Addendum to Final Phase 1 EPA Heavy-Duty Vehicle and Engine Greenhouse Gas Emissions Compliance Report (Model Year 2022) £% United States Environmental Protect Agency ------- Addendum to Final Phase 1 EPA Heavy-Duty Vehicle and Engine Greenhouse Gets Emissions Compliance Report (Model Year 2022) This technical report does not necessarily represent final EPA decisions or positions. It is intended to present technical analysis of issues using data that are currently available. The purpose in the release of such reports is to facilitate the exchange of technical information and to inform the public of technical developments. Compliance Division Office of Transportation and Air Quality U.S. Environmental Protection Agency NOTICE 4>EPA United States Environmental Protection Agency EPA-420-R-22-028C February 2024 ------- This addendum to the "Final Phase 1 Heavy-Duty Vehicle and Engine Greenhouse Gas Emissions Compliance Report (Model Years 2014 - 2020)" supplements the report with Model Year 2022 data. This addendum is part of the U.S. Environmental Protection Agency's (EPA's) commitment to provide the public with information about the heavy-duty vehicle and engine manufacturers' performance in meeting the agency's greenhouse gas emission (GHG) standards. The comprehensive, previously published report as well as the addendum with credit data through model year 2021 are located on the EPA website: https://www.epa.gov/coriipliarice-arid-fuel-ecorioriiy-data/epa-heavy-duty-vehicle-arid- engine-greenhouse-gas-emissions. EPA recognizes significant stakeholder interest in the compliance status of manufacturers subject to the regulatory programs. We are providing this supplemental data summary in advance of the next full report, anticipated to be published in late 2024 or early 2025. In 2011, EPA, along with the Department of Transportation's National Highway Traffic Safety Administration (NHTSA), adopted the first-ever greenhouse gas emission and fuel efficiency standards for heavy-duty engines and vehicles. The comprehensive program the agencies created was designed to address the intertwined challenges of reducing dependence upon oil, achieving energy security, and the amelioration of global climate change. The program also served to enhance American competitiveness and job creation, benefit consumers and businesses by reducing the costs of transportation of goods, and spur growth in the clean energy sector. The Phase 1 Heavy-Duty Vehicle and Engine Greenhouse Gas Rule became mandatory in 2014 and fully phased-in by the 2017 model year. The objective of the Phase 1 program was to reduce GHG emissions from the heavy-duty sector, the transportation sector's second largest contributor to GHG emissions. The program aimed to expand the use of more efficient commercially available technologies. The Phase 2 Heavy-Duty Vehicle and Engine Greenhouse Gas Rule was adopted in 2016 and began implementation with the 2021 model year. In designing the Phase 2 program, EPA considered credit balances available after the Phase 1 program and concluded that manufacturers should be allowed to largely carry the Phase 1 credit balances into the Phase 2 program. However, some restrictions were adopted for certain circumstances, primarily to avoid the potential for credit disparities to disrupt the competitive marketplace. Nevertheless, the quantity of credits potentially being carried into the Phase 2 program was deemed sufficiently large to be considered in setting the stringency of the Phase 2 standards (i.e., the Phase 2 standards are more stringent than they otherwise would have been had manufacturers not demonstrated the ability to over comply with the Phase 1 standards). The commercial transportation industries that use the products covered through these regulations are incredibly diverse with a wide range of operating and use patterns. As a result, the heavy-duty vehicle and engine industry is itself quite diverse and offers an almost unbelievable range of different products and options in order to best serve the needs of their customers. EPA and NHTSA in developing the Phase 1 and 2 programs, included a number of design elements intended to improve fuel consumption and lower GHG emissions without limiting the ability of manufacturers to offer the diverse range of products their customers expected and need. These flexibilities were expected to provide sufficient lead time for manufacturers to make necessary technological improvements, help increase the rate of which new technologies can be implemented, and reduce the overall cost of the program, without compromising overall environmental objectives. The primary flexibility is an engine and vehicle averaging, banking, and trading (ABT) program in which C02 credits may be generated for vehicles/engines that overachieve, relative to the standards. With these ABT provisions, manufacturers can offer the right product for the right consumer need (some of which may over or under perform against the fleet average GHG standards), balance market fluctuations impacting their sales volumes, and still move the entire fleet of vehicles toward increasing levels of energy efficiency and lower GHG 1 ------- emissions. The EPA ABT program allows for emission credits to be averaged, banked, or traded within each of the "averaging sets" described in this interim report, allowing manufacturers the opportunity to comply on a fleet average basis with the emission standards. Participation in this ABT program is optional and manufacturers can alternatively choose to certify all of their heavy-duty vehicles/engines to meet the applicable standards. This addendum provides an overview of the GHG compliance status of manufacturers of heavy-duty combination tractors, vocational vehicles, and the engines that power these vehicles. Heavy-duty combination tractors are the semi-trucks that typically pull trailers and are built to mainly move freight. Vocational vehicles consist of a very wide variety of truck and bus types including delivery, refuse, utility, dump, cement, transit bus, shuttle bus, school bus, emergency vehicles, motor homes, tow trucks, and many more. This addendum also summarizes the current C02 credit situation at the conclusion of Model Year 2022 (the second year of the Phase 2 program) for each manufacturer participating in either of the vehicle or engine ABT programs. Model year 2022 was also the first year that heavy-duty engine and vehicle entities that meet the small business qualifications of 13 CFR 121.201 were no longer excluded from these regulations, and thus were required to certify their vehicle/engine products for introduction into US commerce. Phase 2 also introduced new vehicle averaging sets for certain types of vocational vehicles by allowing a manufacturer to optionally certify using the custom chassis provisions of 40 CFR Part 1037. Banking of excess credits is not allowed for these custom chassis vehicles at the conclusion of a model year. The vehicle manufacturer must have a positive number of credits or they are deemed non-compliant for the year. Any excess credits are not able to be banked and carried over for use in future model years. The credits earned for these custom chassis averaging sets are not presented in this interim report as each manufacturer that certified using the custom chassis provisions was compliant in Model Year 2022 by either having a positive credit balance in each of these averaging sets or by using Phase 1 Advanced Technology credits to offset a negative credit balance. Please refer to the report referenced above for a better description of Phase 1 Advanced Technology credits and their continued flexibility within the Phase 2 program. The success of the heavy-duty GHG program is measured in the industry's ability to create the systems and processes necessary to demonstrate compliance with the program, improve their products to lower their GHG emissions and fuel consumption, and finally through their reporting to the Agency demonstrate that the fleet of vehicles they produced complied with the aggregated fleet standards. It is a significant accomplishment that the entire industry was able to implement and begin complying with this program and has demonstrated through their reporting that GHG emissions have been reduced to such an extent that all manufacturers are compliant, and most have created significant credit banks reflecting better overall fleet performance than the agencies originally projected in setting up the program. Table 1 of this addendum documents that all vehicle manufacturers are not merely compliant, but that all manufacturers participating in ABT have generated a positive banked credit balance through model year 2022 in each of the three averaging sets for vehicles. This table also presents currently available Phase 1 Advanced Technology banked credits which maintain their flexibility into the Phase 2 program until they expire (see report referenced above for additional information about these flexibilities). Similarly, Table 2 shows the updated credit balance values for all engine manufacturers in each of the three averaging sets (Heavy-Duty Spark Ignition engines are not part of this report) after model year 2022 (there were no Advanced Technology credits generated in Phase 1 so there is no corresponding 2 ------- column in this table to reflect those credits). All engine manufacturers except for Ford Motor and Volvo Group have zero or positive credit balances in each of the averaging sets showing their overall compliance to the current Phase 2 program. A negative balance is allowed by the regulations, however, a manufacturer having a negative credit balance may utilize three model years to achieve a zero or positive credit balance. This is the second consecutive year that Ford Motor has run a deficit in the MHD engine averaging set which results in a deficit balance of -16,672 Mg of C02, and the first year of running a deficit for Volvo Group in the HHD Engine averaging set with a deficit balance of -8,634 Mg of C02. 3 ------- Table 1 Heavy-Duty Vehicles Averaging Set Summary GHG Credits (Mg C02) Banked Summary - Through Model Year 2022 LHD MHD HHD Total Total Credit Total Credit Total Credit Phase 1 AT Manufacturer Balance Balance Balance Credit Balance ARBOC Specialty 2,952 Autocar 1,952 601,310 Battle Motors 35,253 9,784 3,259 Blue Bird Body 146,178 57,156 233,283 BYD Auto 157,249 313,254 Chanje 715 Chrysler Group 934,168 Daimler Coaches 179 DTNA Trucks 1,685,582 11,647,130 E-One 23,666 El Dorado 21,590 EVO Bus 235 Ferrara Fire 2,457 Ford Motor 3,550,566 1,614,636 8,114 General Motors 129,815 117,026 Gillig LLC 0 95,738 3,098 Hino Manufacturing 6,262 10 Hino Motors 5,395 145,243 1,491 Isuzu Motors 948,155 71,010 Kovatch Mobile 9,732 Mitsubishi Fuso 4,899 9,618 Motor Coach Ind. 103,300 2,046 Navistar, Inc. 22,985 1,859,581 3,232,342 New Flyer 0 102,455 425,198 Nikola 932,817 Oshkosh 75,879 PACCAR, Inc. 346 449,998 4,294,337 14,293 Rosenbauer Motors 4,365 Spartan Fire 6,049 Terex Corporation 6,479 Van Hool 372,264 1,013 Volvo Group 296,438 4,135,967 0 XOS Trucks 21 150,668 TOTALS 5,596,329 6,589,381 26,058,100 843,191 ------- Table 2 All Heavy-Duty CI Engines - Averaging Set Summary GHG Credits (Mg C02) Banked Summary - Through Model Year 2022 LHD MHD HHD Credit Balance Credit Balance Credit Balance Manufacturer Net C02 Net C02 Net C02 Cummins 2,968,111 1,821,794 Detroit Diesel 357,000 1,988,900 Ford Motor 925,975 -16,672 Isuzu Motors 65,489 Navistar 86,684 210,454 PACCAR 1,586,894 Volvo Group -8,634 Westport Fuel 55,779 48,836 TOTALS 1,078,148 3,308,439 5,599,408 ------- |