EPA and NHTSA,  in Coordination with
                  California, Announce Plans to Propose
                  Greenhouse Gas  and Fuel  Economy
                  Standards for Passenger  Cars and
                  Light Trucks
                      The U.S. Environmental Protection Agency (EPA) and the U.S.
                      Department of Transportation's National Highway Traffic Safety
                  Administration (NHTSA), are announcing plans to propose strong
                  and coordinated Federal greenhouse gas and fuel economy standards
                  for passenger cars and light-duty trucks, consistent with the May 21,
                  2010 Presidential Memorandum.

                  The agencies are issuing a Supplemental Notice of Intent outlining the key program
                  elements of a National Program that EPA and NHTSA plan to propose for model
                  year (MY) 2017-2025 light-duty vehicles. The agencies have continued to coordinate
                  extensively with California, and have held extensive discussions with stakeholders,
                  including automakers, states, environmental groups, and others, to ensure our pro-
                  posal is based on the most robust technical analysis possible. Many automakers and
                  California have announced their commitment to support the National Program.1
                  This approach, if ultimately adopted, will allow manufacturers to build a single
                  light-duty national fleet that would satisfy all requirements under both programs, and
                  would provide significant reductions in GHGs and oil consumption.

                  The standards under consideration are projected to reduce GHGs by approximately 2
                  billion metric tons and save 4 billion barrels of oil over the lifetime of MY 2017-2025
                  vehicles. These standards have significant benefits to American consumers by reducing
                  the costs they would pay to fuel these more efficient vehicles.
                  1  The letters of commitment from these organizations can be found at
                  www.epa.gov/otaq/climate/regulations.htm
SEPA
United States
Environmental Protection
Agency
Office of Transportation and Air Quality
                EPA-420-F-11-027
                      July 2011

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Key Elements of Future Proposed Standards
EPA and NHTSA intend to propose two separate but coordinated sets of standards for model
years 2017 through 2025, each under their respective statutory authorities. Both the proposed
CO2 and CAFE standards would be based on a vehicle's "footprint," or size, similar to the stan-
dards currently in effect through model year 2016, and would become more stringent each
model year from 2017 through 2025,

EPA intends to propose standards that would be projected to achieve, on an average industry
fleet wide basis,  163 grams/mile of CO2 in model year 2025 (this would be equivalent, on a
mpg-equivalent basis, to 54.5 mpg if all of the CO2 emissions reductions were achieved with
fuel economy technology).2 For passenger cars, the CO2 compliance values associated with the
footprint curves would be reduced by 5 percent each year from the CO2 -footprint curves for the
model year 2016 passenger car standard. In recognition that full-size pick-up trucks have unique
challenges compared to other light-duty trucks and passenger cars, EPA intends to propose a
lower annual rate  of improvement for light-duty trucks in the early years of the program. For
light-duty trucks, the proposed overall annual rate of CO2 emissions reduction in model years
2017 through 2021 would be 3.5 percent per year. For model years 2022 through 2025, EPA
expects to propose an overall annual rate of CO2 emissions reduction for light-duty trucks of 5
percent per year.

Given the long time frame at issue in setting standards for MY2022-2025 light-duty vehicles,
EPA and NHTSA intend to propose a comprehensive mid-term evaluation. Consistent with the
agencies' commitment to maintaining a single national framework for vehicle GHG and fuel
economy regulation, the agencies will conduct the mid-term evaluation in close coordination
with California,

In achieving the level of standards described above for the  2017-2025 program, the agencies
expect automakers' use of advanced technologies to be an important element of transforming
the vehicle fleet. The agencies are considering a number of incentive programs to encourage
early adoption and introduction into the marketplace of advanced technologies that represent
"game changing" performance improvements, including:

      Incentives for electric vehicles, plug-in hybrid electric  vehicles, and fuel cells vehicles

      Incentives for advanced technology packages for large pickups, such as hybridization and
      other performance-based strategies

      Credits for technologies with potential to achieve real-world CO2 reductions and fuel
      economy improvements that are not captured by the standards test procedures.
2  Real-world CO2 is typically 25 percent higher and real-world fuel economy is typically 20 percent lower than the
CO2 and CAFE values discussed here. For an mpg value that consumers can compare to their own vehicle's label
mpg or real world fuel economy, EPA estimates that the standards under consideration would yield a fleet with an
approximate real world fuel economy of about 39 mpg by model year 2025.

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In addition, EPA plans to propose provisions for:

      Credits for improvements in air conditioning (A/C) systems, both for efficiency improve'
       ments and for use of alternative, lower global warming potential refrigerant

      Treatment of compressed natural gas (CNG) and plug-in hybrid electric vehicles

      Continued credit banking and trading, including a one-time carry-forward of unused
       MY 2010-2016 credits through MY 2021
Background
Following the successful adoption of a National Program for GHG and fuel economy standards
for model years (MY) 2012-2016 vehicles, President Obama requested the agencies to continue
their efforts to address standards for MY 2017-2025. In a May 21, 2010, Presidential Memo-
randum, the President requested that EPA and NHTSA work together to develop a national
program that would "...produce a new generation of clean vehicles." The President specifically requested
that the agencies develop "...a coordinated national program under the CAA [Clean Air Act] and the
EISA [Energy Independence and Security Act of 2007] to improve fuel efficiency and to reduce greenhouse gas
emissions of passenger cars and light-duty trucks of model years 2017-2025. "3 The President recognized
our country could take a leadership role in addressing the global challenges of improving energy
security and reducing greenhouse gas pollution, stating that "America has the opportunity to lead
the world in the development of a new generation of clean cars and trucks through innovative technologies
and manufacturing that will spur economic growth and create high-quality domestic jobs, enhance our energy
security, and improve our environment."

Since that time, the agencies have worked with the state of California to address all elements
requested in the May 21, 2010 Presidential Memorandum. We completed an initial assess-
ment of the technologies, strategies and underlying analyses that would be considered in setting
standards for 2017-2025, in consultation with a wide range of stakeholders. The Interim Techni-
cal Assessment Report (TAR)  and a Notice of Intent to (NOI) to conduct a joint rulemaking
were concluded on September 30, 2010.4 Following the opportunity for public comment on the
interim TAR and NOI, the agencies developed and published a Supplemental NOI (SNOI)5 in
December 2010 highlighting many of the key comments received in response to the September
NOI and the TAR. That notice also discussed the agencies' plans for many of the key technical
analyses that would be undertaken in developing the upcoming proposed rulemaking.

The National Program would apply to passenger cars, light trucks, and medium-duty passenger
vehicles built in model years 2017-2025. Together, these vehicle categories, which include
passenger cars, sport utility vehicles, minivans, and pickup trucks, are responsible for approxi-
mately 60 percent of all U.S. transportation-related fuel consumption and greenhouse gas
emissions.
3  The Presidential Memorandum is found at:
www.whitehouse.gov/the-press-ofnce/presidential-memorandum-regarding-fuel-efnciency-standards.
4  75 FR 62739, October 13, 2010.
5  75 FR 76337, December 8, 2010.

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Next Steps
EPA and NHTSA are developing a joint proposed rulemaking, which will include full details on
the proposed program and supporting analyses, including the costs and benefits of the proposal
and its effects on the economy, auto manufacturers, and consumers. After the proposed rules are
published in the Federal Register, there will be an opportunity for public comment and public
hearings. The agencies plan to issue a Notice of Proposed Rulemaking by the end of September
2011. California plans on adopting its proposed rule in the same time frame.
For More Information
You can access the EPA and DOT "Supplemental Notice of Intent: 2017-2025 Model Year
Light'Duty Vehicle GHG Emissions and CAFE Standards" at EPA's web site at:

          www.epa.gov/otaq/climate/regulations.htm

For additional information, please contact EPA's Office of Transportation and Air Quality at:

          www.epa.gov/otaq/omS'Cmt.htm

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