Transportation's Role in Reducing U.S. Greenhouse Gas Emissions ...

Transportations Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2
26 percent, which is considered low by industry standards. Therefore this analysis
adjusted the EPA estimate to reflect a retail markup factor of 70 percent, which
corresponds closely to the 75 percent factor applied by NREL (U.S. EPA, 2005; Markel
et al., 2006). The final adjusted incremental vehicle cost is therefore estimated to be $2,000.
Cost estimates of the above technology packages were found in the literature, and the
AEO Reference case also provides average LDV costs by year. Incremental technology
cost increases for advanced LDVs were taken from the literature, and the net increase
above the AEO average vehicle price was subtracted for the near- and medium-term
evaluations, providing the incremental cost of the technology packages relative to the
AEO base case. 14
For the advanced conventional gasoline package, vehicles in the near, mid, and long terms
offer a net savings over the entire range of costs and benefits. This is due to fuel savings
and to the possibility that engine downsizing could reduce estimated vehicle costs (as
presented in the literature in some cases). The cost per tonne of CO2 reduction calculated
using the above methodology and assumptions is negative, meaning that there would be a
net savings over a vehicle’s life, as well as CO2 reductions. In the near term, however, the
cost per tonne range extends into both negative and positive values. The costeffectiveness
values reported in the literature include both negative and positive values as
well, from -$175 to +$161 per tonne. (Bandivadekar et al., 2008; Lutsey, 2009; CARB, 2004;
Fulton and Cazzola, 2008). In general, the literature cost per tonne values were higher
than those calculated in this analysis. Although detailed cost assumptions and calculation
methods were not specified in all of the sources reviewed, the higher end costeffectiveness
values were likely based on lower assumed gasoline prices than the current
AEO projections. Fuel price assumptions are a driving factor in cost-effectiveness
determination, and in turn, dollar per tonne estimates should be considered quite
uncertain due to fuel price volatility alone. Nevertheless, there is general agreement that
advanced technologies available for conventional gasoline vehicles will be cost-effective
options for reducing GHG emissions in the long term.
The emission reduction and cost estimates from NHTSA’s final rulemaking for the 2011
CAFE standards are presented in Table 3.2D. The CAFE analysis performed a highly
detailed, bottom-up assessment of the costs and benefits associated with a large number of
possible technologies that could be applied to the LDV market in the near term. The
analysis also evaluated the potential interactions among the different technologies and the
development “path” that might be followed, considering the order in which individual
technologies might be added to increasingly complex packages (NHTSA, 2009b). These
packages do not directly correlate with the gasoline package presented in this report,
however, as they included different groupings of technologies. While the NHTSA
14 Lifetime per vehicle costs and benefits were calculated for advanced LDVs replacing conventional
gasoline LDVs for the different time frames. Pre-tax fuel prices obtained from AEO projections
were utilized to estimate fuel savings over the life of the advanced vehicle. The specific
assumptions regarding mileage accumulation rates, useful life, and assumed discount rate are
discussed in Appendix A.
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