Regulatory Support Document
Revised Gaseous Emission Regulations
for 1985 and Later Model Year Heavy-Duty Engines
July 1983
Prepared By
Office of Mobile Sources
Emission Control Technology Division
-------
Regulatory Support Document
Revised Gaseous Emission Regulations
for 1985 and Later Model Year Heavy-Duty Engines
July 1983
Prepared By
Office of Mobile Sources
Emission Control Technology Division
-------
Regulatory Support Document
Revised Gaseous Emission Regulations
for 1985 and Later Model Year Heavy-Duty Engines
July 1983
Prepared By
Office of Mobile Sources
Emission Control Technology Division
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-i-
Table of Contents
Page
1. Economic Impact
I. introduction 1-1
II. The Financial Ability of the Regulated
Industry to Comply with the Original
HDE Final Rulemaking . 1-4
A. General Economic Conditions
1979-82 1-4
B. Discussion of Individual
Manufacturers 1-7
C. Summary and Conclusions 1-14
III. Cost of Implementing the Original
Final Rulemaking 1-14
A. Per-Engine and Aggregate Cost
Estimate for the Original FRM 1-15
B. Capital Cost Estimate for the
Original FRM 1-17
IV. Costs of the 1985 Interim Standards 1-20
A. Non-Catalyst Technology
Compliance Costs 1-21
B. Cost Comparison: Interim
Standards vs. Original FRM . 1-30
V. Cost and Savings Associated with the
1987 Split-Class Approach 1-34
A. Costs Associated with the 1987
and Later Model Year Split-Class
Approach 1-35
B. Savings Due to Implementation of
the Split-Class Approach 1-42
VI. Savings of Combined Interim
Standards/Split-Class Approach
Over the Original FRM 1-45
A. Capital Cost Savings 1-45
B. Savings in Cost to Consumer 1-45
C. Savings in Aggregate Costs 1-49
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Table of Contents (cont'd.)
Page
2. Environmental Impact
I. Emission Rates and Lifetime Emissions 2-1
A. Introduction 2-1
B. Methods of Calculation 2-3
C. Heavy-Duty Gasoline-Fueled
Engines (HDGEs) 2-5
D. Heavy-Duty Diesel Engines HC
Emissions 2-8
II. Emission Inventory 2-10
III. Ambient Air Quality Analysis 2-11
A, Ozone 2-14
B, Carbon Monoxide 2-18
IV. Lead Emissions 2-18
3. Useful Life Cost Effectiveness and Air
Quality Impacts 3-1
I. Introduction 3-1
II. Cost Effectiveness 3-1
A. Quantitative Aspects 3-1
B. Qualitative Aspects . 3-11
C. Comparison of Cost Effective-
ness of Full Life with Other
Emission Control Strategies 3-12
III. Air Quality Analysis 3-16
A. Emission Inventory 3-16
B. Air Quality Levels . . 3-16
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Introduction
EPA promulgated gaseous emission regulations for 1984 and
later model year heavy-duty engines (HDEs) in December 1979,
and similar regulations affecting 1984 and later model year
light-duty trucks (LDTs) in September 1980. Major provisions
common to both actions included statutory HC and CO emission
standards, revised useful-life definitions, revised durability
testing and allowable maintenance certification requirements,
an idle test and idle emission standard for gasoline-powered
LDTs and gasoline-fueled HDEs,. and implementation of a 10
percent Acceptable Quality Level for Selective Enforcement
Audit (SEA) testing. The HDE rulemaking also implemented new
emission test procedures and the basic SEA program for HDEs.
In the economic analysis supporting the original 1984 HDE
rulemaking, EPA found that "[m]ost engine manufacturers should
have little difficulty financing the required investments,
barr ing a post-1980 recession" (emphasis added). However, a
¦general economic downturn occurred in late 1979, and in
general, 1980 was a year of record losses for the industry.
The aftereffects of this recession persisted through 1981 and
1982 for most manufacturers.
In response to this economic crisis in the industry and
the need for short-term cash flow improvements, the
Administration undertook a number of regulatory reform
initiatives. Preliminary analyses indicated that several
portions of the 1984 LDT/HDE final rulemakings requiring
substantial investment could be relaxed without significant
losses of emission reductions and air quality improvements
expected from those rules. Some of these actions were
finalized in a January 1983 rulemaking. The present rulemaking
finalizes revisions to the original regulations which were not
addressed in the January 1983 final rulemaking.
The three chapters of this document contain several
analyses in support of the rulemaking. The first, "Economic
Impact," is subdivided into sections dealing with the financial
ability of the manufacturers to comply with the original HDE
final rules, the costs of both the original rules and the
interim standards and split-class approach contained in these
rules, and the savings associated with this rulemaking relative
to the original rulemaking. The second, "Environmental
Impact," analyzes the impact of this rulemaking on per-vehicle
lifetime emissions, decreases in emission inventories and
resulting air quality benefits, and lead emissions. The last
chapter, "Useful Life Cost-Effectiveness and Air Quality
Impacts," analyzes the emission reductions and air quality
improvements attributable to full-life useful-life, and the
cost-effectiveness of these environmental benefits.
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CHAPTER 1
ECONOMIC IMPACT
I. introduction
This rulemaking implements new interim HC and CO emission
standards for 1985-36 heavy-duty gasoline engines (HDGEs) and
longer term HC and CO standards under a "split-class" approach
for 1987 and later model year HDGEs. The interim standards are
established at non-catalyst levels for HDGEs. The 1987 and
later split-class approach will require the statutory HC and CO
standards for Classes IIB and III HDGEs (HDGEs used in vehicles
under 14,000 lbs. GVW), while all other HDGEs will be required
to meet the same standards as applied in the 1985-86 period.
Without this action, the catalyst-forcing HC and CO statutory
standards would become effective for all HDGEs beginning in
1985. This chapter will examine the costs of the interim
standards and the 1987 and later split-class approach. These
costs will be compared to the costs of compliance of the
original 1984 heavy-duty engine (HDE) Final Rulemaking (FRM)
promulgated in December 1979.
Nearly all of the compliance cost assumptions used in the
December 1979 cost analysis[l] have been updated with the
latest information. The hardware cost estimates used in this
analysis were developed in an EPA staff paper,[2] which was
distributed for public comment on March 16, 1983. The updated
capital cost estimates were also presented earlier in the draft
support document to the proposal of this regulation.[3] This
analysis will also update capital costs from the 1979
regulatory analysis. Thus, whenever this chapter refers to the
costs which would have been incurred had the original FRM been
retained, it is referring to these updated costs.
All cost figures used in this analysis are expressed in
1983 dollars unless otherwise noted. Note that the original
cost estimates used in the regulatory analysis were expressed
in December 1979 dollars, while the draft support document and
the staff paper were expressed in 1981 and 1982 dollars,
respectively. For this analysis, these costs (except fuel)
have been updated to 1983 dollars by using average annual
inflation rates of 10.6, 13.4 and 6.5 percent for 1980, 1981
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and 1982, respectively.* Fuel costs in this analysis will be
based upon current 1983 prices.
Sales projections are also updated from those developed in
the 1979 regulatory analysis.** Separate sales projections for
Classes IIB and III vehicles and Classes IV through VIII
vehicles are presented in Table 1-1 for model years 1985-89
inclusive, the first five years of this rulemaking. These
updated sales are based upon total HDV sales estimates and
diesel HDV sales penetration rates obtained from a compilation
of manufacturers' estimates. Total HDV sales were obtained
from a study performed by Data Resources, incorporated.[6]
(These latest projections are consistent with those used in the
March 16, 1983 EPA staff paper.[2])
This chapter is divided into five main sections. in the
first section, the financial ability of the regulated industry
to comply with the original FRM requirements is examined. in
the second section, the cost implications of retention of the
original FRM are reviewed. in the third section, the costs of
the 1985 interim standards are analyzed to identify and
quantify the savings associated with that action over the costs
of the original FRM. in the fourth section, the costs and
savings of the split-class approach to the 1987 and later
* The inflation rates were determined from the producer
price index (PPI) for trucks. The PPI is given by the
Bureau of Labor Statistics for trucks 10,000 lbs. gross
vehicle weight (GVW) and under (inflation rates are 9.1,
14.0, and 5.3 percent for 1980, 1981, and 1982 dollars,
respectively), and 10,001 lbs. GVW and over (inflation
rates are 12.1, 12.8, and 7.6 percent for 1980, 1981, and
1982, respectively).[4] Heavy-duty trucks that weigh less
than 10,000 lbs. GVW are typically Class IIB vehicles,
while trucks greater than 10 ,000 lbs. GVW are Classes III
through VIII vehicles. Recent sales data shows that there
were approximately the same number of Class IIB vehicles
as Classes III-VIII vehicles sold each year between
1980-82. [5] Therefore, the average fleetwide inflation
rates were estimated by assuming a 50-50 split between the
two groupings for the years 1980-82.
** The sales projections of heavy-duty gasoline vehicles
(HDGVs) affect the determination of many costs. These
costs include fixed costs allocated on a per vehicle
basis, and costs affected by factors such as the learning
curve and economies of scale for production of emission
control hardware. Sales projections also affect the
estimates for aggregate costs.
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Table 1-1
Projected Sales of Heavy-Duty Gasoline Engines
Classes I1B-III Clauses IV-VIII
1985 234,390 96,160
1986 247,296 97,888
1987 256,662 97,777
1988 266,724 97,512
1989 267,791 93,696
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model year HDGE standards are presented. In the last section,
the per engine and aggregate costs of both the 1985 interim
standards and 1987 split-class approach are compared to those
of the original FRM to determine the net impact of this entire
rulemaking.
II. The Financial Ability of the Regulated industry to Comply
with the original hde Final Rulemaking
A. General Economic Conditions, 1979-82
At the time the 1984 heavy-duty engine (HDE) regulations
were being developed (1978-79), the HDE industry was
experiencing record sales (see Table 1-2). Based on that
performance, it was generally believed that the industry would
have little trouble underwriting the capital investments
necessary for implementation of the new regulations. The bulk
of this investment was expected in the 3-year period from
January 1980 through December 1982. However, a sharp economic
reversal took place in late 1979 and carried through 1980, 1981
and into late 1982. Worldwide recession, along with high
interest rates and "sticker shock," led to greatly reduced
sales for the domestic automotive industry (see Table 1-2).
Total light and heavy truck sales dropped about 54 percent
between 1978 and 1981. More significantly, passenger car sales
fell 30-32 percent below 1978 levels in 1980-81. Although
light-duty truck (LDT) sales rebounded slightly (4 percent) in
1981, three of the four heavy-duty gasoline-powered vehicle
(HDGV) manufacturers (GM, Ford and Chrysler) are primarily
producers of light-duty passenger vehicles (LDVs) and,
therefore, the increases in LDT sales were far outweighed by
the continued slump in LDV sales. as a result of the sales
decline, the automotive industry as a whole lost more than $4
billion in 1980 and $1.7 billion in 1981, including some of the
biggest individual losses ever recorded for U.S. corporations
(see Figure 1-1).[7,8,9]
To improve their product mix, counter foreign competition,
and increase fuel economy the industry also made over $20
billion in plant and equipment expenditures during 1980 and
1981, despite the large decrease in sales. The resulting
negative cash flow necessitated increased long-term and
short-term borrowing. The high interest rates involved further
exacerbated the situation. to stimulate sales, the industry
resorted to rebates and other sales incentives, which again
tended to diminish profits. Faced with unsold inventories, car
and truck manufacturers cut production and instituted employee
layoffs. Economic concessions were also granted to the
manufacturers by organized labor. These actions resulted in
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1-5
Table 1-2
Factory Automotive and Truck Sales {1978—82) [-1]
Year LDV Sales LDT Sales HDV Sales
1978 9,165,190 3,044,890 661,349
% Change From -0.4% +6% +18%
1977 Sales
1979 8,419,226 2,464,632 572,074
% Change From -8% -19% -13%
1978 Sales
1980 6,4 00,0 26 1,310,264 357,019
% Change From -24%/-30% -47%/-57% -38%/-46%
1979/78 Sales
1981 6,255,340 1,365,906 335,002
% Change From -2%/-32% +4%/-55% -6%/-49%
1980/78 Sales
1982 5f461,074[2] 1,625,90213] 279,537[3]
% Change From -12%/-40% +19%/-47% -17%/-58%
1981/78 Sales
[1] MVMA Motor Vehicle Facts and Figures 1982, pp. 9 and 12.
[2] Ward's Automotive News, February 28, 1983, p. 4.
[3] MVMA Factory Sales and Figure Fact Sheets, 1982.
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1-6
Figure 1-1
4 T
Net Income for HDG Manufacturers[l]
1979-1981
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Faucett
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1-7
decreased costs but also helped deepen the recession and added
to the uneasiness on the part of the buying public, further
decreasing the demand for their products.
As a result of the cost-cutting measures, the record
losses for 1980 decreased in 1981 and GM even showed a modest
net profit. However, net profit does not necessarily represent
income from current operations (current sales revenues less
current expenses). As will be explained in detail later, GM's
net profit resulted from tax credits rather than current
operations. Indeed, 1981 sales were still 55 percent lower
than 1978 levels. As seen in Table 1-2, HDV and passenger car
sales continued to decline throughout 1981, although not as
precipitously as in 1979 and 1980 . Thus, the 1981 "recovery"
resulted from a reduction in costs and from tax credits due to
prior-year losses, rather than from increased sales.
Thus, the HDGE manufacturers, after experiencing record
sales in the period of 1978-79, suddenly faced declining sales
and operating income losses due to the worldwide recession. In
addition, the industry expended $20 billion in 1980-81 in
capital expenditure for plant and equipment necessary to
improve their competitive position. The result was a negative
cash flow which increased their debt financing at a rate much
higher than expected. Clearly, the financial status of the
HDGE industry had weakened substantially.
For 1982, market conditions and sales continued to be
depressed.[10,11,12] As shown in Table 1-2, LDVs sales were
down 12 percent and HDVs were down 17 percent from the previous
year. LDT sales increased 19 percent, but annual sales since
1978 were still down almost 50 percent. With the continuation
of depressed sales, the financial picture did not improve in
1982 for GM, Chrysler, Ford, or IH, as explained in greater
detail below.
B. Discussion of Individual Manufacturers
1. International Harvester Company (IHC)
IHC produces medium-duty and heavy-duty trucks and, except
for the 1980 model year, has been the sales leader in those
clasises. The company stopped production of LDTs late in 1980,
and so did not share in the recent sales increase in that class
experienced by the other three producers. Medium-duty and
heavy-duty sales have decreased by 53 percent and 30 percent,
respectively, from 1978 levels, and combined with a disastrous
labor strike in early 1980, have subjected the company to
severe financial distress. In fact, IHC has been on the verge
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1-8
of bankruptcy for the past two years and has undergone a recent
debt restructuring in an effort to forestall this possibility.
Figure 1-1 shows the decline in IHC profits. IHC lost
$397 million in 1980 and experienced a similar loss in 1981.
The 1981 loss from continuing operations was actually $636
million, but this loss was partially offset by a $243 million
credit from the sale of discontinued operations.[ 13] IHC also
made substantial capital investments in product development/
which constituted another drain on working capital. Indeed,
net working capital decreased by almost 40 percent from 1979-81
(see Figure 1—2 J r but the decrease would have been even more
dramatic without the sale of assets and a massive increase in
long-term bprrowing. Long-term debt increased from $948
million in 1979 to almost $2 billion in 1981, an increase of
over 100 percent (see Figure 1-3). IHC is a highly leveraged
corporation, as is indicated by a debt/equity ratio of 2.56.
Consequently, the company is highly vulnerable to cyclical
swings in the economy than would those of a less highly
leveraged firm such as Ford or GM.[14] IHC's weak financial
position necessitated its recent debt restructuring.
Shortly after the revised non-catalyst standards were
proposed in January 1982, IHc publicly announced its intention
to withdraw from the HUGE market whenever the new standards and
test procedure became effective. HDGEs represent only about
2.5 percent of IHc's total revenue, and this market was
shrinking due to increasing dieselization of medium-duty and
heavy-duty fleets.[15,16] IHc therefore decided to withdraw
from the HDGE market because of their belief that very small
payoffs would be achieved from further investments in HDGEs.
IH requested only that EPA provide 1-year delay of the new
standards and test procedures to allow them to make a more
orderly withdrawal from the market.
In 1982, IHC lost more money than in previous years, a
total of $1.6 billion, due in large measure to a $394 million
loss from discontinued operations and $440 million in debt
restructuring costs.[12] IHC's 1982 dollar sales were 30
percent less than those of 1981. Thus, their financial
position has deteriorated even further.
2. Chrysler Corporation
Chrysler has also faced a struggle for economic survival.
In addition to seeking Federal loan guarantees, the company has
been forced to sell off assets and undergo a $1.3 billion debt
restructuring.[18] In 1980, Chrysler sustained the largest
loss ever recorded by a U.S. corporation, $1.7 billion, which
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1-9
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1979-1981
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1-10
Figure 1-3
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HDGE Manufacturers",
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1-11
followed a loss of $1.1 billion in 1979 and preceded a loss of
$476 million in 1981 (see Figure 1-1). Chrysler has
experienced severe cash flow problems; in fact, its net working
capital was negative in 1979 and 1980 (see Figure 1-2), and
only recovered in 1981 after debt restructuring. In 1981,
Chrysler had to depend on the liquidity of its inventories to
cover 66 percent of its current liabilities (see Table 1-3).
At the time revised non-catalyst standards were proposed,
Chrysler also publicly announced intention to withdraw from the
HDGE market, since the minimal percentage of total sales
represented by HDGEs did not justify the investment. With the
recent slowing in the rate of dieselization, however, it
appears that the demand for gasoline-powered HDVs may be
greater than Chrysler anticipated, at least in the foreseeable
future. Chrysler has, in fact, already made public that it is
reconsidering its decision to leave the HDGE market.
In 1982, Chrysler's unit sales declined 7.9 percent, from
1.28 million in 1981 to 1.18 million in 1982.[11] However,
Chrysler posted a profit of $170 million, attributable
primarily to the divestiture of Chrysler Defense, which was
sold to General Dynamics for $239 million, and cost reduction
measures which reduced Chrysler's breakeven point (i.e., number
of sales units needed to recover annual fixed expenses) to 1.1
million units in 1982 compared with 2.4 million units three
years earlier.[11] Therefore, Chrysler's profit resulted from
decreasing its production costs and selling its defense unit
rather than from improved market conditions.
3 . Ford Motor Company
Ford's losses were $1.5 billion and $1.1 billion,
respectively, in 1980 and 1981. These were the second and
fourth highest losses ever recorded for a U.S. corporation,
after it had shown a profit of $1.2 billion in 1979 (see Figure
1-1). As shown below, the North American operation was largely
responsible for the lack of profitability, showing net losses
in all three years while the overseas portion of the
corporation showed a net profit during the same period.[19]
1979
1980
1981
U.S. & Canada
European & Other Overseas
(208)
1,377
(2,119)
576
(1,447)
387
Total Net Profit (Loss)
1,169
(1,543) (1,060)
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1-12
Table 1-3
HDGE Manufacturers Liquidity Ratios (1979-81)[1]
(1) Current Ratios: Current Assets/Current Liabilities
Manufacturer 1979 1980 1981
General Motors 1.68 1.29 1.09
Ford 1.25 1.04 1.02
Chrysler 0.97 0.94 1.08
IHC 1.74 1.41 1.48
(2) Quick (acid test) Ratios: Most Current
Assets!2]/Current Liablities
Manufacturer 1979 1980 1981
General Motors 0.81 0.61 0.40
Ford 0.53 0.50 0.47
Chrysler 0.34 0.26 0.34
IHC 0.28 0.31 0.52
[1] "Financial Analysis of the HDGE Manufacturers," Jack
Faucett Associates, pp. 13, 21, 28, 36, 1982.
[2] Cash, receivables, and marketable securities.
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Profits from the overseas operations helped fund a $4.8
billion capital expenditure program designed to bring Ford's
domestic product mix more in line with consumer demand.
Nevertheless, Ford was forced to undertake considerable
long- and short-term debts to finance these capital
expenditures. The effect was to reduce working capital, which
had been over $2 billion in 1979, to only $347 million in 1981,
or a reduction of almost 85 percent (see Figure 1-2). As a
result, Ford's ability to meet current obligations declined, as
reflected in the current ratio shown in Table 1-3, which fell
from 1.25 in 1979 to 1.02 in 1981. Ford's quick ratio, another
measure of the ability to service current obligations, was .47
in 1981, meaning that less than 50 percent of current
liabilities could be covered by current assets.
For 1982, Ford continued to show a loss, posting a $658
million deficit. This loss was $402 million less than the
previous year, but the decrease in cost is partially attributed
to reductions in operating costs and adoption of a new
accounting method which reflected the absence of
foreign-currency transaction losses. Ford's 1982 dollar sales
declined 3 percent from 1981 and unit sales were down 2 percent
from 1981.[12]
4. General Motors Corporation
General Motors, the largest auto manufacturer in the
world, did not escape the effects of the recession. GM's net
income (after taxes) declined from a $2.9 billion profit in
1979 to a $763 million loss in 1980, and recovered to a $333
million profit in 1981.[16] The $763 million loss in 1980 (see
Figure 1-1) was the fifth largest ever recorded for a U.S.
corporation; the profit in 1981, however, was largely
attributable to carryforward of tax credits from the previous
year's loss and to the success of its financing and insurance
operations, rather than from sales. GM also made large capital
expenditures to improve its product mix: a total of $3.5
billion in 1980 and 1981. Although GM traditionally avoids
debt by financing capital expenditures from current operations,
it was forced to borrow almost $3 billion in those years (see
Figure 1-3). Even this amount did not cover the cash flow
deficit, however, resulting in a decrease in working capital
from $6.8 billion in 1979 to $1.2 billion in 1981 (see Figure
1-2).. GM's current assets (i.e., cash, receivables and
marketable securities), which were sufficient to cover 81
percent of its current obligations in 1979, would only cover 40
percent in 1981.
For 1982, GM showed a profit of $963 million. [10] Their
earnings increased compared with 1981, but the automobile and
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1-14
truck manufacturing operations either lost money or showed only
a small profit for the year. GM's overall operating income did
show a profit/ but much of this was due to accounting credits
given for currency exchange, tax credits, and cost reductions.
On the other hand, sales declined from the previous year.
Worldwide factory sales were 6.24 million cars and trucks, down
7.7 percent from 1981 and the lowest unit sales since 1976.
C. Summary and Conclusions
Financial analysis of the four corporations involved in
the HDGE industry clearly indicates that the financial
condition of the industry was depressed in 1980 through 1982,
the years in which the initial capital outlay would have been
required for the 1984 statutory standards. GM and Ford both
showed large drops in sales and significant losses in income
from operations, and increased their debt financing well beyond
normal. Chrysler and IHC posted large losses in operating
income and net income, and both were on the verge of
bankruptcy.
Depressed sales in the motor vehicle industry forced
massive borrowing and eroded the domestic manufacturers'
ability to underwrite the necessary capital investment for the
1984 statutory standards. In the regulatory analysis to the
original final rulemaking, it was stated that the 1984
statutory standards were economically feasible for the
manufacturers, barring any post-1980 recession. Considering
that the financial status of the heavy-duty industry had been
weakened severely in the 1980-82 timeframe, compliance with the
statutory heavy-duty HC and CO emission standards in 1984
represented much mote of a burden than it would have had
economic conditions remained constant.
Section 202(a)(3)(k) of the Clean Air Act of 1977 provides
that the Administrator may revise an emission standard for a
specific period of time if he finds "...that compliance...
cannot be achieved...without increasing cost or decreasing fuel
economy to an excessive or unreasonable degree..." Given that
compliance with the 1984 statutory, standards would involve
large capital expenditures at a time when the industry was
under severe economic strain, EPA believes that revisions to
the 1984 standards and their timing are appropriate. With the
apparent improvement in market conditions for 1983, the
promulgation of the standards as provided by this rulemaking
should be economically feasible for the HDGE manufacturers.
Ill. Cost of Implementing the Original Final Rulemaking
The costs which would have been incurred had the original
FRM been retained will be analyzed in this section. The costs
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1-15
to be determined are per engine costs, aggregate costs, and
capital costs. These costs will be compared later in this
chapter to the costs of the interim standards and the
split-class approach.
A. Per-Engine and Aggregate Cost Estimates Cor the
Original FRM
In support of the 1979 final rule, EPA performed an
economic analysis to determine the aggregate cost and first
price impact of the regulations. [ 1] As stated in the
Introduction, most of these costs have since been updated in
the EPA staff paper, and these updated costs will be used
here.[2,3] (Detailed derivations of the costs are presented in
the staff paper and supporting analyses.)
The staff paper presented vehicle/engine costs in two
categories: those related to non-catalyst technology and those
related to catalyst technology. The non-catalyst related
development and hardware costs include the automatic choke,
early fuel evaporation, heated air intake, increased air
injection, EGR, air modulation, and carburetor/engine
modifications. In 1983 dollars, these costs total $113. The
catalyst-related costs were separated in the staff paper for
Classes IIB-III vehicles and Classes IV-VIII vehicles, because
application and cost of catalyst technology differ between the
two groups of vehicles. For CLasses IIB-III vehicles,
components to the catalyst control system include the oxidation
catalyst, stainless steel exhaust pipe, chassis heat shields,
and fuel restrictors. Also, the engines in these vehicles will
require minor modifications to use unleaded fuel. The total
costs of these components and modifications, plus the amortized
certification costs for these vehicles, amounted to $155.[2]
For Classes IV-VII vehicles, the first price cost increase is
estimated to be about $550.[2] This cost is greater than that
for Classes IIB and III vehicles because of the need for a more
durable oxidation catalyst, a catalyst protection system, and
additional research and development- (R&D) to develop such
systems. A weighted average first price increase for
catalyst-related control technology would be $270 for all
HDGEs, assuming that 70 percent of all HDGEs soTd between
1985-89 will be Classes IIB and III (based upon the 1985-89
sales figures shown in Table 1-1). The total first price
increase of both catalyst and non-catalyst control would be the
sum of $270 and $113, or $383.
Operating costs will increase for catalyst control systems
because of the use of unleaded gasoline instead of leaded
gasoline. Assuming a $0.03 per gallon fuel differential, the
staff paper estimated this cost to be $218 for Classes IIB-III
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1-16
vehicles and $469 for Classes IV-VIII vehicles (discounted at
10 percent to the year of vehicle purchase).* The difference
in costs between the two groups of vehicles is due to the
average fuel economies of each group (12.4 mpg for Classes IIB
and III vehicles and 5.8 mpg for Classes IV-VIII vehicles).
Since the publication of the staff paper, EPA has reduced the
average useful-life estimate from 120,000 miles to 110,000
miles. Therefore, the Classes liB-III and Classes IV-VIII
costs for unleaded fuel are $202 and $431, respectively when
discounted to the year of vehicle purchase. The weighted
average fuel differential cost is $270. This fuel differential
cost is partially offset by an estimated maintenance savings of
$252 due to fewer exhaust system and spark plug replacements.
Thus, at a $0.03 per gallon fuel differential, the weighted
average total of these operating and maintenance costs would be
the fuel differential cost at $270 less $252 due to fewer spark
plug and exhaust system replacements, or $18 assuming all HDGVs
will switch from leaded to unleaded fuel. However, it will be
assumed here, as was for the staff paper, that some Chrysler
vehicles are already using unleaded fuel.[2] This was
estimated at 8 percent of all HDGVs, so the weighted average
operating and maintenance costs would decrease from $18 to $17.
Fuel economy will likely improve as a result of new
emission control hardware and engine modifications. In the
staff paper, this improvement was estimated to be about 10
percent. The latest available test data indicate that fuel
economy improvements of 7 to 10 percent are still expected.
For every 1 percent improvement in fuel economy that might
occur, the savings would be about $117 during the lifetime of a
vehicle. This savings is based on an average HDGV fuel economy
of 9.24 miles per gallon, an unleaded gasoline price of $1.30
per gallon, an average HDGV lifetime of 110,000 miles for 8
years, and a 10 percent discount rate. As will be discussed
later, the fuel impact, if any, will be the same under the
original FRM or this rulemaking.
The 5-year aggregate cost was not determined in the staff
paper, but can be calculated by multiplying lifetime vehicle
* At a $0.05 per gallon fuel differential, the operating
costs were estimated at $336 and $718 for Classes IIB and
III and Classes IV-VIII vehicles, respectively. A $0.03
fuel differential cost is assumed in this chapter, even
though a $0.05 fuel differential cost currently exists.
It is expected that in the long run, as increased
quantities of unleaded fuel are produced and as production
of leaded fuel decreases, the differential will decrease
to be $0.03.[1]
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1-17
costs by the HDGV sales between 1985-89. The average lifetime
vehicle costs without the fuel consumption savings is $400.
The estimated sales is 1.76 million between 1985 and 1989.
Discounting costs at 10 percent per year to the year of present
value (1985)/ results in an aggregate cost of $583 million. If
the fuel consumption savings is included, the average lifetime
costs are reduced by $117 for every 1 percent improvement in
fuel economy. This would also reduce or eliminate the
aggregate costs. The net aggregate cost would drop to less
than zero at only a 4 percent fuel economy improvement. Both
the aggregate cost and the per vehicle cost for the original
FRM are shown in Table 1-4.
B. Capital Cost Estimate for the Original FRM
Compliance with the requirements . of the original FRM
include . captial costs to acquire new certification testing
facilities, R&D expenditures, certification testing, and
tooling costs for emission control hardware (e.g., catalytic
converters, larger air pumps, air modulation systems, parameter
adjustment a.nd deceleration fuel shut-off) . The capital cost
estimates used in this analysis are taken from two sources: the
regulatory analysis from the December 1979 FRM and the January
1982 draft support document. A summary of these costs are
shown in Table 1-5.
In the December 1979
certification facilities, R&D,
determined in 1980 dollars.
(undiscounted) are:*
FRM, the capital costs for
and certification testing were
In 1983 dollars, these costs
Certification facilities $12M
R&D $25M
Certification testing $2.0M
While the R&D and certification testing costs shown above may
change as a result of this regulation, the certification
facilities cost will not. The original FRM specified a new
emissions test procedure (the transient test), requiring new
certification test equipment and associated facility
modifications. Test facility and modification costs are
capital costs that are still necessary under this rulemaking.
Because this rulemaking will not affect these requirements, and
because virtually all of these costs have already been
* Selective Enforcement Audit (SEA) costs were included in
the original FRM. However, SEA was delayed to 1986 the
first portion of this rulemaking. Consequently, SEA costs
are not considered here.
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1-18
Table 1-4
Cost of Control for the Original FRM
Development and Hardware
Non-catalyst related control
Catalyst-related control
Total First Price Increase
Operating and Maintenance (O&M)
Savings due to fewer exhaust system and
spark plug relacements
Unleaded fuel at $0.03/gallon
Total 0&M[ 4]
Total
Aggregate Costs of First Price Increase Plus O&M
Sales, 1985-89 1,755,896
Aggregate Cost (discounted @ 10% per $583M
year to 1985)
$113
$270[1]
1183
-$232[2]
$249[3 ]
ITT
$400
[1] This is a weighted average cost of $155 for Classes IIB
and III HDGVs and $5,50 for Classes IV through VIII HDGVs.
It is estimated that Classes IIB and III and Classes IV
through VIII HDGVs will comprise 70 and 30 percent of the
total HDGV fleet, respectively.
[2] This savings is reduced by 8 percent to account for those
HDGVs already using unleaded fuel.
[3] This cost is reduced by 8 percent to account for those
HDGVs already using unleaded fuel. This- is also a
weighted average cost of $130 for Classes IIB and III
HDGVs and $119 for Classes IV through VIII HDGVs. At a
$0.05/gallon unleaded to leaded fuel differential, the
weighted average cost would be $415.
[4] Fuel economy savings are estimated to be 7-10 percent, or
$819-1,170 during the lifetime of a HDGE. These savings
will not change under the interim standards or the
original FRM.
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1-19
Table 1-5
Capital Costs for the Original FRM
(1983 dollars undiscounted)[1/2]
Undiscounted Tooling Costs
Catalytic Converters $ 8.6M
Larger Air Pumps 47.1M
Air Modulation System 2.0M
Chassis Heat Shields/ 1.8M
Stainless Steel Exhaust
Parameter Adjustment 2.7M
Deceleration Fuel Shut-off 8.0M
Engine Modifications 29.4M[3]
Total $ 99.6M
R&D (heavy-duty catalyst only) 24.9M
Pre-Production R&D 8.8M[4]
Certification 2.0M[5]
Grand Total $135.3M
[1] See Reference 3 for more detail.
[2] All costs were initially expected to be invested in 1981
and 1982.
[3] This number is based on six engine families requiring
modifications.. It is predicted that nine total
gasoline-fueled engine families will be certified in 1985,
when these modifications would be required. However, one
GM and two Chrysler families are not expected to require
further tooling or equipment for engine modifications, so
six families are used to compute the engine modification
tooling cost. Using EPA's estimate of about $4.9 million
per engine family, the total modification cost would be
$29.4 million. (Note that this estimate differs from that
calculated in the draft support document.)
[4] Based on nine engine families, at a cost of $980,000 per
engine family.
[5] Testing cost only, based on nine engine families, at a
cost of $218,000 per engine family. Certification
facilities costs are estimated at $12 million, but are not
included in this table because they will not change under
the original FRM or this rulemaking.
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1-20
realized,* the costs presented in the original FRM have not
been updated for this analysis. The undiscounted capital costs
for R&D and certification testing of the original FRM
requirements are included in Table 1-5. Also included in that
table are pre-production R&D costs.[3] {The certification
facilities costs is not included in Table 1-5 because it is
unaffected by this rulemaking.)
While the certification facilities, certification testing,
and R&D costs were explicitly determined in the regulatory
analysis to the original FRM, the tooling costs associated with
the manufacturing of the emission control hardware were not
given separately as capital costs. However, these costs were
stated in a cost per unit manner as part of the manufacturing
cost. Separate identification of these costs now is important,
as they represent a significant portion of the required
investment, as well as a source of the potential savings
associated with the revised 1985 HDGE emission standards. The
derivation of these tooling costs is explained in an EPA
memorandum, "Tooling Cost Calculation for HDG Engine Emission
Control Components."[21] The initial estimates of the tooling
capital costs associated with the original FRM are shown in
Table 1-5.
The total capital cost necessary for compliance with the
original FRM is therefore $135.3 million, as shown in Table
1-5. (Again, this excludes the certification facility costs.)
IV. Costs of the 1985 Interim Standards
The rationale behind this rulemaking has been the
provision of short-term economic relief to the HDGE industry.
Toward that end, preliminary analyses indicated that a
significant portion of the capital investment and R&D costs
related to the original FRM were tied directly to the
implementation of catalytic converter technology on HDGEs. As
a result, the decision was made to provide revised emission
standards beginning in the 1984 model year which could be
achieved without the use of catalysts. Since the 1-year
continuation of the 1983 and earlier standards has already been
promulgated, these interim standards will now be effective
beginning with the 1935 model year. These standards will be
referred to as the 1985-86 interim standards.
See Chapter 3 of the Transient Test Study, attached as
Appendix B to. the Summary and Analysis of Comments
document of this rulemaking.
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1-21
A. Non-Catalyst Technology Compliance Costs
This section will discuss the costs associated with the
interim standards. The technological feasibility discussion in
the Summary and Analysis of Comments outlined the emission
control techniques and strategies which are most likely for
HDGEs. [ 18 ]
This analysis will assume that, when possible, the
manufacturers design and build their emission control systems
to comply with the requirements of the 40 percent acceptable
quality level {AQL) beginning in 1985, even though under
current policy HDE SEA would not begin until 1986. This would
allow the manufacturers to avoid repeated R&D, retooling, and
recertification costs that might be necessary to comply with a
40 percent AQL in 1986. This is the. most efficient use of
resources, and is how EPA anticipates the manufacturers to
conduct their development and certification programs.
Costs for achieving compliance with the emission standards
would lie in three main areas: pre-production R&D, engine and
component modifications, and new emission control hardware.
1. Pre-Production R&D Costs
Pre-production R&D costs will be discussed in terms of
Phase I, or emission characterization, and Phase II,
development and application of emission control systems and
engine/component modifications. These programs, along with
costs, will differ from manufacturer to manufacturer, and
consequently, costs by manufacturer are difficult to
determine. The estimates given below are average costs based
upon conservative assumptions and should be representative of
actual costs.
Phase I of each manufacturer's pre-production R&D program
would most likely be a complete characterization of the
emissions of each engine family using both the transient and
steady-state test procedures. This would include emissions
characterizations at different calibrations, as well as initial
optimization of the engine's emissions performance prior to any
modifications or additions. This preliminary testing would
give the manufacturers information necessary to make decisions
as ,to which modifications and emission control components to
pursue.
With this initial data, Phase II of the R&D program would
begin, and would include the development and application of the
emission control systems and engine/component modifications.
This task would fall upon the HDGE manufacturers and their
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1-22
component vendors. Once the engine modifications have been
made and the necessary components added, the engines would have
to be recharacterized and reoptimized as was done in Phase I.
Costs for Phase I characterization and optimization can be
estimated by determining the number of transient tests
necessary to adequately characterize an engine's emissions
performance. A liberal estimate of the level of effort
required would be 40 transient tests per family. This would
include two tests at each calibration and a void rate of 10
percent. Each full transient emission test is estimated to
cost $580[3] which yields a total testing cost of about $23,000
per family. This estimate is conservative/ and may
overestimate the actual cost, because most manufacturers would
use hot starts and steady-state maps and would tend to keep
full transient tests to a minimum at this stage. As is shown
in Table 1-6, when other fixed costs are included, this cost
becomes $42,000 per family.
Costs for Phase II of the R&D process are more difficult
to estimate. This is primarily because this includes costs for
development of prototype emission control components, and the
modification and optimization of existing components. However,
virtually all of the additions and modifications which EPA
anticipates to be necessary for HDGEs have already been used in
the LDV/LDT fleets for several years, and some are already used
on some HDGE families. This transferability of experience will
reduce necessary development expenses. As an initial estimate,
a figure of $17,000 per family (inflated to 1983 from the draft
support document[3]) will be used to estimate these component
and modification costs. Phase II will also require a
recharacterization and reoptimization after the modifications
have been made and the components added. This would add an
additional $23,000 per engine family (inflated to 1983 from the
draft support document,[3]) bringing Phase II costs to $40,000
(= $17,000 + $23,000) per family (Table 1-6).
Total Phase I and Phase II costs per family sum to $62,000
(= $42,000 + $17,000 + $23,000), Preliminary certification
data and information from manufacturers indicate that the
number of Federal HDGE families will likely decrease from 16 at
present (five for GM, three for Ford, three for Chrysler, and
five for IHC) to 7-9 by 1985 (four for GM, three for Ford, and
zero to two for Chrysler) due to declining market demand for
HDGEs ana the announced withdrawal from the market by IHC.
Assuming nine HDGE families, the total pre-production R&D cost
would be $738,000 -industry-wide.
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1-23
Table 1-6
Pre-Production R&D Testing Costs
{1) Phase I
(a)
Number of
Engine
Manufacturer Families[l]
Chrysler
Ford
GM
2
3
4
(a)
Number of
Engine
Manufacturer Families[11
Chrysler
Ford
GM
2
3
4
(b)
Fixed Costs
Per Family[2]
$19K
$19K
$19K
(2) Phase II
(b)
Fixed Costs
Per Family[5)
$17K
$17K
$17K
(c)
Testing Costs
Per Family[3]
$2 3K
$23K
$23K
(c)
Testing Costs
Per Family[3]
$23K
$23K
$23K
(d)
Phase I
R&D Total[4]
$ 84K
$126K
$16 8K
(d)
Phase II
R&D Total[4]
$ 80K
$120K
$164K
[1] Based on projected Federal certification families for 1985, and
assuming IHC will leave the market.
[2] Engine: $2,300, Break-in: $10,500, Engineering Overhead:
$5,800.
[3] 40 transient tests at $580 per test.
[4] (a) (b + c).
[5] Prototype emission control hardware and modifications.
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1-24
2. Emission Control System Costs
Emission control system costs can be broken down into two
categories: the costs due to engine and component
modifications, and the costs of emission control hardware.
Both categories will be examined below.
a. Modifications and Improvements
EPA expects that substantial emission reductions will be
gained in engine and component modifications. Additional
reductions will be achieved through calibration changes. The
emission-related modifications and improvements which will be
necessary to meet the 1985-86 interim emission standards will
vary by engine family. The costs of control for each family
will vary according to its emission characteristics and the
currently used emission control hardware. The cost of the
necessary modifications and recalibrations is therefore
difficult to estimate on a per engine basis. Recalibrations
are not too difficult to perform and are generally inexpensive,
while engine modifications may require more extensive redesign
and retooling. A summary of the expected modifications and
costs are shown in Table 1-7.
Carburetion modifications will also incur costs. In the
long term, the price of the carburetor will probably remain
relatively unaffected, but manufacturers and vendors will have
to recover their costs for redesign and retooling.121] An
initial cost of $10 per engine was estimated originally by EPA
in 1982 dollars. In 1983 dollars, the cost is approximately
$11. Using a 10 percent discount and assuming these costs are
amortized over a 2-year production period (1985-86), this
requires an investment of about $5.9 million if the investment
is made in 1984. This results in an investment of $650,000 per
engine family to cover costs for carburetor redesign,
optimization, and retooling if necessary. (This investment
estimate should be conservative, due to the fact that some
carburetor configurations are now used for more than one engine
family.) Finally, an additional $5 should be added to the
initial $11 figure to cover parameter adjustment and other
carburetor-related modifications.
Manifold design changes and combustion chamber
modifications are also another significant source for
improvement. Changes to the design of the intake manifold
could improve air/fuel distribution to the cylinders, resulting
in lower HC and CO emissions. (Decreases in the combustion
chamber surface-to-volume ratio and dead volume would also aid
in reducing HC emissions, but such design modifications are
leadtime intensive. At the 2.5 EC standard, these approaches
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1-25
Table 1-7
1985 Non-Catalyst Standards Emission Control
Related Modifications/Improvements (1983 dollars)
Carburetion:
Power Enrichment $11
Accelerator Pump
General Fuel Metering
Parameter Adjustment and $5
Other Modifications
Manifold and/or Combustion $16
Chamber Redesign
Miscellaneous:
Air Injection System {diverter [1]
and pressure relief valves)
Spark Timing, A/F Ratio, EGR [1]
Calibrations [1]
Total $32
[1] Some modifications likely, but costs are negligible.
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1-26
are not considered likely or necessary.) some modifications
are also expected for the exhaust manifold, due to the
increased number and location change of air injection points,
increased air injection rate, and need to improve the thermal
reaction dynamics. Also, better materials are needed to ensure
higher exhaust temperatures brought on by leaner a/F
calibrations and increased thermal reaction in the exhaust.
The total cost is estimated to be $16. capital costs, based
upon a 2-year recovery period and assuming investment takes
place in 1984, are estimated to be $8.58 million industry-wide.
The costs to implement new calibrations of spark timing,
EGR, and air/fuel ratio should be negligible, as should the
costs be for optimization of the air injection system. (The
cost for additional air injection is included in the hardware
costs discussed below.)
in summary, as an initial estimate EPA will use a per
engine modification/improvement cost of $32 (= $11 + $5 + $16),
assuming all modifications are implemented. This would cover
the recalibrations, carburetion improvements, modifications of
the exhaust manifold, and other improvements which EPA believes
will be necessary to comply with the interim standards.
b. Emission Control Hardware
The emission control hardware anticipated for compliance
with the interim standards is similar to that which has been
used in the LDV/LDT fleets. Much of the technology and
performance experience will be readily transferable to HDGEs,
and has been in some cases. [22 J Table 1-8 lists the hardware
which will likely be used beginning in 1985 . [17]
The costs shown in Table 1-8 have been taken from two
sources: manufacturers' comments,[23] and two reports prepared
by an EPA contractor.[ 24,25 ] in both cases, the costs reflect
the economies of scale expected in HDGE production and have
been inflated to reflect the purchasing power of 1983 dollars.
The hardware costs represent what EPA expects to be applied to
the average engine.
3. Total Emission Control System and Other First Price
Costs
The first price increase can be calculated by adding
together the engine and emission control system modification
costs, emission control hardware costs, amortized
pre-production R&D cost, and amortized certification cost.
Engine and emission control system modification costs and
emission control hardware costs are shown in Tables 1-7 and 1.-8
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1-27
Table 1-8
1985 Non-Catalyst Standards
Emission Control System Hardware Costs[l#2]
Automatic Choke (electric)
$ 4
Early Fuel Evaporation
$19
Heated Air Intake
$ 9
Increased Air Injection
$42
EGR
$18[3 ]
Air Modulation
$ 9
Total
$101
[1] See Reference 2.
[2] These costs were originally estimated in 1982 dollars, and
were subsequently inflated to 1983 dollars.
[3] Expected to be used by one manufacturer (GM) only. Ford
and Chrysler engines already have an EGR system.
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1-28
sum to $133. Per engine pre-production R&D cost is estimated
at about $1 at the consumer level, bringing the total emission
control system cost to $134 per engine if all modifications and
components are incorporated.
Not all engine families, however, will need to incorporate
all of these components and modifications. Some families
already use items such as automatic chokes and heated air
intake; these costs need not be incurred again. In the staff
paper it was estimated that on the average about 80-85 percent
of all heavy-duty engines would incorporate all the
modifications and components. Applying this 80-85 percent to
the $134 maximum per-engine cost, the average cost per engine
is in the $107-114 range. This analysis will use the middle
($110) of this range as the average per-engine cost. This cost
includes all profit and overhead and is presented in 1983
dollars. An additional $3 per engine[2] is added to cover
certification costs, bringing the total cost to about $113.
4. Operating and Maintenance Costs
With the control technologies and approaches discussed
above,, there is quite likely to be some improvement in fuel
economy relative to current engines. Based upon the most
recent test data, the increase in fuel economy would be in the
7-10 percent range. Assuming an average fuel economy of 9.24
miles per gallon (mpg), a leaded gasoline price of $1.27 per
gallon, and an average lifetime of 110,000 over 8 years, an
average HDGV owner could expect to save approximately $114 for
each 1 percent improvement in fuel economy. Based upon the
most recent test data, "this yields a lifetime fuel savi ngs of
$798 to $1,140 per vehicle.
The fleetwide use of heated air intake and automatic
chokes may cause a small increase in lifetime maintenance
costs. These components usually require minor servicing
(operational checks and lubrication) in intervals of
12,000-24,000 miles. A cost of $20 will be. included to cover
this maintenance over the vehicle lifetime.[26]
5. Capital Costs of the Revised HDGE Emission Standards
The 1985 interim HDGE emission standards will require
capital costs related to engine and component modifications,
pre-production R&D, and tooling costs associated with emission
control hardware. As shown in Table 1-9, these costs sum to
$68.6 million. These include $0.7 million for pre-production
R&D, $2.0 million for certification, and $65.9 million to cover
costs to "tool up" for the new emission control hardware. EPA
expects that many of the new emission control components can be
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1-29
Table 1-9
Capital Costs of the 1985 HDGE Interim
Emission Standards (1983 undiscounted dollars)[1]
Pre-Production R&D $ 0.7M
Tooling:
Engine/Component Modifications $ 5.9M
Manifold Modifications $ 8.6M
Automatic Choke $ 4.3M
Early Fuel Evaporation $ 2.6M
Heated Air Intake $ 0.5M [2]
Increase Air Injection $38.3M
Air Modulation System $ 2.0M
EGR $ 1.0M
Parameter Adjustment $ 2.7M
Subtotal $65.9M
Certification $ 2.0M
TOTAL $68.6M
[1] See Reference 3 for more detail.
[2] No estimate available, but should be small; 150K has been
included for each of the three manufacturers.
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1-3 0
obtained from currently existing production capacity, thus
eliminating the need for new tooling and equipment. Since the
level of this occurrence could not be precisely quantified, the
tooling costs estimated for HDGEs have not been downwardly
adjusted, and should be considered to be worst case costs.
6. Summary of Costs of interim Standards over Current
Engines
In summary, the costs for the 1985-86 interim standards
are divided into capital costs, development and hardware costs
(on a per-engine basis), and operating and maintenance costs
(also on a per-engine basis). The capital costs include $0.7
million for pre-production r&d, $2.0 million for certification,
and $65.9 million for "tooling" costs, yielding a total cost of
$68.6 million. For development and hardware costs, carburetor
and engine modifications amount to $32 per engine, emission
control hardware amounts to $101 per engine, R&d costs amount
to $1 per engine, yielding a total development and hardware
cost of $134 if used on all engines; however, assuming that all
engines will not incur all of these costs, a weighted average
cost of about $110 is assumed. Certification costs of $3 per
engine brings the total cost to $113. Maintenance costs would
be about $20 over the vehicle lifetime, whereas fuel savings
attributable to improved fuel economy are expected to exceed
$700. These costs are summarized in Table 1-10.
The aggregate costs to the nation can be calculated by
totaling the first price increases and the increase (or
savings) in operating costs and multiplying the result by the
1985-86 projected sales figures. The resultant costs are also
shown in Table 1-10.
B. Cost Comparison: Interim Standards Vs. original FRM
Having now reviewed and updated the costs associated with
the original FRM (see Tables 1-4 and 1-5 and refer to section
II.A.) and having identified and developed the costs associated
with the interim emission standards (see section iv.A.), the
remaining task is to compare the costs in the appropriate
categories to determine the savings. This will be done for
capital costs, first price increase, and operating/maintenance
costs.
Table 1-11 (1) compares the capital costs' of the 1985-86
interim standards over the original FRM catalyst standards.
The total savings in tooling, r&d, and certification costs is
shown in Table 1-12 and amounts to $66.7 million. The major
portion of this savings is due to the delay of the development
and use of catalysts and the associated engine modifications
necessary to use these systems.
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1-31
Table 1-10
Vehicle Lifetime and Aggregate
Cost of Control of Interim Standards
First Price Increase:
Emission Control System Costs,
Amortized R&D, and Certification
Operating and Maintenance (O&M):[1]
Increased Emission Related Maintenance
Total
Sales, 1985-86
Aggregate Cost of First Price Increase and O&M
(discounted @ 10%/year, to 1985)
$113
$20
133[1]
675,734
$8 6 M[1]
[1] Fuel economy savings are estimated to be 7-10 percent over
current consumption, or $798-1,140 during the lifetime of
a HDGE. These savings are essentially the same as those
that would have been realized under the original FRM,
except these are based on the use of leaded gasoline, and
the original FRM used unleaded gasoline.
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1-32
Table 1-11
Cost Comparison of Interim
Standards to the Original FRM
Capital Costs
Tooling/Hardware and Engine
Modifications
R&D
Certification
Total
First Price Increase (per engine)
1985-86
Original Interim
1984 FRM Revision
$99.6M $65.9M
33.7M
2.0M
0.7M
2.0M
$135.3M $68.6M
Emission Control System Costs, $383 $113
Amortized R&D, and
Certification
Operating and Maintenance (O&M) Costs
Unleaded Fuel Differential $249
Exhaust System and Spark Plug -$232
Savings
Increased Emission-Related — $ 20
Maintenance
Total Operating Costs $17 $20
Aggregate Costs
Total First Price Increase $400 $133
Plus O&M
Sales, 1985-86 675,734 675,734
Aggregate Costs (discounted $258M $86M
at 10% per year to 1985)
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1-33
Table 1-12
Savings of Interim Standards Over the Original FRM
Capital Cost Savings $66.7M
Savings per engine
First price increase $270
Operating/Maintenance -$3
Fuel Economy $0
Total per engine $267
Aggregate Savings (discounted @ 10%/year to 1985) $172M
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1-34
As a result of the delay, the hardware portion of the
first price increase will decrease. The expected
hardware/R&D/certification portion of the first price increase
will drop from $383 (1983 dollars) for the original FRM to $113
for the 1985-86 interim standards, for a savings of $270 per
engine. These cost comparisons are shown in Table 1-11 (2),
and the savings are summarized in Table 1-12.
Operating and maintenance costs will not be affected as
dramatically. Although the original FRM has a cost of $268 due
to the fuel price differential, it also shows a savings of $232
due to decreased exhaust system and spark plug maintenance.
Both the original FRM and the analysis of the interim
standards predicted a fuel economy improvement. The original
FRM predicted a 4-9 percent increase (and based cost estimates
upon the 4 percent value), while the more recent data suggest
that 7-10 percent improvements are likely. On the other hand,
EPA's fuel economy analysis[21] predicts that 1985-86 and 1987
catalyst-based fuel economy will be comparable. in other
words, the fuel economy benefit attributed to catalysts in the
original FRM is actually achieved by the engine calibrations
required to meet the interim standards. in short, EPA expects
similar improvements in fuel economy for the current rulemaking
as were predicted under the requirements promulgated with the
original FRM, hence no cost differential is noted.
The only cost incurred by the interim standards that is
not incurred by the original FRM is a $20 maintenance cost for
operational checks and lubrication of the heated air inlet and
automatic choke. These costs are shown in Table 1-11. [3] When
all these costs are added together, the operating and
maintenance costs of the original FRM is $3 more than that of
the interim standards, as shown in Table 1-12.
The total per engine savings of the interim standards
amounts to $267 when the first price increase and operating
costs are added and compared to that of the original FRM.
The aggregate costs to the nation of the interim standard
period (1985-86) are compared for the interim standards and the
original FRM in Table 1-11 (4). The aggregate costs were
calculated by totaling the first price increase and the
increase (or savings) in operating costs, and multiplying the
result by the 1985-86 projected sales figures. The resultant
savings are summarized in Table 1-12.
V. Costs and Savings Associated with the 1987 Split-Class
Approach
For 1987 and later model years, EPA is retaining the
statutory standards for HDGEs used in classes IIB and hi
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1-35
vehicles (i.e., those HDGEs used in HDVs with a GVW of up to
14,000 lbs.). These vehicle classes are expected to represent
70-75 percent of all HDGV sales by 1990, and are very similar
in terms of powerplant selection and operating characteristics
to heavier LDTs.[27] They should, therefore, be able to
utilize extensions of conventional LDT catalyst technology.
HDGEs used in Class IV and larger vehicles (GVW in excess of
14,000 lbs.) would continue to comply with the interim
standards. Manufacturers would therefore be spared the
relatively expensive task of developing catalytic converters
and catalyst protection systems for the larger engines used in
the more severe service applications. The problem of catalyst
durability in the heavier HDGVs would thus be minimized.* EPA
projects that this approach will yield savings over the
original FRM provisions in emission control system costs and
operating and maintenance costs. The discussion below
quantifies thse. costs and the resultant savings.
A. Costs Associated with the 1987 and Later Model Year
Split-Class Approach
1. capital costs
Much of the capital investment necessary for implementing
the split-class approach has already been committed under the
interim standards. The additional capital costs are primarily
tooling expenses related to the application of catalysts to
Classes I IB and III HDGEs. However, much of the tooling costs
normally associated with catalytic converter technology will
not be necessary under the split-class approach, since
similarity in vehicle/engine specifications between
conventional LDTs and Classes IIB-III HDGVs, and excess
capacity for LDT catalytic converter production will permit
some component transferability.
A recent EPA staff analysis of engine applications
indicates that all of the HDGEs which are also used in LDTs
fall in the Classes IIB-III application group.[27] Therefore,
it appears likely that catalyst technology and other engine
modifications necessary to use unleaded gasoline could be
applied with minor modifications (and costs) to Classes IIB-III
* In addition, EPA will also allow up to 5 percent of each
manufacturer Classes iib and III HDGV sales to be
reclassified as Classes IV-VIII vehicles for the purposes
of gaseous emissions standards. Allowing these limited
reclassifications will further minimize any catalyst
development problems for the more severe applications that
might occur in Classes IIB and III HDGEs.
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1-36
vehicles. On the other hand, the development of new catalyst
and catalyst-production technology (e.g., higher temperature
substrate materials) for engines used in Classes IV-VIII would
likely be required, primarily for overcoming
temperature-related durability problems which accompany the
application of catalysts to the larger and heavier HDGEs in
Classes IV and VIII. This task would be more expensive and
difficult than the application of catalysts to lighter weight
vehicles in Classes IIB and III.
Capital costs associated with catalytic converter
production should, therefore, be saved under the split-class
approach. A substantial number of catalysts are presently
purchased from suppliers, so the catalysts production
requirement for Classes IIB and III trucks can likely be
satisfied with existing surplus LDT production capacity, either
on the part of the engine manufacturers or their suppliers.*
Little, if any, additional tooling costs would be incurred.
Similarly, a number of HDGEs share tooling with LDT
engines, and many of the modifications necessary to burn
unleaded gasoline, estimated in the original FRM as costing
$29.4 million, either have already been made or can easily be
incorporated from LDT components. However, assuming the worst
case in which all Classes IIB and III engine families would
require tooling for engine modifications, not all of the $29.4
million would be incurred. It is estimated that in 1987, seven
engine families will fall into the Classes IIB-III category,
and four engine families will fall into the Classes IV-VIII
category.[27] This estimate assumes that two new families will
be created due to catalyst versus non-catalyst applications of
certain engine configurations. Of the seven engine families in
the Classes IIB and III category, one GM' and two Chrysler
families would likely require no further tooling or equipment
for engine modification to burn unleaded fuel, so four families
are used to compute the engine modification tooling cost.
Using EPA's estimate of about $4.09 million per engine
family,[7] the total engine modification tooling cost would be
$16.4 million.
LDT sales declined some 45 percent between 1979 and 1981,
for a decrease in absolute numbers of trucks sold of about
1.1 million units annually. Since LDT sales are down
significantly, excess capacity (about 1 million units) for
production of oxidation catalysts exists for Classes IIB
and III HDGVs. A study by an EPA contractor has also
indicated the existence of considerable excess catalyst
production capacity in the industry.[28]
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1-37
Some tooling costs will be incurred for stainless steel
exhaust systems and chassis heat shield production. EPA
estimates these costs at $1.8 million (see Table 1-5), although
here, too, some LDT components may be adaptable. Adding all
these costs results in a total of $18.2 million for tooling
costs as shown in Table 1-13.
2. Research and Development Costs
Because of the use of catalyst technology in the LDT area
and the basic similarity of the applications, transfer of this
technology to the two lightest HDGV GVW classes should be
relatively straightforward. Some of these heavy-duty trucks
(manufactured by Chrysler), in fact, already use catalysts.
The bulk of the $33.7 million expense originally projected for
the original FRM was expected to be incurred for developing
catalysts suitable for the heavier vehicle/engine applications
and for addressing any worst case catalyst durability problems
that might arise. The 1987 split-class approach should make
that expenditure unnecessary.
With respect to durability testing expenses, some
manufacturers may run test fleets to 110,000 miles to, ensure
catalyst durability in these applications. In most cases,
however, EPA projects that shorter distances of mileage
accumulation will be needed, and will be used only to verify
dynamometer testing of catalyst durability and the worst case
durability of vehicle-related components. The cost per vehicle
(1983 dollars) of such a test fleet would likely include:[29,30]
Prototype vehicle $ 16.4K
Engineering Supervision $ 24. 6K
Mileage accumulation to 110,000 mi
(incl. maintenance and overhead) $424K
32 test at $580 each $ 25.3K
Total $490K per vehicle
Assuming two vehicles per engine family and seven Classes IIB
and III engine families, the total cost is estimated to be $6.9
million. Discounted at 10 percent per year to January 1987
(the beginning of the first model year the catalyst standards
are effective), and assuming that such testing would occur
about a year prior to the 1987 model year, the cost becomes
$7.5 million. This cost represents an upper limit as it is
likely that some engine families will not have to be tested for
catalyst durability, and that most, if not all, of the
durability assessments will be performed on engine dynamometers.
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1-38
Table 1-13
Capital Costs of the 1987 and Later
HDGE Emission Standards (1983 dollars)
Pre Production R&D $6.9M
Tooling:
Engine/Component Modifications $16.4M
Stainless Steel Exhaust $1.8M
Certification $1.5M
Total 26.6M
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1-39
3. Certification Costs
The original FRM divided certification costs into two
categories: deterioration factor (DP) determination and
testing of a representative selection of emission-data engines
at the 125-hour service accumulation point. Although the
manufacturers are not constrained to determine dfs through
durability testing, it is anticipated that the costs for
whatever method they use will not be significantly different
from costs of the current method. The regulatory analysis to
the original FRM provided estimates of these costs at $122k and
$39k,[1] respectively, assuming that three emission data
engines from each family would be tested at the 125-hour
point. Adjusting these costs to 1983 dollar levels results in
costs of $164k -and $52K for DF determination and emission-data
testing. Assuming that all seven classes iib and ill engine
families from three manufacturers are likely to be involved,
the total cost should run about $1.5 million (undiscounted).
The discounted cost would be $1.7 million if discounted to
January 1987 using a 10 percent discount rate, and assuming
that emission durability testing begins one year prior to 1987
model year production. The cost would be less if fewer engine
families are certified or if manufacturers extrapolate their
DFs from the results of the test fleets.
4. Emission Control System Costs
Table 1-14 presents the estimated emission control
hardware costs for Classes IIB and III vehicles. Catalyst cost
is based on the estimated average cost of the best -Ford and GM
LDT oxidation catalysts and current C,hrysler HDGE catalysts.*
A stainless steel exhaust system and chassis heat shielding
will be required. Some modifications will be necessary to run
the engines on unleaded fuel (i.e., valve seat inserts and
hardened valve stems/guides). A fuel restrictor for the fuel
tank will also be required. The total hardware costs are
estimated to be $151 per engine.
Compliance with the idle emission standard is achieveable
at little or no cost increase when catalytic converter
technology is used.
in some worst case situations, or perhaps for convenience
sake, some manufacturers may choose to use dual
conventional LDT catalysts rather than developing a system
for their HDGEs. in this case, the use of two
conventional catalysts would increase hardware costs by
not more than $93.
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1-40
Table 1-14
Per Vehicle Cost of Control for 1987 and Later
Classes IIB-III HDGVs over 1985-86 Costs[l]
Development and Hardware:
Oxidation Catalyst $ 93
Stainless Steel Exhaust System 26
Engine Modifications - Unleaded Fuel 18
Chassis Heat Shields 11
Fuel Restrictor 3
$151
Proveout and Certification $ 4
Subtotal $155
Operating and Maintenance:
Savings due to fewer $-232-[2]
exhaust system and spark
plug replacements
Unleaded fuel at $0.03/gal. $186[2,3]
Total[4] $-46
Total Cost per Vehicle $109
[1] Including manufacturer profit and overhead applied at a
rate of 29 percent of cost.
[2] Includes 8 percent adjustment for those Chrysler HDGVs
already using unleaded fuel. Spark plug and exhaust
system savings would be $252 and the fuel differential
cost would be $218 if Chrysler has no product offerings in
Classes IIB and III which use unleaded fuel in 1985-86.
[3] At $0.05/gallon fuel differential, the cost would be $309
with the 8 percent adjustment, for HDGVs already using
unleaded fuel.
[4] Fuel economy savings are estimated to be 7-10 percent over
current fuel consumption, or a savings of $819-1,170
during the lifetime of a HDGE. These savings will not
change under the split-class approach or the original FRM.
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1-41
5. Operating and Maintenance Costs
Costs to the operator will rise when an HDGV is equipped
with a catalyst because of the use of unleaded gasoline. The
additional costs are largely dependent on the price
differential between leaded and unleaded fuel. (EPA has
normally calculated these costs at a price differential of $.03
per gallon, which has been projected as likely for the
mid-1980's.) The average fuel economy for Classes IIB and III
trucks is about 12.4 miles per gallon.* Therefore, the
increase in operating costs due to use of unleaded gasoline
will be $202 (discounted to year of vehicle purchase using a
110,000 mile average lifetime over eight years).[2] This
increase is offset by a decrease in maintenance costs due to
improved spark plug and exhaust system longevity as a result of
using unleaded gasoline. EPA estimates a savings of $252 per
engine in this area. The net difference in operating costs
should then represent a savings of $50 per engine over the
costs that would be incurred under non-catalyst standards.
Since some Classes IIB and III HDGVs (some of the Chrysler
vehicles) currently use catalyst technology, these
savings/costs should be reduced by 8 percent proportionally
from a savings of $50 to a savings of $46, assuming those HDGVs
presently using unleaded fuel continue to do so in 1985 and
1986. These costs are summarized in Table 1-14.
6. Aggregate Costs of 1987 and Later Split-Class
Approach
The aggregate cost period of mobile source regulations is
typically taken as the first five years following the effective
date of the regulation. Thus, the period of interest for this
entire regulation (i.e., the combined interim standards and
split-class approach) is 1985-89. Since the aggregate costs of
the first two years, or the interim period, have already been
calculated (see Table 1-10), aggregate costs for remaining
three years, 1987-89, need to be determined here for the
split-class approach.
The aggregate cost of incorporating catalysts on Classes
IIB and III vehicles can be calculated by multiplying the
The move to catalyst standards should not change the fuel
economy experienced by Classes IIB and III HDGVs relative
to the levels seen under the interim standards. However,
the actual lifetime dollar savings will be slightly
greater because the fuel saved will be unleaded fuel,
which is $.03 more expensive than leaded fuel in this
analysis.
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1-42
expected lifetime cost per vehicle ($109) by the expected sales
of Classes IIB and III HDGVs for 1987-89. The expected Classes
IIB-III sales should not include those vehicles which are
likely to be reclassified as Classes IV-VIII vehicles as
mentioned earlier in this section.
Table 1-15 summarizes the aggregate cost calculations for
the split-class approach. Discounted at 10 percent to 1985,
the first year of the entire regulation, the aggregate cost is
$61 million. The total discounted 5-year aggregate cost of
this regulation is the interim standard cost of $86 million
(Table 1-11) plus the $61 million just determined for 1987-89,
or $147 million.
B. Savings Due to Implementation of the Split-Class
Approach
The savings due to the split-class approach will result
from deferral of the catalyst technology requirements in
Classes IV through VII gasoline-fueled vehicles.
The split-class approach will eliminate much of the
capital costs identified in the original FRM. R&D and tooling
costs for upgraded catalytic converters are the primary costs
that would be reduced or eliminated. However, some investments
will still be necessary under the split-class approach. These
investments would include $18.2 million for catalytic converter
tooling, $6.9 million for pre-production R&D, and $1.5 million
for certification (see Table 1-13). However, while capital
costs are necessary under the split-class approach, there is
still a net savings of $40.1 million under the combined interim
standards and split-class approach when compared to the
original FRM. Thus, most of the savings that were already
accounted for under the interim standards are maintained under
the split-class approach.
The savings compared to the original FRM in vehicle price
and maintenance costs of Classes ' IV through VIII HDGVs are
shown in Table 1-16. The development, hardware, and
certification savings are inflated to 1983 from those figures
presented in the staff paper.[2] The operating and maintenance
savings are also taken from the staff paper, with a fuel
differential of 3 cents per gallon assumed. The total lifetime
savings for Classes IV-VIII vehicle are $715 because catalysts
are not required.
The aggregate savings compared to the original FRM are
simply the lifetime costs per vehicle that were expected to
have occurred multiplied by the Classes IV-VIII gasoline-fueled
vehicle sales from 1987-89. (The years 1987-89 are relevant
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1-43
Table 1-15
Aggregate Costs to the Nation: 1987 Split-Class Approach
Category of Costs
Costs per Class IIB-III Engine:
First Price Increase
Operating/Maintenance Cost
Total per Engine
Projected Sales 1987 —89[2]
Aggregate Costs
(present value in 1985)[3]
Costs of
Split-Class Approach
$155
-46[1]
$ 109
751,618
$61M
[1] Fuel consumption savings
continue, but no further
interim standards.
[2] The years 1987-89
are still within
(the number of
aggregate costs).,
standards. The 1987-89
reclassifications where 5
vehicles will be allowed
statutory standards.
[3] Discounted at 10 percent
interim standards.
over present
improvement is
engines
expected
will
over
are the years of interest, since they
the first five years of this rulemaking
years typically used for determining
which begins in 1985 with the interim
projections include projected
percent of Classes IIB and III
to be exempt from meeting the
to 1985, the first year of the
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1-44
Table 1-16
Per Vehicle Savings Due to Implementation
of Non-Catalyst Standards for Classes IV-VIII
Gasoline-Fueled Heavy-Duty Vehicles
Development and Hardware:
Oxidation Catalyst $373
Chassis Heat Shields $ 11
Stainless Steel Exhaust $ 26
Converter Protective System $ 21
Unleaded Fuel Engine Modifications $ 18
Fuel Restrictor $ 3
R&D $ 94
$546
Proveout and Certification $ 4
Subtotal $550
Operating and Maintenance:
Savings due to fewer -$232[1]
exhaust system and spark
plug replacements
Unleaded fuel at $0.03 per gallon $397[1][2]
Subtotal $165
Total Savings per Vehicle $715
[1] Includes 8 percent adjustment for those Chrysler HDGVs
already using unleaded fuel. The spark plug and exhaust
pipe savings and the fuel differential cost would be -$252
and $469, respectively, if Chrysler has no product
offerings in these weight classes.
[2] At a fuel differential of $0.05/gallon, the cost would be
$661, including the 8 percent adjustment for those HDGVs
already using unleaded fuel.
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1-45
years for which to determine aggregate savings because they are
the last three years within the first five years of the
effective date of this regulation.) The aggregate savings
compared to the original FRM, discounted at 10 percent to 1985,
or the first year of this regulation {i.e., the first year of
the interim standards), would be $177 million (see Table 1-17).
VI. Savings of Combined Interim Standards/Split-Class Approach
Over the Original FRM
A. Capital Cost Savings
The net capital cost savings for the two sets of standards
promulgated under this entire rulemaking are simply those costs
that would have been expended under the original FRM less those
costs expected to be spent under the combined interim
standards/split-class approach. Table 1-18 summarizes the net
savings, which is estimated to be $40.1 million.
B. Savings in Cost to Consumer
The savings that would be passed on to the consumer
include those savings from the purchase price and operating
costs. This savings is the difference in the estimated cost 6f
the original FRM and the estimated cost of the interim
standards and split-class approach. The net savings is shown
in Table 1-19.
The first price increase estimated for the original FRM
was $383, and that estimated for the interim standards was
$113. For the split-class approach, the estimated cost should
be a fleetwide weighted average cost, determined by once again
assuming that about 70 percent of all HDGVs fall into the
Classes IIB-III category in 1987 (based upon sales projections
shown in Table 1-1). The first price increase of Classes
IIB-III vehicles was estimated to be $155 (Table 1-14), and 70
percent of this is $110. Therefore, the average fleetwide
savings in the first price increase is $383 less $113 and $110,
or $160 as summarized in Table 1-19.
Operating costs under the original FRM are shown in Table
1-4. Briefly reviewing, these costs include $249 for using
unleaded fuel instead of leaded fuel, less a savings of $232
due to fewer exhaust system and spark plug replacements. The
net operating cost is $17. (Note that savings arising from the
projected fuel economy benefit are not presented because they
are expected to be comparable with those achieved with interim
standards and the split-class approach.)
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1-46
Table 1-17
Aggregate Per Vehicle Savings to
the Nation Due to Implementation of
Non-Catalyst Standards for Class IV-VIII
Gasoline-Fueled Heavy-Duty Vehi.cles[l]
1. Costs per engine $550
Net operating/maintenance costs $165
Total per engine $715
2. Estimated Sales 1987 —89 [2] 328,544
Total Discounted savings[3] $177 million
[1] Relative to the December 1979 FRM requirement.
[2] Includes reclassified Classes IIB and III HDGVs.
[3] Discounted at 10 percent to 1985, the first year of the
interim standards.
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Table 1-18
Capital Cost Savings of Combined
Interim Standards and 1987 and Later
Split-Class Approach (millions of dollars)
Tooling
R&D:
Heavy-duty
catalyst
Preproduction
Certification
Total
Original
FRM
$99 .6M
$24.9M
$8 . 8M
$2 .OM
$135.3M
Interim
Standards
$65. 9M
$0. 7M
$2 .0M
$68 .6M
Split-
Classes
Approach
$18 .2M
$6. 9M
$1. 5M
$26.6M
Undiscounted
Savings
$15.5M
$24 .9M
$1.2M
-$1.5 M[1]
$40.1M
[1] A negative savings is actually an additional cost of the
combined interim standards and split-classes approach. It
occurs. here, oecause of the additional round of
certification asssociated with the interim/split classes
approach instead of just one with the original FRM.
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Table 1-19
Savings to Consumer of Combined
Interim Standards and 1987 and Later Split
Classes Approach Compared to the Original FRM
Split
Original Interim classes
FRM Standards Approach[1] Savings
1. First Price $383 $113 $110 $160
Increase
2. Operating Costs:
Unleaded Fuel $249 — $130 $119
Differential
Exhaust System -$232 — -$162 -$70[2]
and Spark Plug
Savings
Emission-Related — $ 20 — -$2 0
Maintenance
Total Operating $17 $20 -$32 $29
3. Total Cost to
Consumer:
First Price $383 $113 $110 $160
Increase
Operating $17 $20 -$32 $19
Costs
$400 $133 $78 $189
[1] Weighted average cost for total gasoline-fueled vehicle
fleet.
[2] A negative savings is actually a cost to the combined
interim standards and split-class approach.
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For the interim standards, the operating cost was
estimated to be $20 for maintenance of emission control
components. For the split-class approach, the net operating
costs were determined to be a savings of $46 for Classes IIB
and III HDGVs, because the savings due to fewer spark plug and
exhaust system replacements was greater than the additional
cost of burning unleaded as opposed to leaded fuel. Since only
Classes IIB and III HDGVs will incur these savings, the
fleetwide average savings would be 70 percent of $46, or $32.
When all of the operating costs of the combined interim
standards and split-class approach are compared to the original
FRM, the net savings is $29. This savings is also shown in
Table 1-19.
Finally, the total savings to the consumer by implementing
the interim standards and split-class approach instead of the
original FRM, is simply the first price savings of $160 plus
the net operating savings of $29. The total savings amounts to
$189.
C. Savings in Aggregate Costs
The savings in aggregate costs of this regulation over the
original FRM are simply the savings determined earlier for the
interim standards. (Table 1-12) and those savings determined for
Classes IV-VIII vehicles (Table 1-17). The sum of these
savings is $349 million, which covers the first five years of
this regulation. All aggregate costs are discounted at 10
percent to 1985, the first year of this regulation. These
costs are summarized in Table 1-20.
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Table 1-20
Aggregate Cost Savings to the
Nation Due to Interim Standards and
1988 Split-Classes Approach (discounted)
Interim Standard Savings!1] $172M
Split-Class Savings 1988—89[2] $177M
Total Aggregate Savings $349M
[1] See Table 1-12
[2] See Table 1-17.
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References
1. "Regulatory Analysis and Environmental Impact of
Final Emission Regulations for 1984 and Later Model Year
Heavy-Duty Engines," U.S. EPA, OMS, ECTD, SDSB, December 1979.
2. "Detailed Information on Sales, Costs of Control,
and Emission Control Benefits Used in Cost Effectiveness
Analysis," addendum to "Staff Report, Issue Analysis - Final
Heavy-Duty Engine HC and CO Standards," U.S. EPA, OANR, OMS,
ECTD, SDSB, March 1983.
3. "Draft Regulatory Support Document, Revised Gaseous
Emission Regulations for 1984 and Later Model Year Light-Duty
Trucks and Heavy-Duty Engines," U.S. EPA, OANR, OMS, ECTD,
SDSB, September 1981.
4. "Index of Truck Prices in the Producer Price Index,"
Bureau of Labor Statistics, U.S. Department of Labor.
5. MVMA Motor Vehicle Facts and Figures 1982, Motor
Vehicle Manufacturers Association, 1982.
6. Data Resources U. S. Long-Term Review, Summer 1982,
Data Resources, Inc., 1982.
7. Financial Analysis of the HDGE Manufacturers,
Prepared For EPA by Jack Faucett Associates, pp. 38-40, August
1982.
8. "Motor Vehicles Industry Status Report," Jack
Faucett Associates, p. 4, November 1982.
9. Automotive News, p. 1, October 18, 1982.
10. Ward's Automotive News, p. 2, February 14, 1983.
11. Ward's Automotive News, p. 7, February 28, 1983.
12. Ward's Automotive News, p. 10, December 27, 1982.
13. See pp. 31-32 of [7] above.
14. Ibid, p.33.
15. See Table V-DD of [1] above.
16. Ibid, p. 5.
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References (cont'd)
17. "Summary and Analysis of Comments to the NPRM for
Revised Gaseous Emission Regulations for 1984 and Later Model
Year Light-Duty Trucks and Heavy-Duty Engines," U.S. EPA, OANR,
OMS, ECTD, SDSB, May 1983.
18. Ibid, p.24, 28.
19. Ibid, p. 16.
20. Ibid, pp. 7 and 8.
21. EPA Memorandum, Tooling Cost Calculations for HDGE
Emission Control Components, From G. Passavant, U.S. EPA, OANR,
OMS, ECTD, SDSB to Public Record.
22. Several HDGE models use automatic chokes, EGR, EFE,
dual air pumps, etc.
23. Public Docket No. OMSAPC-78-4.
24. "Cost Estimations for Emission Control Related.
Components/Systems and Cost Methodology Description,"
EPA-460/3-78-002, March 1978.
25. "Cost Estimations for Emission Control Related
Components/Systems and Cost Methodology Description:
Heavy-Duty Trucks," EPA-460/3-80-001, February 1980.
26. The labor anticipated over the vehicle lifetime is 1
hour or less.
27. "Staff Report: Issue Analysis - Final Heavy-Duty
Engine HC and CO Standards," U.S. EPA, OMS, ECTD, SDSB, March
1983 .
28. "Financial Analysis of HDG Engine Manufacturers and
Catalytic Converter Component Suppliers," Draft Report,
Prepared for EPA by Jack Faucett Associates, p. 9, July 9, 1982.
29. "Issue Paper: Heavy-Duty Durability Testing,"
Docket No. A-8Q-81.
30. "Regulatory Analysis and Environmental Impact of
Final. Emission Regulations for 1984 and Later Model Year
Light-Duty Trucks," U.S. EPA, OMS, ECTD, SDSB, p. 72, 1980.
-------
CHAPTER 2
ENVIRONMENTAL IMPACT
In this rulemaking, certain provisions of HC and CO
emission regulations for 1985 and later model year HDEs
originally promulgated in late 1979 are being revised. This
chapter examines the effect these changes may have on the
amount of HC and CO emitted from HDEs and how this relates to
air quality. This analysis does not discuss the health and
welfare aspects of ozone or CO. Such reviews are available
from other sources and are beyond the immediate requirements of
this analysis. Reference [1] identifies EPA documents dealing
with 02one and CO effects.
In doing this analysis, three scenarios are considered.
The first scenario forms a reference or base case derived by
assuming that the 1984 HDE provisions as finalized in EPA's
January 12, 1983 action (48 FR 1406) continue indefinitely
rather than reverting to the statutory standards. This means
that the current steady state standards are carried over, and
implementation of Selective Enforcement Auditing (SEA) is
delayed until 1986. The second and third scenarios represent,
in order of increasing stringency, the provisions implemented
by this rulemaking, or implementation of the full statutory
standards in 1985, respectively. It should be noted that
Scenario 3 represents the standards and effective dates that
would be required if no new revisions were adopted.
In this context, the first scenario provides a reference
point from which to measure improvements brought about by the
new regulatory provisions of either of the two "control
scenarios." It is, not itself being evaluated as a regulatory
option, since it does not represent a viable future control
strategy. Details of the emission standards, SEA provisions
and useful-life provisions for all three scenarios are given in
Table 2-1.
The focus of the discussion in the remainder of this
chapter will be on the emission reductions and air quality
impacts of this final rulemaking (Scenario 2) relative to the
base case (Scenario 1), in which the HDE emissions standards
effective for the 1979-84 model years remain unchanged, and to
the 1985 and later statutory standards (Scenario 3), the
standards that would be effective were they not being revised.
I. Emission Rates and Lifetime Emissions
A. Introduction
One form of expressing the potential environmental impact
of a regulatory action is calculation of the changes in the
-------
Table 2-1
Scenario
Description of scenarios for Control of
Heavy-puty HC/CO Emissions
IIDGE Standards[l]
Description
Base case. No
change in standards
in effect for MY
1979-83.
Standards promulgated
in this rulemaking.
HDDEs: statutory
standard in 1985+.
HDGEs: interim stan-
dards for 1985-87;
for 1988+, statutory
standards for Classes
IIB-III, interim stan-
dards for IV-VII.
For all HDEs: trans-
ient test (1985+).
Standards promulgated
in original HDE rule-
making. Statutory
standards and trans-
ient test cycle are
in effect for 1985
and beyond.
Model
Year
84-85
86 +
84
85
86
87 +
87 +
84
8 5
86 +
HC
CO
UL
AQL[2]
Carryover from 83[3]
1.5 25 half 40%
Carryover from 83[3]
2.5 40 full none
2.5 40 full 40%
Classes IIB and III
1.3 15.5 full 4 0 %[4]
Classes IV-VIII
2.5 40
full 40%
Carryover from 83
1.3 15.5 full none
1.3 15.5 full 40%
Model
Year
84-85
86 +
84
85
86 +
84
85
86 +
HDDE Standards
HC CO
UL
AQL [2]
Carryover from 8 3 [ 3]
1.5 25 half 40%
Carryover from 8 3 [ 3]
1.3 15.5 full none
1.3 15.5 full 40%
Carryover from 83
1.3 15.5 full none
1.3 15.5 full 40%
[1] standards for LDVs and LDTs for each scenario are those standards already promulgated for
1983 and later. Note that this rulemaking will affect the useful life provision for LDTs,
changing it from half life (in scenario 1) to full life (in scenarios 2 and 3).
[2] Last four column entries are: HC standard (g/BHP-hr), CO standard (g/BHP-hr), useful
life, and SEA acceptable quality level.
[3] Standards are: 1.5 g/BHP-hr HC and 25 g/BHP-hr CO, with half-life useful life and no
requirements for AQL in effect, using the steady-state test procedure.
[4] Catalyst required.
-------
2-3
per-vehicle emission rates and lifetime emissions which the
action is projected to produce. The per-vehicle emission rates
are expressed in terms of grams of pollutant emitted per mile
(g/mi), while per-vehicle lifetime emissions are expressed in
terms of tons of pollutant emitted over the lifetime of the
vehicle. By combining the per-vehicle emission rates with the
useful life of the vehicle, estimated lifetime emissions can be
calculated.
Explanatory remarks concerning the calculation of emission
rates and lifetime emissions are presented below, followed by
the results for HC and CO H.DGE emissions, and then for HDDE HC
emissions. (Diesel engine CO emissions are well below even the
statutory HDE standard of 15.5 g/BHP-hr, so neither the
revisions implemented by this final rule nor the statutory CO
standard will have any impact on HDDE CO emissions. Therefore,
no analysis of HDDE CO emissions is required.)
B. Methods of Calculation
The emission rate calculations used for these analyses are
those produced by the EPA computer model generally Known as
"MOBILE 2.5." Since the mechanics of this model are already
well established, they will not be discussed in detail here.
Citations for background information on this model are given in
Reference [2]. Instead, a general overview of the process will
be given, along with identification where appropriate of
specific assumptions used in this analysis.
MOBILE 2.5 is based on a broad base of data on the
emission characteristics of in-use vehicles. Considerable work
has been done within EPA in an attempt to determine accurate
emission factors for mobile sources. This work depends heavily
on in-use vehicle testing under EPA's Emission Factor Progrm.
To answer the question of how well vehicles perform in actual
use, EPA has administered a series of exhaust emission
surveillance programs. Test fleets of consumer-owned vehicles
within various major cities are selected by model year, make,
engine size, transmission/ and carburation type in such
proportion as to be representative of both the normal
production of each model year and the contribution of that
model year to total vehicle miles traveled. These programs
have focused principally on light-duty vehicles and light-duty
trucks.
The data collected in these programs are analyzed to
provide mean emissions by model year vehicle in each calendar
year, change in emissions with the accumulation of mileage,
change in emissions with the accumulation of age, and effect on
emissions of vehicle parameters (engine displacement, vehicle
weight, etc.). This surveillance data, along with prototype
vehicle test data, assembly line test data, and technical
-------
2-4
judgement, form the basis for the existing and projected mobile
source emission factors.
For the purposes of this HDE analysis, it is. pertinent to
note that the HDE emission factors draw significantly on the
LDV and LDT data base for estimating in-use deterioration rates
for emission control systems. The LDV/LDT data base has a
large amount of information on the in-use performance of
control systems of the types being used on current HDEs and
anticipated to be used for future engines. In contrast, there
is relatively little data available on such systems in actual
use on HDEs.
The general form of the mobile source emission factor
equations is that of a new vehicle, or zero mile (ZM), emission
rate plus a mileage dependent deterioration rate (DR).
Mathematically, emissions as a function of ZM and DR can be
expressed as:
Emission Rate = ZM + DR (miles/lO,000)
The ZM level corresponds to EPA's estimate of
manufacturers' designed target emission levels in response to
any given emission standard plus, in the case of catalyst
vehicles, a correction for the effects of misfueling on new or
nearly new engines. Manufacturer's target levels are
themselves affected by the presence of an SEA program and the
useful-life requirements for certification. Both SEA and
full-life useful life lead to the lowering of emission target
levels for new engines.
The DR expresses the rate per 10,000 miles at which in-use
emissions are expected to increase, due to all causes. This
includes not only the deterioration of emissions experienced by
even well maintained engines, but also the effects of such
things as component failures, inadequate maintenance or
tampering with emissions control systems. DRs are derived from
consideration of the data available on actual performance of
various technology types in-use. In addition, the adoption of
full-life useful life will lead to improved in-use performance
and has therefore been accounted for in developing DRs.[2d]
There are two aspects of the regulatory provisions which
can be expected to affect emissions indirectly, but which have
not been specifically included in this analysis. First, in
anticipation of the new SEA provisions beginning in 1986, some
manufacturers may certify their 1985 engines at levels low
enough to comply with SEA provisions even though they will not
yet be specifically required to do so. The result' of this
anticipated practice is that actual HDE emission- rates for 1985
engines should be slightly lower than would be expected if no
future SEA were required. However, there is no easy way to
-------
2-5
quantitatively determine the potential decrease in emissions.
Therefore, EPA did not attempt to account for this effect in
the calculations of emission rates, and the actual per-vehicle
emission rates for 1985 HDEs may be slightly lower than the
emission rates projected under this analysis. Second, the
transient test procedure will become mandatory in 1985.
Because of this, some manufacturers are likely to use the
optional transient procedure in 1984, certifying at levels low
enough to be carried over to 1985. This too will have the
effect of lowering emission rates for some engines. Once
again, however, EPA did not attempt to incorporate these
effects into its calculations on vehicle emission rates,
because there was no easy way to accurately measure them.
The remainder of this section will discuss emission rates
and lifetime emissions separately for HDGVs and HDDVs. This
will be done for each scenario, using the emission standards
and accompanying useful life and SEA requirements shown in
Table 2-1.
C. Heavy-Duty Gasoline-Fueled Engines (HDGEs)
In order to calculate lifetime HDGE emissions, the
expected vehicle lifetime mileage, the DR, and the. zero-mile
emission rate (ZM) must be known. EPA's analysis of available
data on useful-life indicates that the expected vehicle
lifetime for HDGEs is 110,000 miles. The derivation of this
value can be found in the Summary and Analysis of comments
document accompanying this rulemaking.[3] The ZMs and DRs
differ for each type of emission and for each model year. A
summary of the ZMs and DRs as developed using MOBILE 2.5 is
shown in Tables 2-2 and 2-3 for each scenario. The emission
rates are shown for both low and high altitude, but most of the
remaining discussion will focus on the low-altitude emissions.
1. Hydrocarbon Emissions
The lifetime HDGE HC emissions calculated from the inputs
in the tables under each scenario are shown in Table 2-2. Also
shown are the percent changes in emissions relative to the base
case. For the 1984 model year, the lifetime HC emissions are
the same for all scenarios. This is because the 1984 emission
standards are simply a carryover from the 1983 model year under
all scenarios. For the 1985 and 1986 model years, the average
lifetime emissions under this rulemaking (Scenario 2) are
between 27 and 28 percent less than under the base case due to
the implementation of the interim standards. In 1987 and
beyond, this rulemaking would reduce average lifetime emissions
of HDGEs by about 40 percent (at low altitude). For Classes
IIB-III vehicles, or light heavy-duty gasoline engines
(LHDGEs), the vehicle lifetime emission is reduced by 48
percent for 1987 and later compared to the base case.
-------
2-6
Table 2-2
HDGE HC Emission Rates
Zero-Mile
Level
Model
(2M)
Scenario Year
(q/mi)
1
84-85
5.06
86+
4.45
2
84
5.06
85
4.09
86
3.60
87 +
LHDGEs *:
1.44
All
HDGEs:
2.38
3
84
5.06
85
1.64
86+
1.44
Deterioration
Rate (DR)
(g/mi/10,000 mi)
Low Altitude
0-32
0.32
0.32
0.16
0.16
0.32
0 .25
0.32
0.32
0.32
Per Vehicle
Lifetime
Emissions
(tons)
0.826
0.752
0.826
0.603
0.543
0.388
0.455
0.826
0.412
0.388
Percent
Reduction
Relative to
Base Case
0%
27.0%
27.8%
48.4%
39.5%
0%
50 .1%
48.4%
High Altitude
1 84-85
6.90
0.32
1.049
86+
6.0 7
0.32
0.949
2 84
6.9
0.32
1.049
0%
85
5.57
0.16
0.782
25.5%
86
4.91
0.16
0.702
26.0%
87 +
LHDGEs*:
2.58
0.32
0.526
44.6%
All HDGEs:
3.60
0.25
0.603
36.5%
3 87
6.90
0.32
1.049
0%
85
2.94
0.32
0.569
45.8%
86+
2.58
0.32
0.526
44.6%
HDGEs belonging to Classes IIB and III vehicles only.
-------
2-7
Table 2-3
HDGE CO Emission Rates
Zero-Mile
Level
Model
(ZM)
Scenario Year
(g/mi)
1 84-85
174.96
86+
138.22
2 84
174.96
85
66.64
86
52.65
87 +
LHDGEs*:
14.06
All HDGEs:
30.90
3 84
174.96
85
17.80
86 +
14.06
Deterioration
Rate (DR)
(g/mi/10|.Q00 mi)
Low Altitude
8.37
8.37
8.37
3.98
3.98
2.64
3 .23
8.37
2.64
2.64
Per Vehicle
Lifetime
Emissions
(tons)
26.77
22.32
26 .77
10 .73
9.04
3.47
5 .90
26.77
3.92
3.47
Percent
Reduction
Relative to
Base Case
0%
59.5%
59.5%
84.5%
73.6%
0%
85.4%
84.5%
High Altitude
1 84-85
324.55
8.37
44.89
86+
256.40
8.3 7
36.64
2 84
324.55
8.37
44.89
0%
85
123.62
5.98
18.98
57.7%
86
97.67
5.98
15 . 83
56.8%
87 +
LHDGEs*:
44.74
2.64
7.19
80.4%
All EDGEs:
67.84
3.23
10.38
71.7%
3 84
324.55
8.37
44.89
0%
85
56.64
2.64
8.63
80.8%
86+
44.74
2.64
7.19
80.4%
HDGEs belonging to Classes IIB and III vehicles only.
-------
2-8
Scenario 3 shows reductions of about 50 percent for 1985
and about 48 percent for 1986 and beyond, due to the
implementation of statutory standards. These reductions are
greater than those achieved under Scenario 2, as would be
expected. However, beginning in 1987 and beyond the difference
in reductions between Scenarios 2 and 3 is relatively small,
being about one-fourth as large as the difference in reductions
between Scenario 2 and the base case.
2. CO Emissions
The lifetime HDGE CO emissions under each scenario are
shown in Table 2-3. Also shown are the percentage reduction of
lifetime emissions of Scenarios 2 and 3 relative to the base
case.
In general, the reductions of CO emissions when compared
to the base case follow the same pattern as that for HC
emissions. Scenario 2 shows significant reductions beyond the
1985 model year, particularly for 1987 and later. Scenario 3
shows even greater reductions for 1935 and beyond. The
differences in average reductions of all HDGEs between
Scenarios 2 and 3 is not large (10-25, percent) when compared to
overall reductions of Scenario 2 relative to the base case
(60-74 percent).
D. Heavy-Duty Diesel Engine HC Emissions
For HDDEs the statutory standards are implemented in 1985
under both Scenarios 2 and 3. Therefore, Scenarios 2 and 3 are
identical and there is no loss of benefits for Scenario 2
compared to Scenario 3. The following discussion applies
equally to both scenarios.
The lifetime HC emissions for HDDEs are determined as done
for gasoline engines. An average lifetime of 350,000 miles is
used, reflecting the fact that most HDDs belong to ,the heavier
classes where long-haul travel predominates. The deviation of
this value can be found in the public docket.[4] The ZM and DR
values are shown in Table 2-4.
For 1985, no significant emission reductions are shown in
Table 2-4. This is because in the air quality model being used
here the statutory standards will not, by themselves, cause
enough of a change in average fleetwi.de HDDE emissions to
change the model output until the adoption of SEA in 1986.
Emission reductions for 1986 and later are estimated to be
about 12 percent at low-altitude and 13 percent at
high-altitude when compared to the base case.
-------
2-9
Table 2-4
HDDE HC Emission Rates
Model
Scenario Year
1
2
84+
84-85
86 +
84-85
86+
Zero-Mile
Level
(ZM)
(g/mi)
3.49
3.49
2.98
3.49
2.98
Deterioration
Rate (DR)
(q/mi/10/QQQ mi)
Low Altitude
0.05
0.05
0.05
0.05
0.05
Per Vehicle
Lifetime
Emissions
(tons)
1.682
1.682
1.486
1.682
1.486
Percent
Reduction
Relative to
Base Case
0%
11.7%
0%
11.7%
1
2
84+
84-85
86 +
84-85
86 +
8.03
8.03
6.85
8.03
6.85
High Altitude
0.05
0.05
0.05
0.05
0.05
3.432
3.432
2.978
3.432
2.978
0%
13.2%
0%
13.2%
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2-10
II. Emission Inventory
Whereas the previous section analyzed the per-vehicle HC
and CO emission rates and lifetime emissions, this section will
review projected changes in annual emissions over certain
regions from the entire fleet. These projections were made
using EPA's Modified Rollback II model which developes future
emission inventory estimates based upon data on current
emissions, expected future growth and replacement rates for
various source categories, and anticipated source control
programs.[5] The following discussion will describe the
overall process of making these projections in general terms
and then turn to discussion of the results.
The first step in the process is the selection of areas to
be analyzed. In this analysis the geographical basis for
analyzing HC and CO emissions will be different from those of
past analyses where Air Quality Control Regions (AQCRs) and
counties were used for analyzing HC and CO emissions,
respectively. The effects of both HC and CO will here be
measured over Standard Metropolitan Statistical Areas (SMSAs).
SMSAs will be used because they represent well defined
geographical areas which are being used as a consistent base
for organization of EPA's air quality and emission inventory
data bases. SMSAs are also a good compromise between
large-scale regional areas necessary for measuring the effects
of HC emissions and localized areas necessary for analyzing CO
emissions.
The SMSAs selected for the HC analysis were those areas
whose fourth highest daily maximum ozone hourly value (measured
over the 1979-81 period) exceeded the NAAQS standard. This
resulted in 88 low-altitude and two high-altitude SMSAs to be
analyzed for HC emissions. The HC inventory analyzed is for
non-methane HC since methane is non-reactive and does not
contribute to ozone formulation.
The SMSAs selected for the CO analysis were those areas
with the second maximum non-overlapping 8-hour average
concentrations greater than the NAAQS level in at least two of
three years (1979, 1980, or 1981). This selection process led
to a set consisting of 59 low-altitude and eight high-altitude
SMSAs.
Following the selection of areas to be analyzed, an
emission inventory for each region was compiled for the most
recent year for which the necessary information could be
obtained (1980). Baseline emission rates for various source
categories were taken from the National Emissions Data System
along with projections for future control strategies and growth
rates. This base year data was then used as the basis for
future projections. Projections for future years are a complex
-------
2-11
process, but two assumptions underlying these projections are
worth mentioning. One is that the I/M program will be in
effect in all the areas analyzed. The other assumption
concerns the projected growth rates. For the hydrocarbon
analysis, a medium-growth rate was assumed, while for the CO
analysis, a low-growth rate was assumed, out of a range from
low growth to high growth. A medium-growth rate was selected
for the HC analysis because HC emissions are a large-scale
regional concern, and a medium-growth rate has been
traditionally used to estimate the annual VMT growth rate. A
low-growth rate has been used for the CO analysis because these
emissions are a localized, urban area problem, where the
vehicle miles traveled (VMT) is expected to grow slowly.
Projections for both emissions data and air quality data
are made on a SMSA-by-SMSA basis. However, the underlying
assumptions on emission factors are not region specific, but
represent typical nationwide values. Because of this, only the
average results for all regions will be used for this analysis.
Tables 2-5 and 2-6 show the annual HC and CO emissions
under the three scenarios along with percent reduction figures
calculated from the base case. For HC emissions, it can be
seen that at low altitude reductions are in the 1 to 1-1/2
percent range, with Scenario 2 achieving almost as large a
reduction as could be achieved by Scenario 3. At high
altitude, reductions are in the 1-3 percent range, with
reductions under Scenario 2 again being almost as great as
those under Scenario 3. For CO emissions, reductions under
Scenario 2 are about 12-18 percent when compared to the base
case at low altitude. These reductions represent about 85
percent of the reductions that could be achieved under Scenario
3. At high altitude, the pattern is similar, with the
reductions tending to be 1 or 2 percent greater than they were
at low altitude.
III. Ambient Air Quality Analysis
Once projections of future emissions are prepared, the
next step is to translate them into changes in ambient air
quality. Two modeling methods were used to project future air
quality improvements. The Modified Rollback II method
discussed earlier was used for the CO analysis, while the
Empirical Kinetic Modeling Approach II (EKMA II) was used for
the ozone analysis.[6] The EKMA II procedure has been
developed by EPA in an attempt to provide an improved analysis
(compared to simple rollback) of the relationship between
oxidant and precursor emissions while avoiding the complexity
of many photochemical dispersion models.
It is important to realize that the use of any air quality
model requires a great many simplifying assumptions. This is
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2-12
Table 2-5
Total Non-Methane Hydrocarbon Emissions*
(1,000 tons/year)
Scenario 1985 1990 1995 2000
Low Altitude
1 6,218 6,036 6/274 6,706
2 6,213 5,983 (0.9%)** 6,194 (1.3%) 6,608 (1.5%)
3 6,213 5,974 (1.0%) 6,188 (1.4%) 6,605 (1.5%)
High Altitude
1 161 150 156 167
2 161 148 (1.3%) 152 (2.6%) 162 (3.0%)
3 161 147 (2.0%) 152 (2.6%) 162 (3.0%)
* Based on 88 low-altitude and two high-altitude SMSAs. I/M is
assumed for LDVs and LDTs. A medium-growth rate in VMT is
projected.
** Numbers in parentheses represent percent reduction of emissions
from base case.
-------
2-13
Table 2-6
Total CO Emissions (1,000 tons/year)*
Low Altitude
Scenario 1985 1990 1995 2000
Low Altitude
1 10/125 7,368 6,456 6,273
2 10,125 6,490 (11.9%)** 5,329 (17.5%) 5,170 (17.6%)
3 10,125 6,314 (14.3%) 5,177 (19.8%) 5,024 (19.9%)
High Altitude
1 1,085 668 534 516
2 1,085 595 (10.9%) 436 (18.4%) 415 (19.6%)
3 1,085 581 (13.0%) 424 (20.6%) 406 (21.3%)
* Based on 59 low-altitude and eight high-altitude SMSAs. I/M is
assumed for LDVs and LDTs. A low-growth rate in VMT is
projected.
** Numbers in parentheses represent percent reduction of emissions
from base case.
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2-14
especially true for the models used for this analysis because
the detailed data base needed to run elaborate models is simply
not available on a nationwide basis. This, of course, affects
the model's abilty to predict future air quality accurately.
The weakness in a model will have more impact on the absolute
levels of future predictions than on relative changes from one
modeling strategy to another, since the sources of error will
tend to carry through and affect all strategies. Therefore, in
this analysis the principal focus of discussion will be on the
comparison of strategies and relative changes rather than on
absolute levels of air quality.
The air quality data will be discussed in terms of average
percent changes of ozone and CO concentrations from the base
year (1979), number of areas which experience NAAQS violations,
and the total number of NAAQS violations occurring in the
selected areas. The following sections summarize the air
quality projections from this rulemaking[7] and how they
compare to the base case and to Scenario 3.
A. Ozone
The average change in ozone air quality as shown in Table
2-7 would improve by about 1 percent under Scenario 2 when
compared to the base scenario at low altitude for the years
1990 and 2000. No improvement is shown for 1995. Scenario 3
does not show further improvement at low altitude. At high
altitude, Scenario 2 shows a 1 percent improvement in 1995 and
a 2 percent improvement for 2000, while Scenario 3 shows no
additional improvement over Scenario 2.
Table 2-8 shows the estimated number of SMSAs which will
experience NAAQS violations for ozone. As can be seen,
Scenario 2 will reduce the number of SMSAs with violations by
one in 1990 and three in 1995 at low altitude. Scenario 3
shows no further reductions in violations. In the year 2000,
the total number of SMSAs with violations increases
significantly from 1995 under all scenarios. This is because
some SMSAs that were barely in compliance in previous years,
are now in violation due to the expected growth in emissions
from all sources. These projections indicate that more control
of HC emissions will be needed in future years. Neither
Scenario 2 or 3 will introduce enough control to reduce the
number of SMSAs exceeding the ozone air quality standard by the
end of the 1990s. At high altitude, neither Scenario 2 nor 3
is projected to bring the one violating area into compliance.
Table 2-9 shows the total number of NAAQS violations
within the selected SMSAs (as distinguished from the number of
SMSAs exceeding the standard). Scenario 2 reduces the total
number of violations by three in 1990, five in 1995, and nine
in 2000 when compared to the base case at low altitude.
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2-15
Table 2-7
Average Percent Change in Ozone Air Quality*
(compared to base year, 1980)
Scenario 1985 1990 1995 2000
Low Altitude
1 -23 -24 -23 -19
2 -23 -25 -23 -20
3 -23 -25 -23 -20
High Altitude
1 -20 -23 -21 -17
2 -20 -23 -22 -19
3 -20 -23 -22 -19
Based on 88 low^altitude and two high-altitude SMSAs. I/M
is assumed for LDVs and LDTs. A medium-growth rate in VMT
is projected.
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2-16
Table 2-8
Estimated Number of SMSAs Above Ozone Standard*
Scenario 1985 1990 1995 2000
Low Altitude
1
29
22
27
40
2
29
21
24
40
3
29
21
24
40
High
Altitude
1
1
1
1
1
2
1
1
1
1
3
1
1
1
1
Based on 88 low-altitude and two high-altitude SMSAs.
assumed for LDVs and LDTs. A medium-growth rate in VMT
projected.
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2-17
Table 2-9
Total Number of NAAQS Violations of Ozone Standard*
Scenario 1985 1990 1995 2000
Low Altitude
1
107
91
104
138
2
106
88
99.
129
3
106
87
99
128
High
Altitude
1
1
1
1
2
2
1
1
1
1
3
1
1
1
1
Based on 88 low-altitude and two high-altitude SMSAs. i/M
is assumed for LDVs and LDTs. A medium-growth rate in VMT
is projected.
-------
2-18
Scenario 3 would further reduce the number of violations by one
for 1990, and 2000. At high altitude, Scenarios 2 and 3 reduce
the number of violations by one for the year 2000 compared to
the base case.
B. Carbon Monoxide
The average percent change in CO air quality as compared
to the base year is shown in Table 2-10. Scenario 2 shows an
improvement over the base case of 5 percent in 1990, and 6 and
5 percent in 1995 and 2000, respectively, at low altitude.
Scenario 3 shows an additional 1 percent improvement in 1995
and 2000 when compared to Scenario 2. At high altitude,
Scenario 2 shows a 4-5 percent improvement between the years
1990 and 2000. Scenario 3 would show an additional 1 percent
improvement beyond Scenario 2 for 1995. Thus, the
environmental improvement of Scenario 3 is small relative to
the improvement of Scenario 2 over the base case.
Table 2-11 shows the SMSAs with NAAQS violations, and the
total number of NAAQS violations of CO for those areas are
shown in Table 2-12. At low altitude, no exceedences will
occur under Scenario 2 after 1985, while the base case shows
one area which violates the NAAQS in 1990. At high altitude,
neither Scenario 2 nor 3 will have any effect because no
exceedences are projected under the base case. Although the
Rollback II model predicts that all low-altitude counties will
come into compliance with the CO NAAQS under all control
scenarios by 1995, caution must be used in interpreting these
results in absolute terms. As mentioned earlier, the model
better predicts relative change from strategy to strategy, and
results from the model should be analyzed in this manner.
Therefore, the indication that all low-altitude counties meet
the standard is inconclusive. Inaccuracies of the Rollback II
model can easily be large enough to change the absolute levels
of predictions. However, such inaccuracies would probably be
relatively constant from strategy to strategy, and lead to
consistent relative effects. While no precise conclusions can
be drawn about the overall level of attainment, it is likely
that some reductions will take place, because average air
quality levels would be improved by about 5-6 percent (at low
altitude) under this rulemaking (see Table 2-10). The
reductions that could be obtained under Scenario 3 would not be
much larger.
IV. Lead Emissions
The use of non-catalyst technology for all HDGVs in
1985-86 and for Classes IV-VIII vehicles for 1987 and later
will cause some loss of previously expected reductions in
tailpipe lead emissions for HDGVs. Assuming a lead content of
1.1 grams per gallon for leaded fuel,[8] an average fuel
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2-19
Table 2-10
Average Percent -Change in CO Air Quality
(compared to base year - 1980)*
Scenario 1965 1990 1995 2Q00
Low Altitude
1 -53 -65 -69 -70
2 -53 -70 -75 -75
3 -53 -70 -76 -76
High Altitude
1 -49 -68 -74 -75
2 -49 -72 -79 -80
3 -49 -72 -80 -80
Based on 59 low-altitude and. eight high-altitude SMSAs.
I/M is assumed for LDVs and LDTs. A low-growth rate in
VMT is projected.
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2-20
Table 2-11
Estimated Number of SMSAs
Above CO Standard*
Scenario 1985 1990 1995 2000
Low Altitude
1 4 10 0
2 4 0 0 0
3 4 0 0 0
High Altitude
1 4 0 0 0
2 4 0 0 0
3 4 0 0 0
Based on 59 low-altitude and eight high-altitude SMSAs.
I/M is assumed for LDVs and LDTs. A low-growth rate in
VMT is projected.
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2-21
Table 2-12
Total Number of NAAQS Violations of CO Standard*
Scenario 1985 1990 1995 2000
Low Altitude
1 16 1 0 0
2 16 0 0 0
3 16 0 0 0
High Altitude
1 20 0 0 0
2 20 0 0 0
3 20 0 0 0
*
Based on 59 low-altitude and eight high-altitude. I/M is
assumed for LDVs and LDTs. A low-growth rate in VMT is
projected.
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2-22
economy of 9.24 mpg,[9] an average vehicle lifetime of 110,000
miles,[3] and a 0.80 ratio of lead in to lead out, the
per-vehicle lifetime emissions of lead will be approximately
23.1 pounds for 1985 and 1986 MY HDGVs. For 1987 and later
model years only Classes IV-VIII HDGVs will use leaded fuel.
As discussed in Chapter 1, an average fuel economy of 5.8 mpg
is expected, so lifetime lead emissions for these vehicles are
36.8 pounds.
The total additional lead emitted annually from HDGVs sold
between 1985 and 1989 (the first five years of impact of this
rule) can be estimated by using the total annual HDGV sales
shown in Chapter 1 for 1985 and 1986, and the sales of Class IV
and above for 1987 to 1989 (plus the allowable 5 percent
reclassification), an average VMT of 13,750 miles per year, and
an expected vehicle lifetime of 8 years. Including
contributions from both the 1985-86 and 1987-89 vehicle groups
alluded to above, the maximum annual nationwide lead emissions
would be 1,732 tons from 1989-92 inclusive. However, if no
catalysts were required on any HDGVs, then the maximum annual
nationwide lead emissions would be approximately 2,150 tons in
the same years. Therefore, this rulemaking should reduce lead
emissions (by about 19 percent) when compared to the base case,
where no catalysts are assumed for HDGVs.
It should be noted that approximately half of the lead
from mobile sources is emitted as coarse particles,[10] which
settle rapidly to the ground and are unlikely to contribute to
air pollution. Thus, not all lead emissions would directly
contribute to ambient lead levels.
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2-23
References
1. For further information on "health effects and air
quality, refer to the following documents:
a. For ozone:
"Air Quality Criteria for Ozone and Other Photochemical
Oxidants," EPA-600/8-78-004, April 1978.
"Revision of the National Ambient Air Quality Standard for
Photochemical Oxidants: Staff Summary Paper," EPA Strategy and
Air Standards Division, January 1978.
b. For carbon monoxide:
"Air Quality Criteria for Carbon Monoxide,"
EPA-600/8-79-002, October 1979.
"Preliminary Assessment of Adverse Health Effects from
Carbon Monoxide and Implications for Possible Modifications of
the Standard" - EPA OAQPS Staff Paper Draft, June 1979.
2. Information on Mobile 2.5 can be found in the
following documents:
a. "Compilation of Air Pollutant Emission Factors:
Highway Mobile Sources," EPA-460/3-81-005, March 1981.
b. "User's Guide to Mobile 2 (Mobile Source Emissions
Model)," EPA-460/3-81-006, February 1981.
c. "Modifications to Mobile 2 which were used by EPA to
respond to Congressional inquiries on the Clean Air Act,"
EPA-AA-IMS-82-2, May 1982.
d. Emission Factors for HC and CO Truck Regulations,
EPA Memo from Lois Platte, Project Manager, TEB to John
Anderson, Project Manager, SDSB, July 26, 1983.
3. "Summary and Analysis of Comments on the Notice of
Proposed Rulemaking for Revised Gaseous Emission Regulations
for 1984 and Later Model Year Light-Duty Trucks and Heavy-Duty
Engines," U.S. EPA, OMS, SDSB, July 1983. See the
"Useful-Life" Issue.
4. "Determination of Useful-Life Values for Light-Duty
Trucks and Heavy-Duty Engines," Memorandum from Robert J.
Johnson, U.S. EPA, OANR, OMS, ECTD, SDSB to Public Docket.
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2-24
References (cont'd)
5. Information on the rollback model as used for
analysis can be found in the following documents:
"Rollback Modeling: Basic and Modified," J. Air Poll.
Control Assoc., deNevers, N. and Morris, J.R., Vol. 25~, No~ 97
1975.
Recent HC, CO Truck Regulation Analyses, EPA Memo from
Mark Wolcott, TEB to John Anderson, SDSB, July 22, 1983.
Clarification of Ozone and Carbon Monoxide Modeling
Issues, EPA memo from Warren P. Freas to Mark Wolcott, June 3,
1983.
6. "Uses, Limitations and Technical Basis of Procedures
for Quantifying Relationships Between Photochemical Oxidants
and Precursors," EPA-450/2-77-021a, U.S. EPA, Research Triangle
Park, N.C.
7. Transmittal of HC, CO Regulation Air Quality
Analyses, EPA memo from Mark Wolcott, TEB to John Anderson,
SDSB.
8. EPA Public Hearing for the Notice of Proposed
Rulemaking of Lead Phasedown by E.I. DuPont de Nemours and Co.,
Inc., Docket No. A-81-36, Washington, D.C., April 15-16, 1982.
9. "The Highway Fuel Consumption Model," Eighth Quarter
Report prepared for the U.S. Department of Energy, Office of
Policy, Planning, and Analysis, July 1, 1982.
10. "Air Quality Criteria for Lead," U.S. EPA Office of
Research and Development, Washington, D.C., EPA - 600/8-77-017,
December 1977.
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CHAPTER 3
USEFUL-LIFE COST EFFECTIVENESS AND AIR QUALITY IMPACTS
I. Introduction
There have been at least three opportunities for
interested parties to submit comments pertaining to light-duty
truck/heavy-duty engine (LDT/HDE) useful life since the
full-life requirement was first reopened for study and comment
in the spring of 1981. The January 12, 1983 proposal to modify
the full-life definition was the direct result of issues that
were raised in a number of such comments. One of the major
concerns raised in the course of the various comment periods
has been the issue of cost effectiveness and benefits of
full-life useful life. A number of industry commenters have
questioned both the air quality benefits accruing from full
life and EPA's analysis of the cost of compliance with the
full-life useful-life requirement. In response to these
comments, EPA has included this update of the useful-life
analyses in the Regulatory Support Document.
II. Cost Effectiveness
This analysis will utilize a 2-pronged approach. In the
first portion, a conservative analysis of the LDT and HDE costs
and emission reduction benefits of the full-life requirement
will be developed and the cost effectiveness will be
calculated. The second portion contains a qualitative
discussion of the benefits of full life that are not easily
quantified. In the last portion of this analysis the
useful-life cost-effectiveness values are compared to those of
other strategies.
A. Quantitative Aspects
1. Methodology
The basic methodology for determining cost effectiveness
remains unchanged from earlier analyses. EPA will weigh the
estimated costs (derived primarily from the latest
manufacturer-supplied data) against projected emission
reduction benefits developed from EPA emission factor data. A
cost-effectiveness figure will be calculated for hydrocarbons
(HC) and carbon monoxide (CO) for LDTs, heavy-duty gasoline
engines (HDGEs) under the interim non-catalyst standards, and
HDGEs under the longer term standards (assuming catalysts will
be used on Classes IIB and III trucks only). Since heavy-duty
diesel engine (HDDE) CO emissions are already below the
statutory level, only HC cost effectiveness will be calculated
for HDDEs.
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3-2
Costs will include the cost per engine for improving the
durability of emission-related components and in some cases foi
additional quality control (QC)f efforts. Cost will also
include those expected for increased recall liability, although
we anticipate manufacturers will make efforts to keep their
full-life recall liability the same as that now experienced
under half life. They also include costs for increased
certification durability testing, although under the full-life
provisions the manufacturers are essentially free to determine
durability for certification purposes by any manner they
choose. However, it is not expected that they will choose a
method that is any more costly than the present system of
durability testing, so this would represent a worst case
estimate. For the sake of consistency with the comments, all
costs will be in terms of 1982 dollars.
Emission reductions for a full-life versus a half-life
requirement will be estimated using the EPA emission-rate
equations developed for use in the MOBILE2.5 emission factor
model. The rates used represent projected in-use emissions and
are adjusted for factors such as assembly-line testing and
misfueling for catalyst-equipped engines. These equations take
the form:
ER = ZM + DR(M). (1)
Where ER is the emission rate, ZM represents zero-mile
emissions, and DR(M) is the projected deterioration rate per
10,000 miles multiplied by the mileage (in tens of thousands).
Both deterioration rates and zero-mile emissions are lower
under the full-life requirement which reflects the
manufacturers' design efforts for full-life compliance of a
well-maintained vehicle/engine. To model the effects of a
full-life requirement on lifetime vehicle emissions, in-use
emissions are assumed to deteriorate no farther in terms of
absolute levels during the full life of a vehicle/engine than
they would during the half life under a half-life requirement.
Zero-mile emissions are lowered to reflect reduced low-mileage
targets for certification.
The difference in average emission rates between the
half-life and full-life scenarios will be calculated and the
result multiplied by the full-life mileage figure to determine
the difference in total lifetime emissions. When the cost per
engine determined above is divided by this difference in tons
of total lifetime emissions, the result equals the cost per ton
of emission reduction which can then be compared with the cost
effectiveness of other emission control strategies. This
approach will be used for both HC and CO emissions with the
costs being shared equally by both. The only exception is
HDDEs, where as noted above, only an HC cost effectiveness will
be determined.
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3-3
2. Light-Duty Trucks
a. Costs
The original analysis for the cost of full-life
useful-life projected, costs on the basis of 30 percent of the
projected increase in hardware and research and development
(R&D) costs for improved catalysts ($4.27 + $5.06 per engine,
respectively), plus $1.44 projected additional certification
costs for increased durability testing, or a total of $10.77
per engine.[1] Since that time, noble metal prices have
increased about 9 percent, increasing the hardware cost to
$4.65. Adding a 25 percent inflation factor to the R&D and
certification costs (based on the 1982 Bureau of Labor
Statistics (BLS) Producer Price Index of Truck Prices) brings
that portion of the increase to $8.13. The adjusted total is
$12.78 in 1982 dollars.
Detailed estimates of the cost of full-life useful life by
manufacturers are limited to data supplied by General Motors
Corporation (GM). In their comments on the useful-life issue,
GM submitted LDT costs for the original full-life requirement
as follows:[2]
Hardware costs included the cost of increased catalyst loading,
increasing the durability of the converter housing, valve stem
seals for improved oil control, and an increase in air pump
durability. GM's cost estimate for hardware is more than
double EPA's estimate. However, the EPA estimate was for
increasing catalyst durability only, so the increase may be
justified. GM maintains that these modifications would still
not result in full-life durability and so the additional
warranty and recall costs were projected.
The $111 fuel economy penalty is the result of a projected
loss of approximately one mile per gallon (mpg) in fuel economy
due to more stringent low-mileage targets. GM based this
projection on the difference in fuel economy between its 1980
Federal and 1980 California vehicles. This fuel economy issue
was first raised in the course o£ the initial LDT rulemaking.
EPA concluded at that time that the California fuel economy
loss was due to the "quick-fix" strategy employed by the
industry for a market that represented a fairly small part of
the total sales picture. A "quick-fix" approach such as this
is not appropriate or necessary for the manufacturers'
nationwide sales. In addition, it should be noted that reduced
low-mileage targets due to useful life comprise only a very
Improved hardware
Fuel economy penalty
Warranty and recall costs
TOTAL
$ 27
111
168
$306
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3-4
small portion of the total reduction in emission levels. As a
matter of fact, most current LDT configurations are far enough
below the 1985 emission standards to accommodate any small
downward shift in low-mileage targets due to the full-life
requirement.[3] Therefore, GM's fuel economy concerns do not
seem well-founded.
No breakdown of the $168 projected additional warranty and
recall expense (as to percentage of warranty and recall) was
given. GM submitted a similar estimate ($160) for increased
warranty and recall expenses for HDGEs, however, wherein the
additional recall exposure cost was calculated to be $21 per
engine. Breaking down the LDT total on the same percentage
basis would yield a cost of $22 for LDT recall expenses. Since
the modified full-life strategy would limit a manufacturer's
warranty liability to the current 5-years/50,000-miles, no
additional warranty expense would be incurred, leaving only the
$22 for additional recall exposure. Adding the $27 hardware
cost and the $22 recall exposure cost results in a total cost
of $49 per truck. To avoid any increase in net recall
liability in full life versus half life, some manufacturers may
wish to devote some additional effort in the QC area.
Additional QC inspections could cost an additional $3-5 per
engine {based on 10-15 minutes each at $20/hr labor cost) or
manufacturers may choose to select additional vehicles/engines
for audit testing at an average per vehicle cost of about $10.
Increased QC efforts could probably be accomplished for less
total cost than assuming greater recall liability, but this
analysis will conservatively use the larger figure.
EPA estimates the additional certification cost to be $3
per engine, which would bring the total cost per truck for full
life to $52, based upon GM's figures.
b. Benefits
Utilizing the basic emission factor equation and
discussion given above and a midpoint mileage of 60,000 miles
for average lifetime emissions, the calculations for HC are as
follows:
Half Life: ER = 0.74 + .26(6] = 2.30 grains per mile
(g/mi),
Full Life: ER = 0.63 + .12(6) = 1.35 g/mi.
The difference (0.95 g/mi] multiplied by the full useful life
(120,000 miles) gives a total lifetime emissions difference of
114 kg, or .126 tons of HC.
For CO, the calculation becomes:
Half Life: ER = 8.06 + 2.35(6)
= 22.16 g/mi,
-------
3-5
Full Life: ER = 7.13 + 1.05(6) = 13.43 g/mi.
The difference (8.73 g/mi) multiplied by 120,000 miles equals
1,048 kg, or 1.15 additional tons of CO removed over the
lifetime of the vehicle.
c. Cost Effectiveness
Having derived the emission reductions and the costs, it
becomes a fairly straightforward calculation to divide the
costs by the emission reduction benefits to determine a cost
per ton of HC and CO. As has been the practice in previous
analyses, costs will be equally apportioned between HC and CO.
For HC, the cost/ton = &26/.126 tons = ^206/ton.
For CO, the cost/ton = $26/1.15 tons = $23/ton.
A cost-effectiveness figure was not calculated for nitrogen
oxides (NOx), since both the costs and benefits of full life
are largely attributable to prevention of catalyst failures,
and oxidation catalysts are presently the primary control
technology for HC and CO. Catalyst failure would therefore
have little effect on NOx levels, assuming current standards
and technology. In the event a more stringent NOx standard is
adopted at some future date and the technology balance shifts
toward increased catalytic control of NOx emissions, the costs
and benefits involved could then be factored into the analysis.
Finally, there is the question of light-duty diesel trucks
(LDDTs). LDDTs are relatively new in the market place and
high-mileage emission control system-performance data are
scarce. EPA expects that LDDT emissions performance and
durability should be at least as good as the gasoline-powered
vehicles they are intended to replace. In addition, many of
the same considerations found in the discussion of HDDEs below
will apply to LDDTs as well. Therefore, both benefits and
costs should be relatively small and will likely affect only HC
emissions. Since LDDTs comprise only 5-10 percent of total LDT
sales, the impact of LDDTs on the total LDT cost effectiveness
should be minimal. For simplification, this analysis will
assume that the overall LDT HC cost-effectiveness value will be
unchanged whether LDDTs are included or not. Therefore, the
figures derived above stand for all LDTs.
3. Heavy-Duty Gasoline Engines - Interim Standards
a. Costs - Non-Catalyst Engines
Since the original statutory standards for 1984 and later
HDEs assumed the need for catalysts on gasoline engines, no
estimate was given for the cost of full-life useful life for
non-catalyst engines in the original Regulatory Analysis.
However, a general description can. now be given of the
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3-6
technology necessary for compliance with the interim standards
and the effect of useful life. EPA envisions the use of larger
air injection pumps, perhaps in conjunction with air
modulation, fuel metering refinements, induction air
preheating, EGR systems, and other similar engine
modifications. Improving the durability of the components
involved consists of generally heavier construction and/or
better quality materials for all moving parts and use of
improved bearings and seals, and better lubricants for air
pumps.
General Motors submitted estimates for non-catalyst HDGEs,
presumably including modifications of this nature, stating that
components would be "designed to last considerably longer than
the average useful life of the engine."[4] GM presented
estimates for both full-life and half-life non-catalyst
scenarios. The full-life scenario represented costs under the
original full-life definition promulgated in late 1979; the
half-life provision represented the current 5-year/50,000-mile
requirement. Although the GM costs for compliance with the
interim standards seem excessive under either useful-life
requirement, the increased costs of full life presented by GM
(shown below) are useful in that they represent somewhat of an
upper limit on the costs of full life.
Hardware costs:
Materials and labor
Overhead
Engineering
Subtotal:
Warranty and recall costs:
Emissions-related engine overhauls
Emission-control system warranty
Increased recall liability
Subtotal $160
TOTAL ADDITIONAL COST FOR FULL LIFE: $223
Since the manufacturer is under no obligation to pay for
engine overhauls under the current modified . full-life
provision, and since emissions warranty liability under
modified full life is no greater than it is under the 1983 and
earlier half-life regulations, only the $21 increase in recall
cost remains in the warranty and recall costs category. If
GM' s emission control components in fact do last longer than
the useful life of the engine, there should actually be no
increase in recall costs for full life compared to half life-.
However, for the sake of being conservative, adding this $21 to
$30
30
3
$63
$90
49
21
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3-7
the $63 hardware cost yields a total of £84 per engine for the
cost of full-life components. Adding $>3 per engine for
additional certification costs (even though no increase was
projected by GM) brings the total to $87 per engine. GM did
not include any additional QC effort in their estimate.
However, as before with LDTs, EPA estimates this cost to be
$13-15, but to be conservative the higher recall costs provided
by GM will be used. Thus total costs are $87, which should be
looked upon as an upper limit.
b. Benefits
The emission factor equations for the 1985-86 non-catalyst
standards are given below. Since emissions change slightly
when SEA is introduced in 1986, an average factor representing
both 1985 and 1986 is" used here. Using a midpoint mileage of
55,000 miles for average lifetime emissions, the calculations
for HC and CO are:
Half-Life HC emission rate = 4.005 + .32(5.5) = 5.765 g/mi,
Full-Life HC emission rate = 3.845 + .16(5.5) = 4.725 g/mi.
Half-Life CO emission rate = 61.36 + 8.37(5.5) = 107.395
g/mi,
Full-Life CO emission rate - 59.65 + 3.98(5.5) = 81.540
g/mi.
The difference in lifetime emissions for HC is given by the
difference in average emission rates (1.04 g/mi) times the full
useful life (110,000 miles). The result is 114.4 kg or 0.126
tons.
Similarly, the difference in lifetime emissions for CO is
25.86 g/mi times 110,000 miles which equals 2,844.6 kg or 3.133
tons.
c. Cost Effectiveness
The total cost of $87 is allocated equally to HC and CO
reduction. The cost-effectiveness calculations then become:
HC = $43.50/0.126 tons = $345/ton.
CO = $43.50/3.133 tons = $14/ton.
4. HDGEs - 1987 and Later Catalyst Standards
Costs
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3-8
The original Regulatory Analysis for 1984 and later model
year HDEs projected compliance costs with the statutory
standards for HDGEs that included the development of catalytic
converters for all engines. The current rulemaking prescribes
statutory standards for Classes IIB and III vehicles only,
however, with Classes IV-VIII vehicles continuing to meet
non-catalyst standards. Thiese Classes IIB and III vehicles are
primarily LDT derivatives and should, therefore, benefit from
the LDT component development that has previously been done in
response to the 1985 LDT regulations. EPA sees no reason why
the additional costs of full life for Classes IIB and III HDGEs
should be significantly greater than the additional costs for
LDTs (i.e., 452). However, knowing the manufacturers' concern
about catalyst durability, cost effectiveness will also be
evaluated assuming additional costs of double the LDT amount or
$104.
b. Benefits
The calculation of benefits will cover only Classes IIB
and III trucks, since non-catalyst standards for Classes
IV-VIII represent no change in costs or benefits from the
interim standards. Accordingly, using the midpoint mileage of
55,000 miles for average lifetime emissions, the emission
factor equations for HC are:
Half-Life HC emission rate = 1.82 + 0.64(5.5) = 5.34 g/mi,
Full-Life HC emission rate = 1.44 + .32(5.5) = 3.20 g/mi.
Multiplying the difference (2.14 g/mi) by 110,000 miles yields
102.3 kg, or a total lifetime difference of .259 tons HC.
For CO the calculation becomes:
Half-Life emission rate = 17.70 + 5.16(5.5) = 46.10 g/mi,
Full-Life emission rate = 14.06 + 2.64(5.5) = 28.58 g/mi.
The difference in rates (17.52 g/mi) X 110,000 mi = 1,927.2 kg
= 2.122 tons CO over the lifetime of the vehicle.
c. Cost Effectiveness
Splitting the cost ($52) between HC and CO and dividing by
the HC and CO benefits yields the following cost-effectiveness
figures:
HC = $26/.259 tons = $100/ton.
CO = $26/2.122 tons = $12/ton.
If, as mentioned above, double the cost is assumed, these
values become $200/ton for HC and $24/ton for CO.
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3-9
5. Heavy-Duty Diesel Engines
a. Costs
Heavy-duty diesel manufacturers have repeatedly stressed
the durability and low emissions deterioration characteristics
of HDDEs. Comments have stated that since control of emissions
in HDDEs is generally a function of basic engine design, rather
than of add-on components, there should be few, if any,
catastrophic emission control failures late in the life of an
engine that could result in large-scale increases in
emissions. Moreover, such failures as might affect emissions
would also tend to have a deleterious effect on performance,
thereby giving the owner a strong incentive to repair the
failure.
EPA generally concurs that HDDEs tend to be fairly
durable, and is not aware of any widespread emission problems
with HDDEs. With the exception of smoke-limiting devices and
other purely emission control components such as EGR or
mechanical variable timing used occasionally, HDDE emission
control systems are integrated into the basic design of the
engines. Emission-control problems therefore tend to be
self-correcting, assuming proper maintenance is done on the
remainder of the engine. Therefore, EPA is not projecting any
large emission benefits or costs associated with full life for
HDDEs. Should problems surface which lead to greater costs,
the benefits would also increase.
Recall also should present few problems to manufacturers
since recall is limited to well-maintained engines. Likely
action on the part of manufacturers to safeguard against a
possible recall might be to concentrate on eliminating
production defects through increased quality-control
inspections during component and engine development and
assembly. Increased manufacturer self-auditing for emissions
is a similar possibility.
EPA estimates that manufacturers could spend &10-15 per
engine on increased QC and certification. Any recall exposure
increase should be minimal in any event, given the maintenance
and durability of components as discussed above. Virtually all
HDDE families are adequately below the 1985 HDDE HC standard to
accommodate the very small downward shift in low-mileage
targets associated with full life, so no costs in this area are
expected.
b. Benefits
The methodology used to calculate the full-life. HC
emission rate for HDDEs is essentially the same as that for
LDTs and HDGEs with a slight variation. The recognized
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3-10
half-life DR for HDDEs is very small, being only 0.04 grams HC
per 10,000 miles. For comparison, the LDT half-life DR is 0.74
and the HDGE half-life DRs are 0.32 and 0.42 (for non-catalyst
and catalyst engines, respectively). While the HDDE DR may in
fact be slightly reduced under full life, this reduction would
be very difficult to quantify. Furthermore, since the DR
reduction would be very small, its impact on the full-life
emission rate would be very small. Therefore, the same HDDE DR
has been used for both the half-life and full-life emission
rates. This is a conservative approach since any reduction in
the DR would lead to a reduction in the full-life emission rate
as shown by Equation 1. Reducing the full-life emission rate
increases the benefits of the full-life requirement because
benefits are defined as the difference between the half-life
and the full-life emission rates.
The only HDDE HC benefit that will be projected under the
full-life requirement is that due to the reduction in the ZM.
The full-life ZM was calculated in the standard way from the
MOBILE 2.5 emission factor model. Both the half-life and
full-life ZMs are shown in the equations below.
The HDDE class is split into three subclasses with,
estimated total lifetime periods and estimated sales fractions
as follows:
1985 Projected Average Lifetime
Subclass Percent Sales Usage Period
LHDDE 28% 110,000 mi
MHDDE 23% 268,000 mi
HHDDE 49% 529,000 mi
The heavy heavy-duty diesel engine (HHDDE) and medium
heavy-duty diesel engine (MHDDE) subclasses have total usage
periods greater than the assigned useful-life values due
primarily to the fact that many MHDDEs and most HHDDEs are
rebuilt at least once. Using these figures, a sales weighted
composite lifetime usage period of 350,000 miles was calculated
to represent the three HDDE subclasses.[5]
Using the midpoint mileage of 175,000 miles for average
lifetime emissions, the emission factor equations for HC are:
Half-Life emission rate = 3.05 + .04(17.5) = 3.75 g/mi,
Full-Life emission rate = 2.97 + .04(17.5) = 3.67 g/mi.
Multiplying the sales-weighted composite lifetime usage period
by the difference in average emission rates (.08 g/mi) yields
28 kg, or .031 total tons of HC.
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3-11
c. Cost Effectiveness
Since the CO emissions of HDDEs are already well below the
final standard, the cost is allocated to HC only. Dividing the
cost by the projected benefit yields an HC cost effectiveness
of $323 per ton at a cost of $10 per engine, or $484 per ton at
a cost of $15 per engine.
B. Qualitative Aspects
Although this discussion has thus far concentrated on the
quantitative aspects of full life (i.e., the cost per ton of
emissions reduction), it is important to realize that there are
benefits involved in the comparison of the full life and half
life which are not easily quantified. EPA agrees that most
manufacturers' current emission control systems function past
half life. We do not know exactly how far past half life they
presently function, however, and there is no guarantee that in
the face of pressure to cut costs they will continue to do so
in the future. A full-life recall provision could provide the
insurance that durability will not be sacrificed in the face of
mounting pressures to reduce costs, or that in lieu of
durability, manufacturers would not simply specify additional
maintenance (i.e., components could be made less durable and
more frequent replacement could be specified to make up for the
decreased durability).
As technology becomes more sophisticated, indications are
that the increase in emissions resulting from component
failure(s) is likely to be more significant. For example,
EPA's emission factor program tested a late model light-duty
vehicle (LDV) with a failed catalyst and electronic control
module at 10.55 g/mi HC and 254.87 g/mi CO, or more than 25 and
36 times the respective HC and CO standards. Yet when the
defective components were replaced, the vehicle tested well
within the standards for that model year.[6] This example is
an extreme case, but it nevertheless illustrates the possible
effects that can result from compound failures of emission
control components.
With the potential use of more sophisticated and expensive
technologies on LDTs and HDEs (e.g., three-way catalysts with
closed-loop control on LDTs, oxidation catalysts and possibly
electronic controls on HDGEs, electronic controls and possibly
particulate traps and EGR on HDDEs) whose in-use performance
has not been fully demonstrated, a full life requirement will
ensure durable design and "construction. In addition, it will
ensure that the money invested by the consumer in emission
control hardware actually brings about the reduction in
emissions which was intended. Given increasing complexity, the
durability of components becomes a more important issue. EPA
believes that full life can help ensure continued component
durability.
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3-12
Finally, full life is important for HDEs, because for the
forseeable future EPA's in-use efforts in this area must of
necessity be fairly limited in scope. A large HDE recall
program, particularly for HDDEs, will be difficult and costly
to conduct. There will be difficulties involved in locating
engines for testing, obtaining their owners* consent for
testing (which will likely involve compensating the owner for
lost service time) , and assuring that the engines have been
properly maintained. The amount of effort, and consequently
cost, involved in engine removal, testing, and reinstallation
is also extensive. Budgetary constraints alone may preclude
any large-scale effort. It will therefore be increasingly
important to ensure that manufacturers focus significant
initial efforts on designing and producing durable
engine/emission control components to prevent emission-related
problems from developing later in the useful life.
C. Comparison of Cost Effectiveness of Full Life with
Other Emission-Control Strategies
For convenience, the costs, emission reduction benefits,
and cost-effectiveness values developed above are summarized in
Table 3-1. Tables 3-2 and 3-3 present cost-effectiveness data
on various emission control strategies for reductions in HC and
CO emissions. As can be seen from Table 3-2, the cost per ton
for removal of HC ranges from a low of $112 for heavy-duty
gasoline vehicle (HDGV) evaporative emissions regulations to a
high of $15,767 per ton for transit improvements. Table 3-3
shows a cost per ton for CO ranging from $0 to $1,493. In
general, full-life useful life falls into the lower end of
these ranges and thus appears to be very cost effective in
comparison with other generally accepted emission control
strategies.
Industry comments have repeatedly stressed the minimal
impact of full life on total ambient air quality. It is true
that if the durability of emission components could be assured
in the second half of the vehicle's life without full-life
useful life, then absolute improvements in total air quality
due to full life would be smali. However, our best efforts in
controlling emissions from all sources will be insufficient to
meet air quality standards in regions containing millions of
people, particularly in the case of ozone. For the forseeable
future, improvements in air quality will result from many small
actions, no one of which will yield results as dramatic as some
of the previous measures. Based on the quantitative and
qualitative considerations noted above, full-life useful life
appears to be a cost-effective addition to the overall emission
control strategy.
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3-13
Table 3-1
Summary of Cost Effectiveness of
Benefits
(tons)
Dollars/Ton
Costs
HC CO
HC CO
LDT
$52
0.126 1.15
$206 $23
HDGEs -
Interim
$87
0.126 3.133
$345 $14
Standards
HDGE Catalyst $52-104 0.259 2.122 $100-200 $12-24
Standards (Classes
IIB & III only)
HDDEs $10-15 0.031 — $323-484
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3-14
Table 3-2
Cost Effectiveness of Emission
Control Strategies - Hydrocarbons[7]
HC Cost
Effectiveness
Control Strategy Dollars/ton
HDGE Evaporative Control $112
HDGE Useful Life (1987 and beyond) $100-200
LPT Useful Life $206
LDT Statutory Standards $207
HDDE Useful Life $323-484
HDGE Useful Life (1985-86 interim standards) $345
Gasoline Refueling Regulations $353
Interim HA Standards (1982-83) $416
LDV Statutory Standards (1981) $508
Motorcycle Standards $616
Traffic Control $666
l/M $943
Auto Coatings $1,301
Transit Improvements $15,767
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Table 3-3
Cost Effectiveness of Emisssion
Control Strategies - Carbon Monoxide[7]
CO Cost
Effectiveness
Control Strategy Dollars/Ton
Motorcycle Standards Neg.
HDGE Useful Life (1987 and beyond) $12-24
Interim HA Standards (1982-83) $13
LDT Statutory Standards $14
HDGE Useful Life (1985-86 interim standards) $14
LDT Useful Life $23
LDV Statutory Standards $44
Traffic Controls $55
I/M $57
Transit Improvements $1,493
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3-16
III. Air Quality Analysis
Using the emission rate equations described above, the air
quality impact of full life versus half-life can be estimated.
The methodology for doing so is that presented earlier in
Chapter 2. This section will present and discuss the results
for impacts on the HC and CO emission inventory and the ozone
and CO ambient air quality, for the same areas as analyzed in
Chapter 2.
A. Emission Inventory
Table 3-4 presents HC and CO emission inventory
projections for both the case of the current half-life useful
life and the case of full-life useful life. These same
projections are expressed as percent reductions in overall
emissions in Table 3-5.
Table 3-5 indicates a sizeable improvement in HC and CO
emissions due to the full-life requirements. In fact,
examination of the table indicates that the relative benefit of
full-life versus half-life appears to be somewhat overstated,
particularly for HC. A review of the emission-factor equations
behind these projections leads to the conclusion that the
half-life benefits are being understated because they fail to
fully account for the implementation of parameter-adjustment
provisions. Parameter-adjustment provisions are expected to
improve in-use emissions significantly, regardless - of whether
full or half-life useful life is in effect. This is especially
true for catalyst-based emission control systems where a large
portion of in-use emissions are due to in-use deterioration.
For example, recent emission test data on 1980 model year LDVs,
some of which had parameter-adjustment controls installed,
shows a sizeable reduction in the DR derived from parameter-
adjustment vehicles compared to other vehicles.[8] The DR for
HC changes from 0.136 for 259 non-parameter-adjustment vehicles
to 0.049 for 246 parameter-adjustment vehicles. Data such as
this indicate that the parameter-adjustment provisions will
bring the half-life emission benefits into a more appropriate
range for comparison with full-life.
There is insufficient data to accurately estimate the
effects of parameter adjustment on HDEs at this time. The
non-catalyst systems on all 1985-86 HDEs and heavier 1987 and
later HDEs will respond less to parameter adjustment than will
catalyst systems. In addition, the method of applicability of
the available LDV data to HDEs is not clear. Parameter
adjustment will shift some of the benefits of this rulemaking
from the full-life provisions to the half-life provisions.
B. Air Quality Levels
Table 3-6 shows the effect of changing useful life on
projected future reductions of ozone, both in terms of the
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3-17
Table 3-4
Effects of Useful Life on HC and CO Emissions
Half Life
Full Life
Total Non-Methane Hydrocarbon Emissions*
(1,000 tons/year)
Low-Altitude Areas Only
1990
6, 015
5,983
1995
6, 247
6,194
2000
6,675
6,608
Half Life
Full Life
Total Carbon Monoxide Emissions**
(1,000 tons/year)
Low-Altitude Areas Only
1990 1995
6, 706
6,490
5,661
5, 329
2000
5, 525
5, 170
* Based on" 88 low-altitude SMSAs. i/M is assumed for LDVs
and LDTs. A medium-growth rate in VMT is projected.
** Based on 59 low-altitude SMSAs. i/M is assumed for LDVs
and LDTs. A low-growth rate in VMT is projected.
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Table 3-5
Percent Reductions in HC and CO Emissions*
Half Life
Full Life
Total Non-Methane Hydrocarbon Emissions
Low-Altitude Areas Only
1990 1995
0.35%
0.87%
0.43%
1.28%
2000
0.46%
1.46%
Half Life
Full Life
Total Carbon Monoxide Emissions
Low-Altitude Areas Only
1990 1995
9.0%
11.9%
12.3%
17.5%
2000
11.9%
17.6%
Percent reductions calculated from base case as defined in
Chapter 2.
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3-19
Table 3-6
Effects of Useful Life on
Ozone Ambient Air Quality*
Average Percent Change in Ozone Air Quality
(compared to base year, 1980)
1990 1995 2000
Half Life -25 -23 -19
Full Life -25 -23 -20
Estimated Number of SMSAs Above Ozone Standard
1990 1995 2000
Half Life 22 26 40
Full Life 21 24 40
*
Based on 88 low-altitude SMSAs. i/M assumed for LDVs and
LDTs. A medium-growth rate in VMT is projected.
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3-20
average percent change for the areas analyzed and in terms of
the number of areas exceeding the ozone air quality standard.
The average percent reduction figures of Table 3-6 indicate
little or no apparent change in the average ozone air quality
even though, as was shown from the emission inventory data,
there is a change in emissions. This seemingly inconsistent
result is due to the fact that when preparing outputs the model
rounds off the air quality reductions to the nearest whole
percent. Therefore, changes in air quality of less than one
percent may or may not be reflected in the output, depending
upon whether they change the rounded off values.
On the other hand, Table 3-6 also projects that
implementation of full-life useful life will serve . to bring
more areas into compliance with the ozone air quality standards
in the 1990-1995 period. For example, the number of violating
areas in 1995 is projected to be reduced from 26 to 24. These
results illustrate the potential benefit of even a small
improvement in air quality in being sufficient to bring a
marginally non-compliant area into compliance. By the year
2000 the projections indicate that the useful-life benefit will
be overtaken by the rapid increase in violating areas resulting
from the overall growth in HC emissions.
Overall, the air quality analysis indicates that a small
but discernable ozone air quality benefit will result from the
implementation of full-life useful life. The earlier portions
of this chapter have shown that this benefit, when balanced
against the anticipated costs, is a cost-effective strategy for
HC control. This latter fact is in some ways more important
than the absolute size of the reductions gained. Since HC
emissions arise from a large number of generally small sources,
it is not surprising that any single control item by itself has
only a small effect. So long as the benefits are commensurate
with the costs, and so long as a number of regions are
projected to exceed the standards, even small control programs
should be implemented.
Air quality data for CO is presented in Table 3-7. Here
it can be seen that full-life useful life is projected to
produce a 1 to' 2 percent overall improvement in CO air quality
throughout the 1990's. Since the model projects that all areas
will be brought into compliance even under half-life useful
life, no change in the status of any regions is projected due
to full life. As discussed in Chapter 2, some caution is
needed in interpreting the lack of violations projected by the
CO model since the absolute levels projected by the model are
not as accurate as are the predicted differences between
scenarios. The reader is referred to the CO air quality
discussion of Chapter 2 for further details.
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3-21
Table 3-7
Effects of Useful Life on
Carbon Monoxide Ambient Air Quality*
Average Percent Change in CO Air Quality
(compared to base year, 1980) .
1990
1995
2000
Half
Li fe
-68
-73
-74
Full
Li f e
-70
-75
-75
Estimated Number of SMSAs Above CO Standard
1990 1995 2000
Half Life 0 0 0
Full Life 0 0 0
Based on 59 low-altitude SMSAs. i/M assumed for LDVs and
LDTs. A low-growth rate in VMT is projected.
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3-22
References
1. "Regulatory Analysis and Environmental Impact of
Final Emission Regulations for 1984 and Later Model Year
Light-Duty Trucks," U.S. EPA, OANR, OMS, ECTD, SDSB, pp.
109-111, 1980.
2. "GM Response to the Environmental Protection Agency
on the Proposed Revised Gaseous Emission Regulations for 1984
and Later Model Year LDT and HDE," Public Docket A-81-11,
IV-D-23, April 12, 1982.
3. "Federal Certification Test Results for 1982 Model
Year," U.S. EPA, pp. 66-98, 1983.
4. See Reference 2.
5. "Derivation of HDDE Average Usage Period-,"
Memorandum from R. Johnson, Standards Development and Support
Branch, to the Public Docket (A-81-11), July 1, 1983.
6. Listing of High-Emitting New Technology Vehicles,
EPA Memo From R. B. Michael to P. Lorang, Chief, Technical
Support Staff, March 2, 1983.
7. See Reference 1, pp. 104-105; see also: "Update on
the Cost Effectiveness of Inspection and Maintenance,"
EPA-AA-IMS-81-9, April 1981, p. 21; EPA Memorandum i/M Cost
Effectiveness, from Phil Lorang, Technical Support Staff, to
Charles. L. Gray, Jr., Emission Control Technology Division,
July 22, 1982; "Evaporative Emission Regulation and Test
Procedure for 1985 and Later Model Year Gasoline-Fueled HDVs,"
U.S. EPA, OANR, OMS, ECTD, SDSB, 48 FR 1437, January 12, 1983;
"Issue Analysis - Final HD Engine HC and CO Standards," U.S.
EPA, OANR, OMS, ECTD, SDSB, March 1983. Figures are adjusted
for inflation to 1982.
8. Simple Regression of 1981 Model Year Data, EPA Memo
From Phil Lorang, Chief, Technical Support Staff to John
Anderson, Project Manager, SDSB, July 26, 1983.
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