Tailpipe Rule - GlobalWarming.org

Federal Register / Vol. 75, No. 88 / Friday, May 7, 2010 / Rules and Regulations
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both the costs and benefits of its CAFE
standards. In contrast, the CAA does not
allow for fine payment (civil penalties)
in lieu of compliance with emission
standards, and EPA’s analysis of
benefits from its standard thus assumes
full compliance. This assumption
results in higher estimates of fuel
savings, of reductions in GHG
emissions, and of manufacturers’
compliance costs to sell fleets that
comply with both NHTSA’s CAFE
program and EPA’s GHG program.
In summary, the projected costs and
benefits presented by NHTSA and EPA
are not directly comparable, because the
GHG emission levels established by EPA
include air conditioning-related
improvements in equivalent fuel
efficiency and HFC reductions, because
of the assumptions incorporated in
EPA’s analysis regarding car-truck credit
transfers, and because of EPA’s
projection of complete compliance with
the GHG standards. It should also be
expected that overall, EPA’s estimates of
GHG reductions and fuel savings
achieved by the GHG standards will be
slightly higher than those projected by
NHTSA only for the CAFE standards
because of the reasons described above.
For the same reasons, EPA’s estimates of
manufacturers’ costs for complying with
the passenger car and light trucks GHG
standards are slightly higher than
NHTSA’s estimates for complying with
the CAFE standards.
A number of stakeholders commented
on NHTSA’s and EPA’s analytical
assumptions in estimating costs and
benefits of the program. These
comments and any changes from the
proposed values are summarized in
Section II.F, and further in Sections III
(for EPA) and IV (for NHTSA); the
Response to Comments document
presents the detailed responses to each
of the comments.
1. Summary of Costs and Benefits of
NHTSA’s CAFE Standards
NHTSA has analyzed in detail the
costs and benefits of the final CAFE
standards. Table I.C.1–1 presents the
total costs, benefits, and net benefits for
NHTSA’s final CAFE standards. The
values in Table I.C.1–1 display the total
costs for all MY 2012–2016 vehicles and
the benefits and net benefits represent
the impacts of the standards over the
full lifetime of the vehicles projected to
be sold during model years 2012–2016.
It is important to note that there is
significant overlap in costs and benefits
for NHTSA’s CAFE program and EPA’s
GHG program and therefore combined
program costs and benefits, which
together comprise the National Program,
are not a sum of the two individual
programs.
TABLE I.C.1–1—NHTSA’S ESTIMATED
2012–2016 MODEL YEAR COSTS,
BENEFITS, AND NET BENEFITS
UNDER THE CAFE STANDARDS BE-
FORE FFV CREDITS
[2007 dollars]
3% Discount Rate: $billions
Costs ....................................... 51.8
Benefits ................................... 182.5
Net Benefits ............................ 130.7
7% Discount Rate:
Costs ....................................... 51.8
Benefits ................................... 146.3
Net Benefits ............................ 94.5
NHTSA estimates that these new
CAFE standards will lead to fuel savings
totaling 61 billion gallons throughout
the useful lives of vehicles sold in MYs
2012–2016. At a 3% discount rate, the
present value of the economic benefits
resulting from those fuel savings is $143
billion. At a 7% discount rate, the
present value of the economic benefits
resulting from those fuel savings is $112
billion. 41
The agency further estimates that
these new CAFE standards will lead to
corresponding reductions in CO 2
emissions totaling 655 million metric
tons (mmt) during the useful lives of
vehicles sold in MYs 2012–2016. The
present value of the economic benefits
from avoiding those emissions is $14.5
billion, based on a global social cost of
carbon value of approximately $21 per
metric ton (in 2010, and growing
thereafter). 42 It is important to note that
NHTSA’s CAFE standards and EPA’s
GHG standards will both be in effect,
and each will lead to increases in
average fuel economy and CO 2
emissions reductions. The two agencies’
standards together comprise the
National Program, and this discussion of
costs and benefits of NHTSA’s CAFE
standards does not change the fact that
both the CAFE and GHG standards,
jointly, are the source of the benefits
and costs of the National Program.
TABLE I.C.1–2—NHTSA FUEL SAVED (BILLION GALLONS) AND CO 2 EMISSIONS AVOIDED (mmt) UNDER CAFE
STANDARDS (WITHOUT FFV CREDITS)
2012 2013 2014 2015 2016 Total
Fuel (b. gal.) ................................. 4 .2 8 .9 12 .5 16 .0 19 .5 61 .0
CO 2 (mmt) .................................... 44 94 134 172 210 655
Considering manufacturers’ ability to
earn credit toward compliance by
selling FFVs, NHTSA estimates very
little change in incremental fuel savings
and avoided CO 2 emissions, assuming
FFV credits would be used toward both
the baseline and final standards:
TABLE I.C.1–3—NHTSA FUEL SAVED (BILLION GALLONS) AND CO 2 EMISSIONS AVOIDED (MILLION METRIC TONS, MMT)
UNDER CAFE STANDARDS (WITH FFV CREDITS)
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41 These figures do not account for the
compliance flexibilities that NHTSA is prohibited
from considering when determining the level of
2012 2013 2014 2015 2016 Total
Fuel (b. gal.) ............................................. 4.9 8.2 11.3 15.0 19.1 58.6
new CAFE standards, because manufacturers’
decisions to use those flexibilities are voluntary.
42 NHTSA also estimated the benefits associated
with three more estimates of a one ton GHG
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reduction in 2010 ($5, $35, and $65), which will
likewise grow thereafter. See Section II for a more
detailed discussion of the social cost of carbon.