Physical Science Basis. Contribution of Working Group I to
the Sixth Assessment Report of the Intergovernmental Panel on
Climate Change [Masson-Delmotte, V., P. Zhai, A. Pirani, S.L.
Connors, C. P[eacute]an, S. Berger, N. Caud, Y. Chen, L. Goldfarb,
M.I. Gomis, M. Huang, K. Leitzell, E. Lonnoy, J.B.R. Matthews, T.K.
Maycock, T. Waterfield, O. Yelek[ccedil]i, R. Yu, and B. Zhou
(eds.)]. Cambridge University Press, Cambridge, United Kingdom and
New York, NY, USA, pp. 3-32, doi:10.1017/9781009157896.001.
\181\ Blunden, et al. 2023.
\182\ IPCC, 2021.
\183\ IPCC, 2021.
\184\ USGCRP, 2018: Impacts, Risks, and Adaptation in the United
States: Fourth National Climate Assessment, Volume II [Reidmiller,
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K.
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research
Program, Washington, DC, USA, 1515 pp. doi:10.7930/NCA4.2018.
\185\ IPCC, 2021.
\186\ IPCC, 2021.
\187\ These are drought measures based on soil moisture.
\188\ IPCC, 2021.
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The assessment literature demonstrates that modest additional
amounts of warming may lead to a climate different from anything humans
have ever experienced. The 2022 CO<INF>2</INF> concentration of 419 ppm
is already higher than at any time in the last 2 million years.\189\ If
concentrations exceed 450 ppm, they would likely be higher than any
time in the past 23 million years: \190\ at the current rate of
increase of more than 2 ppm per year, this would occur in about 15
years. While GHGs are not the only factor that controls climate, it is
illustrative that 3 million years ago (the last time CO<INF>2</INF>
concentrations were above 400 ppm) Greenland was not yet completely
covered by ice and still supported forests, while 23 million years ago
(the last time concentrations were above 450 ppm) the West Antarctic
ice sheet was not yet developed, indicating the possibility that high
GHG concentrations could lead to a world that looks very different from
today and from the conditions in which human civilization has
developed. If the Greenland and Antarctic ice sheets were to melt
substantially, sea levels would rise dramatically--the IPCC estimated
that over the next 2,000 years, sea level will rise by 7 to 10 feet
even if warming is limited to 1.5 [deg]C (2.7 [deg]F), from 7 to 20
feet if limited to 2 [deg]C (3.6 [deg]F), and by 60 to 70 feet if
warming is allowed to reach 5 [deg]C (9 [deg]F) above preindustrial
levels.\191\ For context, almost all of the city of Miami is less than
25 feet above sea level, and the 4th National Climate Assessment NCA4
stated that 13 million Americans would be at risk of migration due to 6
feet of sea level rise. Moreover, the CO<INF>2</INF> being absorbed by
the ocean has resulted in changes in ocean chemistry due to
acidification of a magnitude not seen in 65 million years,\192\ putting
many marine species--particularly calcifying species--at risk.
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\189\ Annual Mauna Loa CO<INF>2</INF> concentration data from
<a href="https://gml.noaa.gov/webdata/ccgg/trends/co2/co2_annmean_mlo.txt">https://gml.noaa.gov/webdata/ccgg/trends/co2/co2_annmean_mlo.txt</a>,
accessed September 9, 2023.
\190\ IPCC, 2013.
\191\ IPCC, 2021.
\192\ IPCC, 2018.
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The NCA4 found that it is very likely (greater than 90 percent
likelihood) that by mid-century, the Arctic Ocean will be almost
entirely free of sea ice by late summer for the first time in about 2
million years.\193\ Coral reefs will be at risk for almost complete (99
percent) losses with 1 [deg]C (1.8 [deg]F) of additional warming from
today (2 [deg]C or 3.6 [deg]F since preindustrial). At this
temperature, between 8 and 18 percent of animal, plant, and insect
species could lose over half of the geographic area with suitable
climate for their survival, and 7 to 10 percent of rangeland livestock
would be projected to be lost.\194\ The IPCC similarly found that
climate change has caused substantial damages and increasingly
irreversible losses in terrestrial, freshwater, and coastal and open
ocean marine ecosystems.
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\193\ USGCRP, 2018.
\194\ IPCC, 2018.
---------------------------------------------------------------------------

Every additional increment of temperature comes with consequences.
For example, the half degree of warming from 1.5 to 2 [deg]C (0.9
[deg]F of warming from 2.7 [deg]F to 3.6 [deg]F) above preindustrial
temperatures is projected on a global scale to expose 420 million more
people to extreme heatwaves at least every five years, and 62 million
more people to exceptional heatwaves at least every five years (where
heatwaves are defined based on a heat wave magnitude index which takes
into account duration and intensity--using this index, the 2003 French
heat wave that led to almost 15,000 deaths would be classified as an
``extreme heatwave'' and the 2010 Russian heatwave which led to
thousands of deaths and extensive wildfires would be classified as
``exceptional''). It would increase the frequency of sea-ice-free
Arctic summers from once in 100 years to once in a decade. It could
lead to 4 inches of additional sea level rise by the end of the
century, exposing an additional 10 million people to risks of
inundation as well as increasing the probability of triggering
instabilities in either the Greenland or Antarctic ice sheets. Between
half a million and a million additional square miles of permafrost
would thaw over several centuries. Risks to food security would
increase from medium to high for several lower-income regions in the
Sahel, southern Africa, the Mediterranean, central Europe, and the
Amazon. In addition to food security issues, this temperature increase
would have implications for human health in terms of increasing ozone
concentrations, heatwaves, and vector-borne diseases (for example,
expanding the range of the mosquitoes which carry dengue fever,
chikungunya, yellow fever, and the Zika virus, or the ticks which carry
Lyme, babesiosis, or Rocky Mountain Spotted Fever).\195\ Moreover,
every additional increment in warming leads to larger changes in
extremes, including the potential for events unprecedented in the
observational record. Every additional degree will intensify extreme
precipitation events by about 7 percent. The peak winds of the most
intense tropical cyclones (hurricanes) are projected to increase with
warming. In addition to a higher intensity, the IPCC found that
precipitation and frequency of rapid intensification of these storms
has already increased, the movement speed has decreased, and elevated
sea levels have increased coastal flooding,

[[Page 27864]]

all of which make these tropical cyclones more damaging.\196\
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\195\ IPCC, 2018.
\196\ IPCC, 2021.
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The NCA4 also evaluated a number of impacts specific to the United
States. Severe drought and outbreaks of insects like the mountain pine
beetle have killed hundreds of millions of trees in the western United
States. Wildfires have burned more than 3.7 million acres in 14 of the
17 years between 2000 and 2016, and Federal wildfire suppression costs
were about a billion dollars annually.\197\ The National Interagency
Fire Center has documented U.S. wildfires since 1983, and the 10 years
with the largest acreage burned have all occurred since 2004.\198\
Wildfire smoke degrades air quality, increasing health risks, and more
frequent and severe wildfires due to climate change would further
diminish air quality, increase incidences of respiratory illness,
impair visibility, and disrupt outdoor activities, sometimes thousands
of miles from the location of the fire. Meanwhile, sea level rise has
amplified coastal flooding and erosion impacts, requiring the
installation of costly pump stations, flooding streets, and increasing
storm surge damages. Tens of billions of dollars of U.S. real estate
could be below sea level by 2050 under some scenarios. Increased
frequency and duration of drought will reduce agricultural productivity
in some regions, accelerate depletion of water supplies for irrigation,
and expand the distribution and incidence of pests and diseases for
crops and livestock. The NCA4 also recognized that climate change can
increase risks to national security, both through direct impacts on
military infrastructure and by affecting factors such as food and water
availability that can exacerbate conflict outside U.S. borders.
Droughts, floods, storm surges, wildfires, and other extreme events
stress nations and people through loss of life, displacement of
populations, and impacts on livelihoods.\199\
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\197\ USGCRP, 2018.
\198\ NIFC (National Interagency Fire Center). 2021. Total
wildland fires and acres (1983-2020). Accessed August 2021.
<a href="http://www.nifc.gov/fireInfo/fireInfo_stats_totalFires.html">www.nifc.gov/fireInfo/fireInfo_stats_totalFires.html</a>.
\199\ USGCRP, 2018.
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EPA modeling efforts can further illustrate how these impacts from
climate change may be experienced across the United States. EPA's
Framework for Evaluating Damages and Impacts (FrEDI) \200\ uses
information from over 30 peer-reviewed climate change impact studies to
project the physical and economic impacts of climate change to the
United States. resulting from future temperature changes. These impacts
are projected for specific regions within the United States. and for
more than 20 impact categories, which span a large number of sectors of
the U.S. economy.\201\ Using this framework, EPA estimates that global
emission projections, with no additional mitigation, will result in
significant climate-related damages to the United States.\202\ These
damages to the United States. would mainly be from increases in lives
lost due to increases in temperatures, as well as impacts to human
health from increases in climate-driven changes in air quality, dust
and wildfire smoke exposure, and incidence of suicide. Additional major
climate-related damages would occur to U.S. infrastructure such as
roads and rail, as well as transportation impacts and coastal flooding
from sea level rise, increases in property damage from tropical
cyclones, and reductions in labor hours worked in outdoor settings and
buildings without air conditioning. These impacts are also projected to
vary from region to region with the Southeast, for example, projected
to see some of the largest damages from sea level rise, the West Coast
projected to experience damages from wildfire smoke more than other
parts of the country, and the Northern Plains states projected to see a
higher proportion of damages to rail and road infrastructure. While
information on the distribution of climate impacts helps to better
understand the ways in which climate change may impact the United
States, recent analyses are still only a partial assessment of climate
impacts relevant to U.S. interests and do not reflect increased damages
that occur due to interactions between different sectors impacted by
climate change or all the ways in which physical impacts of climate
change occurring abroad have spillover effects in different regions of
the United States.
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\200\ (1) Hartin, C., et al. (2023). Advancing the estimation of
future climate impacts within the United States. Earth Syst. Dynam.,
14, 1015-1037, <a href="https://doi.org/10.5194/esd-14-1015-2023">https://doi.org/10.5194/esd-14-1015-2023</a>. (2)
Supplementary Material for the Regulatory Impact Analysis for the
Supplemental Proposed Rulemaking, ``Standards of Performance for
New, Reconstructed, and Modified Sources and Emissions Guidelines
for Existing Sources: Oil and Natural Gas Sector Climate Review,''
Docket ID No. EPA-HQ-OAR-2021-0317, September 2022, (3) The Long-
Term Strategy of the United States: Pathways to Net-Zero Greenhouse
Gas Emissions by 2050. Published by the U.S. Department of State and
the U.S. Executive Office of the President, Washington, DC. November
2021, (4) Climate Risk Exposure: An Assessment of the Federal
Government's Financial Risks to Climate Change, White Paper, Office
of Management and Budget, April 2022.
\201\ EPA (2021). Technical Documentation on the Framework for
Evaluating Damages and Impacts (FrEDI). U.S. Environmental
Protection Agency, EPA 430-R-21-004, available at <a href="https://www.epa.gov/cira/fredi">https://www.epa.gov/cira/fredi</a>. Documentation has been subject to both a
public review comment period and an independent expert peer review,
following EPA peer-review guidelines.
\202\ Compared to a world with no additional warming after the
model baseline (1986-2005).
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Some GHGs also have impacts beyond those mediated through climate
change. For example, elevated concentrations of CO<INF>2</INF>
stimulate plant growth (which can be positive in the case of beneficial
species, but negative in terms of weeds and invasive species, and can
also lead to a reduction in plant micronutrients \203\) and cause ocean
acidification. Nitrous oxide depletes the levels of protective
stratospheric ozone.\204\
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\203\ Ziska, L., A. Crimmins, A. Auclair, S. DeGrasse, J.F.
Garofalo, A.S. Khan, I. Loladze, A.A. P[eacute]rez de Le[oacute]n,
A. Showler, J. Thurston, and I.

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