EPA, NHTSA propose rule that could impact FFVs

By | September 15, 2009
Report posted Sept. 17, 2009, at 5:50 p.m. CST

The U.S. EPA and National Highway Traffic Safety Administration have released the proposed rule for a new program aimed at light-duty vehicles that aims to reduce greenhouse gas (GHG) emissions and improve fuel economy. In the rulemaking, EPA proposes certain GHG emissions standards under the Clean Air Act, while NHTSA proposes new Corporate Average Fuel Economy standards be implemented under the Energy Policy and Conservation Act.

As authorized by the EPCA, the CAFE program provides incentives for automobile manufactures to produce flexible fuel vehicles (FFVs) and dedicated alternative fuel vehicles. Most FFVs are designed to be capable of operating on both gasoline and E85, while dedicated alternative fuel vehicles are designed to operate exclusively using an alternative fuel, such as compressed natural gas. Under the program, the production of FFVs provides credits toward meeting the CAFE standard. The EPCA phases out these credits for FFVs until model year (MY) 2019, after which time they are no longer available to help demonstrate CAFE compliance. EPCA, however, does not phase out the credit for dedicated alternative fuel vehicles.

For its GHG reduction program, the EPA is proposing to allow FFV credits to be generated as they are under the CAFE program for MY 2012 through MY 2015. After MY 2015, the EPA proposes to allow FFV credits only when the vehicle manufacturer can demonstrate that alternative fuel is actually being used in the FFVs.

Under the EPCA, which would govern how the FFV credits are treated by the EPA's GHG reduction program for MYs 2012-2015, the availability of the FFV credit is not based on actual use of alternative fuel, such as E85. Rather, it is assumed that a FFV operates 50 percent of the time on alternative fuel, and 50 percent of the time on conventional fuel. Carbon dioxide emissions for the vehicle are computed using an equation established in the EPCA which results in a carbon dioxide emissions value that is significantly lower than it would actually be. According to information provided by the EPA, this artificially low value for carbon dioxide emissions represents the credit provided to FFVs used to show compliance with CAFE standards.

The EPA is proposing to use this equation to establish credits for the GHG reduction program through MY 2015. Starting with MY 2016, the vehicle manufacture would be required to demonstrate how much alternative fuel is actually being used by FFVs in order to gain any extra credit towards meeting the GHG reduction standards. Furthermore, FFV emissions levels would be based on actual emissions tests that would be completed with the alternative fuel.

In the rulemaking, the EPA proposes several options that could be used to allow vehicle manufactures to demonstrate alternative fuel use. One would be a top-down approach based on national E85 usage levels. Under this approach, national E85 volumes and national FFV sales would be used to pro-rate E85 use based on manufacturer sales volumes and FFVs already in use. The EPA would use its emission inventory MOVES model to analyze vehicle miles traveled by year for all FFVs and use vehicle miles traveled ratios and E85 sales to assign E85 usage to each vehicle. These figures would be adjusted on an annual basis.

According to the EPA, the ability to generate GHG reduction credits through the demonstration of alternative fuel use would provide an actual incentive for alternative fuel use. In addition, the agency said there is currently little incentive for vehicle manufactures to optimize FFVs to alternative fuel use, and that this program could offer an incentive for car makers to optimize FFV engines and calibration to provide additional carbon dioxide reductions.