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Regulating fuel economy of heavy-duty vehicles (HDVs)

Regulating fuel economy of heavy-duty vehicles (HDVs). Winston Harrington Alan Krupnick For USAEE Meeting Washington, DC, October 11, 2011. Outline. Background on HDVs The regulations Some economic issues Conclusions. Caveat: TO ABRIDGE IS TO LIE. Final rule: 958 pages

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Regulating fuel economy of heavy-duty vehicles (HDVs)

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  1. Regulating fuel economy of heavy-duty vehicles (HDVs) Winston Harrington Alan Krupnick For USAEE Meeting Washington, DC, October 11, 2011

  2. Outline • Background on HDVs • The regulations • Some economic issues • Conclusions

  3. Caveat:TO ABRIDGE IS TO LIE • Final rule: 958 pages • RIA: 391 pages • This presentation: 15 slides

  4. Background on heavy-duty vehicles

  5. Light duty vehicles: 58% Heavy-duty vehicles: 17% Air: 9% Other: 16%  Eliminating diesel CO2 emissions reduces U.S. CO2 by .17*.30 = 5% CO2 vs. miles (LDVs and HDVs): LDVs: 77% of CO2, 90% of miles HDVs: 23% of CO2, 10% of miles Energy use (almost all oil) in transport (2010)

  6. HDV energy losses (Class 8 Combination trailers) Total Gain is 47% * NRC report (2009)

  7. Complex industry-complex products • Purchase engine, vehicle and trailer/body separately  tough for regulation and could be inefficient • Strong secondary market with modifications easy to do  hard to regulate • Strong announcement and new-source bias effects around NOx, PM regs

  8. Regulation

  9. Energy Information and Security Act (EISA) gives NHTSA a mandate to regulate fuel use in HDVs Massachusetts v. EPA (2008) gave EPA the authority/responsibility to regulate CO2 as a criteria pollutant Agencies jointly proposed regulations in Nov. 2010, promulgated in August 2011 Authority

  10. Traditional classification (FHWA): 8 vehicle classes, based on weight 1-2a: Light duty vehicles 2b-8: Heavy-duty vehicles Regulatory categorization (NHTSA/EPA): Class 2b-3 HD pickups and vans (20% of energy use) Class 7-8 Combination vehicles (Semis) (65%) Class 2b-8 “Vocational” vehicles (15%) Basis: duty cycle, energy use, weight, similarities in manufacture/assembly Vehicle classifications

  11. Class 2b-3 HD pickups and vans Regulated like LDVs (whole-vehicle, payload-based attribute regulation) Class 7-8 combination vehicles Separate standards for engines and cabs Subcategorization : 2 engine, 9 cab classifications Vocational vehicles 3 engine-chassis combinations, based on weight Regulatory description

  12. Development of standards • Set baseline for engine and vehicles (e.g., class 8: HD 15-liter engine producing 455 hp); can be based on mfg fleet average • Apply performance-enhancing technologies in order of cost-effectiveness • Set percent reduction equating estimated average cost/ton CO2 across categories (equity?) • Allow trading of emissions credits with banking within vehicle subcategories

  13. HD Pickups and vans With gasoline engines: 12% With diesel engines: 17% Combination vehicles Engines: 6% Vehicles: 10-24%; higher for sleeper cabs (more aerodynamic opportunities) Vocational vehicles Engines: 5-9% Vehicles: 6-9% Regulatory effectiveness in 2018(% reduction in fuel use or CO2 emissions)

  14. Hardware Cost per vehicle (2020): Combination vehicles: $5661 Vocational vehicles: $343 Cost per ton CO2: Combination vehicles: $30 Vocational vehicles: $30 Net cost per ton incl energy savings: Combination vehicles: -$220 Vocational vehicles: -$230 Estimated cost of regulations for combination and vocational vehicles (2008 $)

  15. What’s good and not Good • Redo of categories • Credit trading Not so good • No alternate fuel credits • Technique for setting level of standards. Are marginal costs being equated across categories? • Standards appear too weak, but perhaps understandably so

  16. Broader Issue • The usual problems with new source standards • Rebound effect (5-15%) (plus road damage and accidents) • New source bias • Missed opportunities for existing vehicles • Class shifting • Lack of vehicle innovation incentives  Raise tax on diesel fuel

  17. This is only a first step. Expect further and more expensive regulation Could fix some issues We’d be better off with carbon/diesel taxes or, much less so, feebates Takeaways

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