CAFE/GHG Standard Loopholes Appear

A joint EPA-DOT document ( PDF) explaining the updated national CAFE/emissions standards reveals a number of the new loopholes that will help automakers slip under the seemingly high standard. To kick things off, the EPA/DOT remind the reader that new standards were assembled using “the art of the possible.” to wit:

“There is a wide range of technologies available for manufacturers to consider in upgrading vehicles to reduce GHG emissions and improve fuel economy.7 These include improvements to the engines such as use of gasoline direct injection and downsized engines that use turbochargers to provide performance similar to that of larger engines, the use of advanced transmissions, increased use of start-stop technology, improvements in tire performance, reductions in vehicle weight, increased use of hybrid and other advanced technologies, and the initial commercialization of electric vehicles and plug-in hybrids. Although many of these technologies are available today, the emissions reductions and fuel economy improvements under consideration for the proposal would be expected to involve more widespread use of these technologies across the fleet.”

Unless they don’t feel like it, of course. Loopholes are just as important as technology.

That’s when you flip to heading C (Program Flexibilities for Achieving Compliance). There you learn,

“Under the program being considered for proposal, a manufacturer whose fleet generates credits in a given model year would have several options for using those credits, including credit carry-back, credit carry-forward, credit transfers, and credit trading.”

Got an out-of-compliance model? Who cares! If you replace it with a compliant model, your firm can carry-back those credits to pay for up to 3 years of non-compliant model sales. Or, car fleet compliance credits can pay down truck fleet non-compliance, or vice-versa. Credits can also be banked for five years. Or sold to other manufacturers. Not for any scientific reason of course.

The new system also

“provides a statutory incentive for production of FFVs (Flex-Fuel Vehicles) by specifying that their fuel economy is determined using a special calculation procedure that results in those vehicles being assigned a higher fuel economy level than would otherwise occur. This is typically referred to as an FFV credit… For the GHG program, EPA contemplates proposing to allow FFV credits in line with EISA limits only during the period from MYs 2012 to 2015. EPA will also consider allowing FFV credits beyond MY 2015 if manufacturers are able to demonstrate that the alternative fuel is actually being used in the vehicles. EPA is also considering how that demonstration could be made.”

Because why not? Besides, some manufacturers could evade the whole system if they’re lucky.

“EPA is considering a temporary lead-time allowance for manufacturers whose sale of vehicles in the U.S. in a specified time period is below a specified cut-off, such as sales of 400,000 vehicles or less during a specified year, such as MY 2009 or 2010. This would limit the number of vehicles to which the flexibility could apply. The manufacturers that satisfy the threshold criteria would be able to treat a limited number of vehicles as a separate averaging fleet, which would be subject to a less stringent GHG standard.”

But the best is saved for last. Enter the “Super Credit.”

“EPA is currently considering proposing additional credit opportunities to encourage the commercialization of advanced GHG/fuel economy control technology such as electric vehicles and plug-in hybrid electric vehicles. These “super credits” could take the form of a multiplier that would be applied to the number of vehicles sold such that they would count as more than one vehicle in the manufacturer’s fleet average. EPA is also considering allowing such credits to be generated for years prior to MY 2012.”

Shockingly, “using currently available analyses, EPA and NHTSA do not anticipate any significant noncompliance under the program being considered.” Now why would that be?