FEDERAL FUEL EFFICIENCY AND GHG EMISSION STANDARDS FOR HEAVY-DUTY VEHICLES: PHASE 2 PROPOSAL Matt Spears, U.S. EPA Coralie Cooper, U.S. DOT

SAE INTERNATIONAL

Overview • Heavy-duty truck energy use • Phase 1 program recap • Proposed Phase 2 overview

– Program structure – Benefits

• Next Steps

Overview

2

SAE INTERNATIONAL

U.S. Transportation Sector Energy Use

3

Heavy-duty vehicles are responsible for about one fifth of the energy use and GHG emissions from transportation sources

60%

20%

9%

3% 2%

6%

Light-Duty Vehicles

Heavy-Duty Trucksand Buses

Aircraft

Ships and Boats

Rail

Source: U.S. Energy Information Administration Annual Energy Outlook 2014

SAE INTERNATIONAL

Federal HD Regulation: Phase 1 Standards

4

Phase 1 heavy-duty fuel efficiency and GHG standards began in 2014 First-ever standards for heavy-duty vehicles, will be fully phased in by

2018 A coordinated national program: manufacturers produce a single fleet

to comply with all federal standards *California aligned with Phase 1 federal standards*

Manufacturers are complying with “off-the-shelf” technologies Very cost-effective technologies lead to fuel-savings greater than the

technology cost—all standards “pay back”

Phase 1 implementation in 2014 seemed very successful Market very accepting, no evidence of “pre-buy” Sales higher than before Phase 1 began Some early compliance

SAE INTERNATIONAL

Federal Phase 2 Proposed Standards

5

The Phase 2 program builds on the success of Phase 1, with similar design and vehicle categories – and, for the first time, including fuel efficiency standards for trailers

Heavy-Duty

Large Pickups & Vans 14% of HD Fuel Consumption

and GHG Inventory

Standards in g/mile and gallons/100 miles

Vocational Vehicles 21% of HD Fuel

Consumption and GHG Inventory

Standards in g/ton-mile and gallons/1000 ton-miles

Combination Tractors

65% of HD Fuel Consumption and GHG

Inventory (together)

Standards in g/ton-mile and gallons/1000 ton-miles

Trailers Pulled by Combination

Tractors (currently unregulated Federally)

NEW!

SAE INTERNATIONAL

Phase 2 Program Highlights

6

Proposed Phase 2 standards phase in from 2018 to 2027 Standards would begin in 2018 for trailers and in 2021 for other categories All standards increase incrementally in 2024 and are fully phased in by 2027 Long lead time important for ensuring reliability and durability

Recognizing the unique nature of the industry, the Phase 2

includes important compliance flexibilities to manufacturers, e.g., Averaging, banking and trading program (ABT) 1-year delay for small businesses

Program includes proposed improvements to computer

simulation compliance program to recognize new technologies and better reflect real-world driving

SAE INTERNATIONAL

Significant Testing to Support Phase 2 Proposal

7

3 Years of Engine & Powertrain Testing at EPA, Southwest Research Institute, Oakridge National Lab

Hundreds of Coastdown, CFD and Wind Tunnel Aerodynamic Tests

Tire Rolling Resistance Tests of Hundreds of Tires

Over 500 Heavy-Duty Truck Chassis Tests

SAE INTERNATIONAL

Proposed Phase 2 Program: Advancing Technology

8

Proposed standards are performance-based Manufacturers can choose technology pathway that works best

for their customers

Proposed standards based on widespread deployment of existing and advanced technologies, encouraging the development of a new generation of cleaner trucks Standards developed with extensive stakeholder input, well

over 300 meetings Manufacturers, suppliers, trucking fleets, dealerships, state air quality agencies, non-

governmental organizations (NGOs), and others

SAE INTERNATIONAL

Technologies that could be used to meet Phase 2

9

Vehicle-level Technologies Transmission, and driveline

improvements Aerodynamic devices Lower rolling resistance tires Automatic tire inflation

systems Weight reduction Engine stop start Powertrain hybridization

Engine-level Technologies

Combustion optimization

Improved air handling

Reduced friction within the engine

Improved emissions after-treatment technologies

Waste heat recovery

SAE INTERNATIONAL

Per Vehicle Costs

10

Cost increase shown represents average 2027 vehicle vs. average Phase 1 vehicle Fleet-average standards enable

vehicle market to include a wide range of technology levels and cost impacts

2021 and 2024 standards would lead to gradual introduction of new technology and gradual increase in costs

Projected Average Cost Increase for MY 2027

Vehicle (Relative to 2018 vehicles)

Tractors $11,700 <12% cost increase

Trailers $1,200 <5% cost increase

Vocational Vehicles

$3,400 <5% cost increase

Pick-ups/Vans $1,300 <3% cost increase

*Assumed vehicle prices: $100,000+ for tractors, $25,000+ for trailers, $70,000+ for vocational vehicles and $40,000+ for HD pickups/vans

SAE INTERNATIONAL

Vehicle Paybacks for Proposed Standards

11

Standards would achieve large fuel savings that “pay” for the cost of the technology

Favorable payback periods Purchasers will generally get what they pay

for – bigger fuel savings for purchasers opting for more technology

Customers that finance vehicles may see immediate payback where monthly fuel savings exceed increase in monthly payment

Very quick paybacks for tractors, pick-ups and vans

Vocational Vehicles (buses, refuse trucks, etc.) Vocational paybacks longer because of

fewer miles travelled each year But vocational owners keep trucks longer –

typically values net savings from longer payback periods

Tractors/Trailers 2nd year Vocational Vehicles 6th year Pick-ups/Vans 3rd year

Payback Period for Typical MY 2027 Vehicles

Assumed 135,000 mi/yr new sleeper cab, 71,000 mi/yr new day cab, 20,000 mi/yr new vocational vehicle

Used U.S. EIA Annual Energy Outlook (AEO) Fuel Price Projections

See Rulemaking for details

SAE INTERNATIONAL

Adding It Up: Phase 2 Fuel Savings and Benefits

12

Phase 2 would save operators money, with about $170 billion in fuel savings over the lifetime of the vehicles sold under the program Bringing down the costs of

transporting freight Benefiting both businesses and

consumers The proposed standards would

result in approximately $230 billion in net lifetime benefits, while costing the affected industry less than one-tenth that amount

Proposed Phase 2 MY 2018-2029

(beyond Phase 1) GHG Emissions Reductions

1 billion metric tons (CO2-equivalent)

Reductions in Fuel Use 1.8 billion barrels of oil

Billions of 2012$

Fuel Savings $170

Cost to Industry $25

Net Benefits to Society $230

SAE INTERNATIONAL

Proposed Phase 2 Program: Reducing GHGs

13

The proposed standards would significantly reduce GHG emissions and fuel consumption from heavy-duty vehicles

Over the lifetime of vehicles sold during the regulatory timeframe, Phase 2 would: Cut 1 billion metric tons of

CO2 Save 1.8 billion barrels of oil

600

700

800

900

1000

1100

1200

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

2046

2048

2050

GH

G (M

MT

CO

2eq)

Calendar Year

Phase 1 Reduction Phase 2 Proposal Reduction

Annual GHG Reductions from Adding Phase 2 Proposal to Existing Phase 1

SAE INTERNATIONAL

July 2015 Transport and Environment Report

14

HD Phase 2 “will make US trucks the most technologically advanced and fuel efficient in the world” and will be “the world’s most advanced and comprehensive regulatory framework”

SAE INTERNATIONAL

Phase 2 Collaboration

15

An important goal of Phase 2 is to propose federal standards that would help manufacturers continue to build a single fleet of vehicles and engines The proposed program fully harmonizes EPA and

NHTSA standards EPA and NHTSA worked closely with the California

Air Resources Board on the proposal All three agencies are committed to the final goal of

a single national program

SAE INTERNATIONAL

Next Steps

16

Phase 2 comment period closed on October 1, 2015 EPA and DOT will incorporate

stakeholder and public feedback into the final program, as well as continue collaboration with CARB

SAE INTERNATIONAL

Appendix

Paper # (if applicable) 17

SAE INTERNATIONAL

Combination Tractors Standards differ by vehicle weight class, roof height, and cab type New for Phase 2: separate standards for heavy-haul tractors (i.e., combined weight

rating over 120,000 lbs)

Trailers Pulled by Combination Tractors Standards apply to certain trailer types in 2018 and extend to more types in 2021. The 2027 standards apply to: Long-box highway (dry and refrigerated); short-box highway (dry and refrigerated);

non-box highway

Pickups/Vans Like Phase 1, standards in the form of target curves based vehicle’s payload, towing

capabilities, and 4-wheel drive Average emission and fuel consumption rates applicable to each manufacturer depend

on the manufacturer’s sales mix

Proposed Phase 2 Standards: Segment Details

18

SAE INTERNATIONAL

Vocational Vehicles Proposing subcategories based on vehicle weight class and driveline specs: Regional,

Multi-Purpose, Urban Separate vehicle standards depending on whether engine is SI or CI Separate standards for emergency vehicles Requesting comment on how to structure Phase 2 for specialty vehicles such as motor

homes & buses

Engines Like Phase 1, proposing separate standards for tractor and vocational engines Proposing a revised test cycle weighting for tractor engines to better reflect actual in-use

operation

Other For natural gas-fueled vehicles, largely continuing the Phase 1 approach but proposing

to require additional on-vehicle evaporative and refueling controls to prevent natural gas leaks We are not proposing new NOx standards

Proposed Phase 2 Standards: Segment Details

19

SAE INTERNATIONAL

Proposed Phase 2 Final Target Reductions

20

a Compared to Phase 1 b Compared to an average 2017 trailer c Engine reductions also included in vehicle standards – not additive; vehicle standard includes an additional 4% for engine downspeeding

Category CO2 Emissions and Fuel Consumption Reductions in

2027 Combination Tractorsa up to 24% Trailers Pulled by Combination Tractorsb

up to 8%

Vocational Vehiclesa up to 16% Pickups/Vansa up to 16% Enginesa up to 4%c

SAE INTERNATIONAL

Maintains basic Phase 1 structure for tractors Engine standards GEM-based vehicle standards

But incorporates engines, transmissions, and axles into GEM New tractors standards would phase in – 2021, 2024, 2027,

with ABT Continues the Phase 1 manufacturer-based emissions credit

averaging, banking and trading programs 1-for-1 Phase 1 credit use allowed in Phase 2 5-year credit lifetimes and 3-yr debt flexibilities

Adds heavy-haul tractor subcategory without any sales cap (>120,000 GCWR)

Technology-forcing standards – but more than one technology path should be available

Summary of the Tractor Program

21

SAE INTERNATIONAL

2021 2024 2027

Incremental Unit Cost

(Unweighted) MY 2027

Baseline Penetration

Percent Reduction by Subcategorya

9 -13% 15-20% 18-24%

Average Incremental Cost Increasea

$5,000-$8,000 $8,000-$11,000 $10,000-$13,000

Technology Penetration AMT/Auto/DCT

55% 80% 90% $3,795 0%

Technology Penetration WHR 1% 5% 15% $8,931 0%

Technology Penetration APU 80% 90% 90% $4,327 30%

Engine Improvements 1.5% 3.7% 4.2% $1,698 -

Overview of Tractor Technology

22

a Costs and reductions relative to Phase 1 (baseline)

SAE INTERNATIONAL

Separate subcategories for: Long box (longer than 50 feet) dry vans Long box (longer than 50 feet) refrigerated vans Short box (50 feet and shorter) dry vans Short box (50 feet and shorter) refrigerated vans Non-box trailers Four-step phase in of standards SmartWay Basic-type standards in 2018 Intermediate standards in 2021 and 2024 Final standards in 2027 Follows same basic structure as

tractors Certification by trailer manufacturer Simpler equation-based approach, no GEM Averaging (but not banking or trading) for box trailers

Summary of the Trailer Program

23

Long Dry Van Standards 2018 2021 2024 2027

Percent reduction from conventional dry box van

6% 8% 10% 12%

Cost relative to conventional dry box van

$1,422 $1,716 $1,932 $2,232

Relative to projected baseline assuming significant use of skirts

Percent reduction from average baseline dry box van

2% 4% 6% 8%

Cost relative to average baseline dry box van

$588 $901 $1,116 $1,409

SAE INTERNATIONAL

Duty Cycle Transient % 55 mph Cruise %

65 mph Cruise %

Idle/Driving

Regional 50 28 22 10/90 Multi-Purpose 82 15 3 15/85 Urban 94 6 0 20/80

Vocational Duty Cycles and Segmentation

24

Default is Multi-Purpose. Regional if engine speed @ 65 mph < 75% (CI)/45% (SI) of max engine test speed Also intercity buses, motor homes, and vehicles with SET-certified

engines

Urban if engine speed @ 55 mph > 90% (CI)/50% (SI) of max engine test speed Also vehicles with hybrid powertrains

SAE INTERNATIONAL

2021 2024 2027 Incremental Unit

Cost (Unweighted)

MY 2027

Vehicle Percent Reduction by Subcategorya 4-7% 7-12% 13-17%

Average Incremental Package Cost Increaseb $570-$3,400 $820 - $4,830 $1,400 - $7,420

Diesel Engine Percent Reduction 2% 3.5% 4% $440 - $470 Technology Adoption: Driveline Integration (powertrain test) 15% 30% 70% $315

Technology Adoption: Improved Tire Rolling Resistance

Steer 80% 6.9 Drive 50% 7.3

Steer 60% 6.5 Drive 30% 6.9

Steer 50% 6.2 Drive 15% 6.5 $150 - $250

Technology Adoption: Workday Idle Reduction 70% neutral idle 85% NI

15% stop-start 30% NI 70% SS

$10 $710 - $1,370

Technology Adoption: Hybrids (powertrain test) 4% for MP and Urban 7% for MP and Urban 18% for MP and Urban $11,790 - $30,950

Technology Adoption: Axle Improvements 75% advanced lubes, 45% 6x2 for HHD-R

75% advanced lubes, 60% 6x2 for HHD-R

75% advanced lubes, 60% 6x2 for HHD-R

$110 - $170 $120

Technology Adoption: Weight Reduction 4-7% 4-7% 5-8% $580

Overview of Vocational Vehicle Technology

25

a Costs and reductions relative to Phase 1 (baseline). b Package costs include $20 for technology to reduce HFC leakage from air conditioning systems.

SAE INTERNATIONAL

EPA is proposing new requirement to meet current engine standards for 2018 and later gliders

Not banning gliders

Grandfather existing small business, subject to sales caps: Small businesses currently producing LESS than 300 per year could continue at

current production rates without meeting new requirements Small businesses currently producing MORE than 300 per year could continue

producing up to 300 per year without meeting new requirements Additional sales would need to be fully compliant

Asking for comment on offering more or less flexibility NHTSA also asking for comment on gliders

EPA Glider FAQ available on EPA Website

Glider Kits

26