September 30, 2018

Submitted by:
ICF
Contract #: (EP-C-16-020)
Work Assignment: # (1-02)

Submitted to:

Aircraft CO2 Cost and Technology Refresh

Table of Contents
I.	Preface	4
II.	Assessment of CO2 Reducing Technologies	5
1.	Introduction	5
1.1	Growth of Aviation-Produced CO2 and the International Response	5
1.2	Data Sources	6
1.2.1	Secondary Research	7
1.2.2	Market Interviews	7
1.2.3	Domain Knowledge and ICF Internal Cost and Performance Models	9
1.2.4	Benchmark databases, industry conferences, and latest industry news & announcements	9
III.	Executive Summary	10
IV.	Aircraft Metric Values	13
1.	Introduction	13
2.	Metric Value Data Sources  -  PIANO	14
V.	Metric Value Forecast	15
1.	Introduction	15
2.	Methodology	15
2.1	Short and Mid-Term Metric Value Impact Methodology (Years 2015-2029)	15
2.2	Long-Term Metric Value Impact Methodology (Years 2030-2040)	16
2.3	Technology Development Cost Methodology	17
3.	Updates to 2015 Assumptions	17
3.1	Technology and Cost Assumptions Updates	17
3.2	Methodology Updates	18
4.	Results/Forecast	19
VI.	Stringency Implications	19
1.	Introduction	19
2.	Stringency Scenarios	19
3.	Stringency Lines	24
4.	Stringency Gaps	26
VII.	Technology Response for Failed Aircraft	28
1.	Modeling Metric Value Reduction	28
1.1	Implementation of Metric-Value-Improving Technology versus Smoothed Forecast	28
1.2	1% Additional Design Margin for Non-Compliant Aircraft	30
2.	PIANO Data Based Technology Response	30
2.1	Regulatory Non-compliance by Scenario	30
2.2	Technology Response by Aircraft by Scenario	32
2.2.1	A380 (-842 / -861)	32
2.2.2	767-3F	34
2.3	2028 Freighter Delay	35
2.4	Low Volume Exemption	37
2.4.1	Introduction to Low Volume Exemption	37
2.4.2	Low Volume Exemption for In-Scope Aircraft based on PIANO Data	37
2.5	In-Development Freighter Aircraft Analysis	39
VIII.	Appendices	40
1.	2015 Technology Impact Model Methodology	40
1.1	Introduction	40
1.2	Magnitude and Sources of Historical CO2 Reductions	43
1.3	The Nature of Technology Insertion	43
2.	Long-Term Technology Impact Model Methodology	48
2.1	Introduction	48
2.2	Methodology overview	48
2.3	Derive fuel burn reduction prospect index	48
2.4	Derive market driver index	50
2.5	Derive overall metric value improvement acceleration index	50
2.6	Example: Narrowbody Long-Term Metric Value Forecast	50
2.7	Long-Term Replacement Aircraft Analysis (Replacement Aircraft circa 2030-2040)	52
2.7.1	Historical Aircraft Emissions Performance	52
2.7.2	Long-term metric value forecast	54
3.	2015 Development Cost Model Methodology	56
3.1	Introduction	56
3.2	Methodology Overview	56
3.3	Categorizing Incremental Technologies	56
3.4	Elements of Non-Recurring Cost	57
3.5	Baseline Non-Recurring Cost Element Proportions	57
3.6	Non-Recurring Cost Scaling Factors	58
3.7	Considerations for Recurring Costs	60
3.8	Cost Calculations	60
3.9	Example:  Large Incremental Update NRC (Wingtip Devices)	60
4.	Table of Aircraft MV Forecast (PIANO Data)	63
5.	Representative Cumulative Metric Value Improvement and Cumulative Non-Recurring Cost (NRC) by Aircraft Category	67
6.	Selected Technology Profiles	68
6.1	Engine Technologies	68
6.2	Variable Camber Trailing Edge	72
6.3	Advanced Wingtip Devices	74
6.4	Adaptive Trailing Edge	76
6.5	Riblet Coatings	78
6.6	Natural Laminar Flow Control - Nacelle	80
6.7	Hybrid Laminar Flow Control  -  Empennage	82
6.8	Hybrid Laminar Flow Control  -  Nacelle	84
6.9	ECS Aerodynamic Cleanup and On-Demand ECS Scheduling	86
6.10	Fuel Cell APU Replacement	88
6.11	Control Surface  -  Optimal Control Laws for Horizontal Stabilizer Trim	90
6.12	Gap Reductions & Aerodynamic Cleanup on Slats/Spoilers/Ailerons/ etc.	92
6.13	Reducing Profiles of Lights, Antennae, Sensors, etc.	94
6.14	Aft Body Redesign for Aerodynamics	96
6.15	Composites  -  Current State, Increased Application	98
7.	Technology Readiness Level Definitions	100
8.	Introduction to Technology Response Database	101

Preface
In February 2016, the International Civil Aviation Organization's (ICAO) Committee on Aviation Environmental Protection (CAEP) agreed on the first-ever international standard to regulate CO2 emissions from aircraft, and in March 2017, ICAO formally adopted this standard.  Domestically, the Environmental Protection Agency (EPA) could propose future aircraft greenhouse gas (GHG) emission standard that are at least as stringent as ICAO's CO2 standard.  This report has been composed for the US Environmental Protection Agency (EPA) to study the costs of developing and implementing fuel burn or carbon dioxide (CO2)-reducing technologies on new in-production aircraft as measured by ICAO's CO2 metric. This report provides an overview of the ICAO CO2 aircraft metric and standard.  Additionally, this report assesses if there will be any impact on the US fleet from the ICAO CO2 aircraft standard relevant to new deliveries of in-production aircraft, and any alternative scenarios, as well as costs for scenarios where aircraft may need a technology response.
In a prior project for EPA, ICF gathered data on some 70 technologies from a combination of public sources and confidential interviews, then applied a detailed methodological framework (or expected value methodology) to develop projected CO2 metric values and costs.  ICF leverages the tool built under this prior project to perform the analysis described in this report, and the methodologies can be referred to in appendices VIII.1.  This report was prepared by Peter Zimm and Kent Harli of ICF and Dr. Joaquim Martins of the University of Michigan.

Assessment of CO2 Reducing Technologies
Introduction
Growth of Aviation-Produced CO2 and the International Response
In 2012, global aircraft CO2 emissions were 2% of total global aggregate CO2 output, (and 13% of global transportation CO2 emissions in 2011, which is the most recent year that global transportation CO2 emissions data is available).  Aircraft CO2 emissions are receiving increasing scrutiny because they have steadily increased due to fleet growth and higher aircraft utilization.  Globally, civil aircraft generated an estimated 1.44 trillion pounds of CO2 in 2012.  Commercial air transport aircraft -- encompassing the Very Large Aircraft, Large Twin Aisle, Small Twin Aisle, Single Aisle, and Regional Jet aircraft categories -- generated approximately 96% of this total.  Furthermore, ICF estimates global commercial air transport CO2 output will increase at 3.5% per annum over the next 10 years, rising to 1.8 trillion pounds in 2021.  The air transport aircraft categories will continue to produce the most CO2 output, and the production of two categories in particular -- Single Aisle and Large Twin Aisle -- will outpace overall CO2 emissions growth.
In response to this issue, in February 2016, the tenth meeting of the International Civil Aviation Organization's (ICAO) Committee on Aviation Environmental Protection (CAEP)  -  CAEP10  -  agreed on the first-ever international standard to regulate CO2 emissions from aircraft and, in March 2017, ICAO formally adopted this standard.  This standard applies to subsonic jet aircraft having a maximum takeoff weight (MTOW) greater than 5,700kg (12,566lb) and to propeller-driven multi-engine aircraft (e.g., turboprops) having MTOW greater than 8,618kg (19,000lb).
The Metric Value (MV) for the ICAO CO2 standard is based on an instantaneous measure of the fuel burn per distance flown that is then adjusted by accounting for usable aircraft floor area. Three test points are considered in the calculation of the MV for each aircraft, representing flight at high, medium, and low gross weights. The fuel burn per unit distance of each aircraft is evaluated at these three points and then averaged to obtain the MV. A more detailed description of the MV can be found in section IV.1. For the ICAO standard, the maximum allowed MV increases with the maximum takeoff mass (MTOM) of the aircraft, according to a stringency function. Furthermore, the implementation dates for the CO2 standard are 2020 or 2023 for new type aircraft (depending on the MTOM for the aircraft) and 2028 for in-production aircraft.
Domestically, the EPA potentially could propose future aircraft CO2 standard that are at least as stringent as the ICAO CO2 standard.  For the EPA, this study projects the reductions in aircraft metric value from incremental technology improvements and assesses the compliance position of the aircraft models subject to the ICAO standard.  We then project the technology responses likely to be applied to those aircraft that are expected to fail the standard at the time of implementation.  In addition to the ICAO standard, ICF assesses aircraft compliance and technology response under two additional scenarios:  one in which the ICAO standard is effective 5 years earlier for in-production aircraft and one in which a more stringent standard is applied 5 years earlier than the ICAO standard. The implications of these scenarios are that in-production aircraft may need to perform technology insertions or cease production to comply with the ICAO standard.
Data Sources
As a specialized consultant in the field of aviation, ICF works across the aviation value chain  -  from airlines and aerospace equipment makers to airports and investors. Specifically, in the aerospace market, ICF provides aerospace thought leadership and comprehensive services. We work with manufacturers and component original equipment manufacturers (OEMs) on aftermarket strategies and assist buyers, sellers, and advisors with aerospace-related acquisition targeting, commercial due diligence, and document preparation. More specifically, the essence of the work we do spans across the following project types:
 Analyzing market fundamentals
 Developing business strategies
 Assessing interest in new products and services
 Conducting customer satisfaction assessments
 Benchmarking supply chain functions.
As we perform these projects for the largest clients in the industry, we continually develop up-to-date analyses and maintain our in-house databases that translate years of proprietary data in areas such as aircraft and equipment production forecasts and raw material demand projections into analysis for expansion, capital allocation, and other strategic decisions. Therefore, we constantly draw from the following resources:
 Secondary research into industry published articles, white papers, scientific papers
 Primary research with market experts
    Domain knowledge from past work/engagements and ICF Internal Cost and Performance Models
 Benchmark databases, industry conferences, and latest industry news & announcements.
Therefore, all the analyses that are laid out in this report incorporate the aforementioned resources, synthesized with our constant internal dialogue within our team of aerospace senior-level aviation experts and aerospace industry contacts that validate the credible results that we produce.
Secondary Research
Secondary research provided a wealth of information about individual technologies and ongoing research programs. This was captured in the industry press, supplier and Original Equipment Manufacturer (OEM) press releases, conference proceedings, and news articles. University publications and websites also provided much information.
Market Interviews
ICF conducted a broad and thorough market interview program to gather feedback on technology performance, modeling approach and methodology, and commercial feasibility. Over 40 interviews were conducted with a wide cross-section of key individuals from throughout the industry  -  airframe, engine, and systems manufacturers, aircraft operators, and university and research organizations provided input and feedback on methodology, technology performance, and costs.

Current and former employees were interviewed from the following organizations:
                           Organizations Interviewed
   Aerion
   Aerodynamic Solutions
   Airbus
   Aloft AeroArchitects
   ATR
   Boeing
   Bombardier
   GE
   Honeywell
   Mitsubishi
   MTU
   NASA
   PATS Aircraft Systems
   Pratt & Whitney
   Rolls-Royce
   Volvo
   United Airlines
   United Technologies

Furthermore, the titles of the interviewees for this study spanned across multiple area of expertise:
                            Titles of Interviewees
   Advanced Structures  -  Core Engineering
   Chief Technology Officer
   Director, Project Engineering
   Director, Strategic Technology
   Executive Vice President (EVP), Commercial Programs
   Federal Aviation Administration (FAA) Designated Engineering Representative
   Head of Product Strategy
   Head of Research and Technology
   Head of Engines and Systems Technology
   [OEM] Technical Fellow
   Principal Design Engineer
   Senior Engineer
   Senior Vice President (SVP) Engineering
   SVP Operations & Supply Chain
   SVP Strategy
   Airframe Programs Technical Assistant
   Vice President (VP) Engineering
   VP Strategic Marketing
   VP Technology & Environment

Domain Knowledge and ICF Internal Cost and Performance Models
The ICF team was able to leverage knowledge gained through past consulting engagements, as well as cost and performance models that had been developed to support market knowledge and ongoing project work. In some cases, knowledge was available from in-depth cost and performance models used for particular technologies.
Benchmark databases, industry conferences, and latest industry news & announcements
The ICF team also drew our information from various benchmark databases that were published by other market experts. Additionally, ICF team members regularly attend industry conferences in which industry experts attend and discuss the latest trends in the market. Finally, the ICF team is always up to date on the latest industry news & OEM announcements.
Through a combination of these sources, ICF was able to create comprehensive profiles of both the fuel burn impact and cost of a wide variety of technologies.

Executive Summary
The purpose of this report is to evaluate the cost to implement CO2 -reducing technologies on in-production aircraft to reduce aircraft CO2 metric values (MVs).
ICAO metric values originated from CAEP10 agreements for developing the CO2 standard.  Despite ICAO metric value data being the official dataset that underpinned the development of the CAEP10 CO2 standard, the dataset is not available in the public domain due to ICAO's data-sharing restrictions. Therefore, this report uses PIANO (Project Interactive Analysis and Optimization) data so that our analysis results may be shared publicly.  Metric values developed utilizing PIANO data are similar to ICAO metric values.
This study leverages a model ICF built for the EPA in 2012-2015. That study examined the impact of the CO2 standard to new in-production aircraft. In particular, it assessed the technological improvements to new in-production aircraft that are feasible, and the potential CO2 emission reductions that could result.  We updated the assumptions in the 2012-2015 model, re-ran the CO2 emission reduction projections, and compared the forecasted aircraft emissions with the respective stringency levels and the implementation dates, which will be elaborated in detail in section VI.2. Finally, we projected the non-recurring engineering costs of realizing the projected CO2 emission reductions that the OEMs have to undertake to improve the metric value.
Furthermore, we evaluated compliance to three scenarios:
 Scenario 1 is the ICAO CO2 standard and its production cut-off date is 2028.
 Scenario 2 pulls ahead the Scenario 1 production cut-off date to 2023.  In addition, Scenario 2 delays the production cut-off date to 2028 for dedicated freighters.
 Scenario 3 implements a tighter stringency level, pulls ahead the production cut-off date to 2023, and delays the production cut-off date to 2028 for dedicated freighters.
Using PIANO MV baselines and ICFs MV forecast model, ICF forecasted metric values of over 120 aircraft models for upcoming years. First, we computed the gap between each aircraft MV and its respective stringency level in each of the three different scenarios. To compute the gap, we started with the projected MV to the stringency enforcement year, and subtracted the stringency line value for the corresponding MTOM for all three scenarios. We then filtered out the aircraft models that are projected to end their production before the standard goes into effect (again, by scenario).  Aircraft models meeting the standard were filtered out next, leaving those models which fail the standard for at least one of the scenarios.
The result of the analysis is two aircraft failed at least one stringency scenario:
 The A380 does not comply with scenario 3 with a MV gap of 3.24%
 The 767F does not comply with scenarios 2 or 3 with MV gaps of 7.91% and 15.67%, respectively.
 There are no aircraft that fail scenario 1.
For those aircraft that do not comply with a scenario, an additional 1% design margin above the shortfall to the stringency level of the scenario needs to be achieved.  This design margin is expected in order to ensure the technology addresses the shortfall to the standard (actual CO2 reduction for a given technology is variable).
The A380 does not comply with scenario 3 with a MV gap of 3.24% -- so it requires a technology response.  Adding the 1% design margin, the technology response must total to 4.24% in expected MV improvement.  Furthermore, we assume the original equipment manufacturer (OEM) would have implemented Advanced Wingtip Devices and Engine Technologies in the course of achieving the metric value reductions projected by the smoothed forecast.  Doing so would in fact mean that 1.71% of excess reductions would already have been achieved, leaving 1.53% of reductions to be achieved through technology response.  Adding the 1% design margin, the net target becomes 2.53%.  The most economical solution is for A380 to implement Adaptive Trailing Edge if design margin is not required but, Adaptive Trailing Edge and ECS Aero if design margin is required.  The non-recurring cost to implement these improvements are $493M and $580M, respectively.
The 767-3F will fail stringency scenario 2 at its stringency level and production cut-off date (2023) with a smoothed forecasted metric value gap of 7.91%.  Considering the large metric value gap that 767-3F has, and that 2023 is the final year of production for the aircraft model, it is likely that 767-3F will pull forward its final year of production by a year (to 2022) to avoid mandatory technological insertion.  This response would be much less costly than the investment required to implement technology response sufficient to address such a large MV gap.
The 767-3F will fail stringency scenario 3 at its stringency level and production cut-off date (2023) with a smoothed forecasted metric value gap of 15.67%.  Considering the large metric value gap that 767-3F has, and that 2023 is the final year of production for the aircraft model, it is likely that 767-3F will pull forward its final year of production by a year (to 2022) to avoid mandatory technological insertion.  This response would be much less costly than the investment required to implement technology response sufficient to address such a large MV gap.
ICF then analyzed further potential freighter stringency year delays that may be applied to non-compliant freighter aircraft models and low-production-volume exemptions that may be applied to the non-compliant aircraft models. The analysis showed that the delay of the production cut-off date to 2028 for dedicated freighters in scenarios 2 and 3 will enable the 767F to avoid a mandatory accelerated technological insertion due to the aircraft being out of production by the later implementation date. For low-production-volume exemptions, ICAO will publish a set of criteria after CAEP11 meeting, and therefore the methodology will not be outlined in this report. However, A380 and 767F both will qualify for this low-volume-exemption.
Finally, ICF analyzed in-development freighter aircraft and forecasted their potential CO2 compliance. Based on ICF's forecast, both upcoming in-development freighter aircraft (A330neoF and 777XF) will both pass the three scenarios without any issues.

Aircraft Metric Values
Introduction
The ultimate purpose of this report is to evaluate the cost of reducing aircraft CO2 emissions, which are proportional to fuel burn.  ICF began its analysis by evaluating the impact of technologies on relative fuel burn reductions.
However, the CAEP certification procedure does not use fuel burn directly, but instead, defines a metric system or Metric Value (MV) that is related to fuel burn. The metric system or MV is developed to equitably reward advances in aircraft technologies that contribute to reductions in aircraft CO2 emissions.
The MV is defined based on an instantaneous measure of fuel burn per distance flown and represents an attempt to develop a metric that correlates with fuel burn, while being independent of aircraft type, weight and utilization. The MV is based on the specific air range (SAR), which is an instantaneous measure of the distance flown per unit weight of fuel. The MV is obtained by inverting SAR (which yields the fuel weight required to travel a unit distance), and then dividing it by a non-dimensionalized floor area raised to an exponent, resulting in the following equation:
MV= 1SAR x AFAR0.24
where AF is the floor area, and AR is a reference area related to the fuselage platform.
Since SAR depends on the instantaneous weight, which varies during flight (i.e., weight reduces as fuel is burned) and has a wide range depending on the mission. SAR can vary by as much as a factor of 2 for a given aircraft.  Given this wide range of variation, the MV is highly dependent on the weight used in its calculation.  To address this issue, CAEP defined three weight values over which the MV should be averaged to obtain a final value that is representative.
When converting fuel burn reductions to reductions in the MV, ICF assumed that the MV is based on SARs at a representative set of weights.  Therefore, a 1% fuel burn reduction corresponds to 1% MV reduction.
One important characteristic regarding the MV is that reductions in aircraft empty weight would not impact the MV. The rationale for this was that any reduction in empty weight would be canceled out by a corresponding increase in payload, fuel, or both. Thus, even though weight saving technologies and improvements increase the aircraft efficiency, this is not reflected in the MV. Therefore, ICF post-processed all the fuel burn reductions to remove the reductions due to weight by individually analyzing each technology and assessed the magnitude of fuel burn reduction that is caused by aerodynamic improvements and weight savings respectively.  Across technologies, about 2/3 of the fuel burn impact is reflected in the MV, although this varies depending on the technology and the aircraft category.
Metric Value Data Sources  -  PIANO
ICAO metric values originated from CAEP10 agreements for developing the CO2 standard.  Despite ICAO metric value data being the official dataset that underpinned the development of the CAEP CO2 standard, the dataset is not available in the public domain due to ICAO's data-sharing restrictions. Therefore, this report uses PIANO (Project Interactive Analysis and Optimization) data so that our analysis results may be shared publicly.  Metric values developed utilizing PIANO data are similar to ICAO metric values.
The PIANO metric value database is a professional tool for various design/performance analysis on commercial aircraft, including environmental emissions assessment.  PIANO uses an identical formulation as ICAO to derive metric value, except that it draws on various industrial and academic sources instead of the confidential disclosures of the manufacturers. The PIANO assumptions are derived partly from first principles (e.g. performance calculations), and partly from classical, semi-empirical, semi-theoretical calculations. PIANO was developed by Lissys LTD, a UK-based limited company that began the PIANO metric value database in 1990. PIANO is currently utilized by more than 20 major aerospace organizations as a publicly available source of data about airplane performance. The PIANO version utilized in this analysis was PIANO version 5.4.

Metric Value Forecast
Introduction
This study leverages a model ICF built for the EPA in 2012-2015.  That study examined the impact of the CO2 standard to new in-production aircraft.  In particular, it assessed the technological improvements to new in-production aircraft that are feasible, and the potential CO2 emission reductions they could produce.  We updated the assumptions in the 2012-2015 model, re-ran the CO2 emission reduction projections, and compared the forecasted aircraft emissions with the respective stringency levels and the implementation dates.  Finally, we projected the costs of realizing the projected CO2 emission reductions.
Methodology
Short and Mid-Term Metric Value Impact Methodology (Years 2015-2029)
For the 2012-2015 work, ICF developed a detailed methodological framework to analyze the potential impact of new technology introduction on aircraft fuel efficiency and CO2 emissions as shown in Exhibit 5.1.
 Exhibit 5.1: ICF Technology Impact Methodology

This framework involved five basic steps that we utilized to forecast annual metric value improvement for the upcoming short and mid-term where we are able to foresee the technologies that are being implemented to in-production aircraft:
    First, we identified the technologies that could reduce CO2 emissions from new in-production aircraft
    Second, we then assessed each technology for the magnitude of potential CO2 reduction and the mechanisms by which reduction is achieved.  Both were analyzed by aircraft size category
    Third, the technologies were passed through technical success probability
    Fourth, the technologies were passed through commercial probability success screens
    Last, individual aircraft differences were considered within aircraft category to develop a CO2 emissions reduction forecast by technology by aircraft model
Detailed descriptions of the short and mid-term metric value reduction forecast can be found in Appendix 1 (or section 1 of Appendices).
Long-Term Metric Value Impact Methodology (Years 2030-2040)
The methodology that is elaborated in the previous section is only applicable for the timeframe in which we are able to recognize the technologies that are going to be implemented on in-production aircraft (i.e. years 2015-2029). Therefore, to forecast long-term metric value improvements beyond 2029, we need to derive an alternative methodology.
Because it is still highly uncertain as to what specific technologies will be feasible and ready for implementation beyond 2029, we will need to utilize a parametric approach in deriving the long-term forecast. This framework involved three steps that we utilized to forecast long-term annual forecast metric value improvement:
 First, for each aircraft type, we identified ten technical factors on three scoring dimensions that drive fuel burn and metric value reduction impact and feasibility in the long-term, and we then scored each aircraft type on a scale of 1 to 5 for each technical factor and on each scoring dimension to arrive at an overall fuel burn reduction prospect index.
 Second, we analyzed the potential market factors for each aircraft type and derived indices on a scale of 1 to 5 as an estimate for how much R&D will be put into each aircraft type based on overall potential of each aircraft type's future market.
 Third, we coupled each aircraft type's the market factor with their respective overall fuel burn reduction index and derived an overall index score for their metric value improvements. A low overall index score means that the aircraft type will experience reduced annual metric value reduction, while a high overall index score means that the aircraft type will experience accelerated annual metric value reduction.
Afterwards, we expanded our short/mid-term metric value improvement impact figures to the end of the long-term forecast horizon (i.e. 2040) and applied the overall metric value improvement index scoring derived by each aircraft type.
Detailed descriptions of the long-term metric value reduction forecast can be found in Appendix 2 (or section 2 of Appendices).
Technology Development Cost Methodology
ICF developed an independent, bottom-up non-recurring cost (NRC) cost model for implementing minor (0-10% metric value) improvements on existing aircraft platforms.  First, we categorized the incremental technologies into impactful-ness groupings  -  either as Minor PIPs (performance improvement packages) or as Large Incremental Updates.  Next, we identified the elements of non-recurring cost.  Third, we developed baseline non-recurring cost element proportions by incremental technology category for single-aisle aircraft.  Then, we scaled the baseline NRC elements to the other aircraft size categories.  Next, we determined the NRC costs for single aisle aircraft and applied the scaled costs to the other aircraft size categories.  Lastly, we compiled technology supply curves by aircraft model.
Detailed descriptions of the technology development cost methodologies can be found in Appendix 3 (or section 3 of Appendices).
Updates to 2015 Assumptions
Technology and Cost Assumptions Updates
ICF reviewed the 2015 model assumptions and conducted research to validate them.  A number of technologies had been inserted on aircraft that had entered service since the 2015 report so they now had actual service histories (natural and hybrid laminar flow in particular).  We also reviewed the outcomes of major design changes (i.e., re-engine, re-wing).  Lastly, even though they were studied in the 2012-2015 effort, weight reducing technology assumptions were not updated in this analysis. Despite reducing overall emissions driven by less aircraft fuel burn, the weight-reducing technologies do not affect the CAEP metric value (CAEP metric value is independent of aircraft type, weight, and utilization).
ICF updated the following assumptions in the metric value forecast analysis based on the results of our research:
 Engine technologies:  Increased fuel burn reducing impact and increased commercial feasibility.  We did this because we found that engine OEMs were constantly pushing the frontier to incorporate these technologies.  Put another way, it appears adopting these engine technology improvements is a high priority.
 Riblet coatings: Increased technical feasibility.  For example, Airbus and Lufthansa are already experimenting with shark skin coatings and British Airways is experimenting with coatings on transatlantic A318s.
 Hybrid laminar flow control  -  empennage: Decreased commercial feasibility and increased recurring cost.  Boeing is reviewing the drag benefits of Hybrid laminar flow control on the 787. As a result of the current wing shape and several other factors, the technology isn't producing the sweet spot balance of cost/performance as initially expected.
Methodology Updates
Either based on validation research or to address new requests from EPA, ICF made the following modifications to metric value forecast methodology:
 Analysis extended to aircraft variant level (i.e. beyond aircraft family level): The analysis in the 2015 report was done at the aircraft family level (e.g., 737 family).  Therefore, to determine the compliance of each in-scope aircraft model (e.g., 737-700, 737-800, etc.), ICF applied the forecasted aircraft family metric value reductions to the base year metric value of each aircraft model.
 Continuous technology benefit applicability assessment to more precisely model technology applicability for new project aircraft: Typically, new project aircraft will have lower baseline metric values compared to legacy aircraft, due to having more advanced technologies implemented within the initial launch of the aircraft. As a result, there will be fewer incremental improvements available from future technologies for new project aircraft.  Due to the addition of a number of new project aircraft into the analysis, ICF modified the technology applicability matrix from analyzing each technology in a binary manner (i.e. technology can only be fully applicable or fully un-applicable), to a continuous manner so that partial impacts of technologies could be applied to new aircraft models (i.e. percentage magnitude of a fuel burn impact will each technology provide).
Results/Forecast
As elaborated in the methodology section, the metric value forecast is derived through approximating incremental annual metric value improvement, and applying those annual improvements to a baseline metric value. To derive each year's cumulative metric value reduction, ICF took the following approach:
Metric value reduction = Technology applicability percentage * commercial feasibility factor * probability of technical success * Average MV benefit of technology by aircraft type
Using this approach and using PIANO data, ICF projected metric values for 125 in-scope aircraft models for the 2015-2029 time period using the short/mid-term methodology (as elaborated in section V.2.1), and for the 2030-2040 time period using the long-term methodology (as elaborated in section V.2.2).  Results for years 2015, 2018, 2020, 2023, 2028, 2030, and 2040 are shown in Appendix 4 (or section 4 of Appendices).
Stringency Implications
Introduction
In this section, we compute the gaps between the forecasted MV for the various aircraft and the corresponding stringency standard for each aircraft model at the time the standard goes into effect.  We then identify in-production and project aircraft that are expected to fail to meet the stringency requirements.  For those aircraft that are expected to fail the standard, we analyze the potential technology responses that would bring them into compliance.  Lastly, in addition to evaluating the ICAO CO2 standard stringency scenario, we considered two alternative scenarios: one scenario in which the ICAO standard are implemented 5 years earlier for in-production aircraft and one scenario in which a more stringent standard is applied 5 years earlier.
Stringency Scenarios
CAEP considered and analyzed 10 different stringency levels (SLs) for both in-production and new type standard, comparing aircraft with a similar level of technology on the same stringency level. These levels were generically referred to numerically from ``1'' (the least stringent) to ``10'' (the most stringent).  For the CO2 standard that were ultimately adopted by ICAO, the new-type and in-production stringency levels for smaller and larger aircraft were adopted at different levels to reflect the range of technology being used and the availability of new fuel burn reduction technologies that vary across aircraft of differing size and weight. Exhibit 6.1 provides a brief overview of the implementation dates and stringency levels of the ICAO CO2 standard.

Exhibit 6.1: Stringency Levels and Implementation Dates for International Aircraft CO2 Emission Standard

Aircraft Weight (MTOM) Thresholds (KG)
                New-Type Aircraft Maximum Permitted CO2 Level

                 In-Production Aircraft Maximum Permitted CO2
                                     Level
                               Stringency Level

 >5,700 to <60,000
                                      SL5
                                      SL3

  60,000 to ~ 70,000
                                   SL5-SL8.5
                                    SL3-SL7

> ~70,000
                                     SL8.5
                                      SL7
                              Implementation Date

Application for a new-type certificate or a change to an existing-type certificate
                                     2020
                            (2023 for planes with
                              less than 19 seats)
                                     2023

 Production Cut-Off
                                      n/a
                                     2028

CO2 adverse or significant in-production type changes

                                      n/a

                                     2023
We summarize the ICAO scenario and the two alternative scenarios in Exhibit 6.2.
Scenario 1 is the ICAO CO2 standard.  The stringency lines for this scenario are shown in Exhibits 6.3 and 6.4 for in-production aircraft.  The production cut-off date for this standard is 2028.
Scenario 2 pulls ahead the Scenario 1 production cut-off date to 2023. In addition, Scenario 2 delays the production cut-off date to 2028 for dedicated freighters.
Scenario 3 implements a tighter stringency level, pulls ahead the production cut-off date to 2023, and delays the production cut-off date to 2028 for dedicated freighters.
We analyze the results of these three scenarios in the next section.

Exhibit 6.2: Stringency Scenarios
Scenario
Option
Description
                                       1
ICAO (as agreed at CAEP/10)
 New Type SL8.5 (SL5 for aircraft < 60 tons) 2020
 (SL5 for aircraft < 60 tons and < 19 seats 2023)
 In Production SL7 (SL3 for aircraft < 60 tons) 2028
 2023 for CO2 adverse or significant in-production type changes
                                       2
Pull Ahead Some In-Production
Dates
 Move in-production standard or production cut-off date to 2023 (2025 for aircraft < 60 tons)
 Delay production cut-off date to 2028 for dedicated freighters
                                       3
Pull Ahead Some New Type and In-Production
Dates and More Stringent
Levels
 New Type SL9 (SL6 for aircraft < 60 tons) 2020
 In Production SL8 or SL9 2023 (SL5 for aircraft <60 tons, 2025)
 Delay production cut-off date to 2028 for dedicated freighters

Stringency Lines
MV varies with aircraft maximum take-off mass (MTOM) and mission range.  Thus, we cannot apply a single MV stringency value for all aircraft. ICAO adopted a stringency function that is dependent on MTOM.  Ideally, a fair MV stringency would also account for the range that an aircraft is capable of within their MTOM category.  However, aircraft range is strongly correlated with the MTOM. The result was the following stringency option function:
          MVSO=10C0+C1log10MTOM+C2log10MTOM2
This is a second order log curve whose coefficients were tuned to match the trends of MVs for actual aircraft.
For in-production aircraft, ICAO adopted SL3 for MTOMs under 60,000 kg and to SL7 for MTOMs over 70,107 kg, with a constant MV value of 0.797 for MTOMs between 60,000 kg and 70,107 kg.
This results in the curve shown in Exhibits 6.3 and 6.4, which shows that most aircraft models are already passing the stringencies. Aircraft models that have stringency gaps will be elaborated upon further in section VI.4.

Exhibit 6.3: Stringency lines for the three scenarios[,]

Exhibit 6.4: Detail of Stringency lines for aircraft below 100 metric tons of MTOM

Stringency Gaps
Using PIANO MV baselines and ICFs MV forecast model, ICF forecasted metric values of over 120 aircraft models for upcoming years as shown in Appendix 4 (or section 4 of Appendices). First, we computed the gap between each aircraft MV and its respective stringency level in each of the three different scenarios. To compute the gap, we started with the projected MV to the stringency enforcement year, and subtracted the stringency line value for the corresponding MTOM for all three scenarios. We then filtered out the aircraft models that are projected to end their production before the standard goes into effect (by scenario).  Aircraft models meeting the standard were filtered out next, leaving those models, which fail the standard for at least one of the scenarios.
The aircraft models failing the standard in at least one of the scenarios are listed in Exhibit 6.5. This figure depicts the computed percentage gap relative to the corresponding stringency line (yellow line), for scenarios 1 (red), 2 (blue) and 3 (green).  A zero value for scenario 1 in Exhibit 6.5 means that the aircraft is projected to end its production before the stringency standard goes into effect.  A negative value in Exhibit 6.5 means that the aircraft meets the stringency standard of a given scenario, and a positive value indicates that it does not meet the stringency level.  Dots to the right of yellow line show that an aircraft is not meeting a stringency level of a scenario.  (Note, scenario 3 includes both SL8 and SL9 for in-production aircraft greater than 60 tons, hence there are two columns for this scenario. The first column under scenario 3 represents SL8, and the second column is for SL9.)
Exhibit 6.5: Gap to stringency scenario for aircraft models that fail the stringency when using PIANO database MVs.

Technology Response for Failed Aircraft
Modeling Metric Value Reduction
Implementation of Metric-Value-Improving Technology versus Smoothed Forecast
There is an important distinction to bear in mind for the technical response discussion below.  The metric value reduction forecast is an expected value calculation; it is a projection of the annual fuel burn improvement from all the technologies that will be implemented on each aircraft.  As a result, it is expressed in terms of a constant annual improvement in metric value.  We know that original equipment manufacturers (OEMs) work to develop and implement incremental technology improvements, but we don't know the timing of the investment or implementation of the improvements aircraft model to aircraft model.  Rather than attempt to discretely project improvements by aircraft, we consider the potential improvement by aircraft family implemented over a given time frame, and project reductions in terms of a smoothed forecast.
In contrast, for those aircraft requiring a technical response (i.e., failing to meet the standard and expected to remain in production), ICF constructed supply curves that plot the expected benefit (CO2 emission reduction) of a given technology against its expected development cost.  The result is an ordinal ranking of the incremental technologies by aircraft family, from most cost effective to least cost effective, expressed as a supply curve. For the purpose of determining technical response, ICF assumes the manufacturer will invest in and implement the most cost effective technologies first and proceed to the next most cost effective technology next to achieve their incremental metric value improvements projected by the metric value reduction forecast.  However, in contrast to the smoothed forecast described above, once the new technology is implemented, there is a step change in the metric value reduction; in other words, metric value reductions are realized all at once (instead of gradually) when the technology is implemented.  So, from the base year to the year the standard goes into effect (e.g., from 2010 to 2025), the metric value reduction forecast projects a given reduction (e.g., 6.25% in Exhibit 7.1 below).  However, for this example, in order to achieve that level of reduction, the manufacturer will have implemented Advanced Wingtip Devices and Engine Technologies, for a total of 7.7% in metric value reductions.  Thus, while the smoothed forecasted reduction is 6.25%, the implemented reductions are actually higher because the actual technology benefit is fully realized at once when technology is implemented.  A representative metric value improvement and its associated non-recurring cost data points by aircraft category is shown in Appendix 5 (or section 5 of Appendices), while each individual technology's non-recurring costs and fuel burn benefit are shown in the technology profiles in Appendix 6 (or section 6 of Appendices).

Exhibit 7.1: Incremental Improvement Technology Insertion Analysis Methodology

We applied the following methodology in order to derive the implemented metric value improvement that relates to the smoothed forecast:
 For a given future year, a manufacturer's technology insertion is assumed to have progressed up the supply curve (i.e. technologies with largest improvement and most economical cost are implemented first). Therefore, these economical technologies would have already been implemented by the stringency year, and will not be available for future investment.
 We overlay the smoothed forecasted incremental metric value improvement by the stringency year on the aircraft model's discrete supply-curve.  From this overlay, ICF identifies the most economical technologies that would already have been implemented by the stringency year.
 The remaining technologies not yet implemented are available for accelerated investment should a technology response be needed.  For each in-scope aircraft model, ICF analyzed technology responses using PIANO data.

1% Additional Design Margin for Non-Compliant Aircraft
For those aircraft that do not comply with the stringency standard, an additional 1% design margin above the shortfall to the stringency needs to be achieved.  This design margin is expected in order to ensure the technology addresses the shortfall to the standard (actual CO2 reduction for a given technology is variable).
PIANO Data Based Technology Response
Using PIANO metric values and ICF's metric value reduction forecast, ICF compared the forecasted Metric Values of each aircraft model to the stringency standard in the year the standard goes into effect to derive the gap between the expected performance of the aircraft model to the standard.  This section identifies those aircraft models which are expected to fail the standard in the three scenarios, identifies the technology responses available to the manufacturer to bring the aircraft into compliance, and explores any exemptions that may apply to the non-compliant aircraft.
Regulatory Non-compliance by Scenario
Based on PIANO data, the following aircraft models are non-compliant to the standard at their respective stringency years in at least one of the scenario options:

Exhibit 7.2: Aircraft Non-Compliance by Scenario

                                  Scenario 1
                                  Scenario 2
                                  Scenario 3
                                Aircraft Model
                                  Compliance
                               Metric Value Gap
                                  Compliance
                               Metric Value Gap
                                  Compliance
                               Metric Value Gap
                                     A380
                                    (-842 /
                                     -861)
                               Out of Production
                                   (by 2028)
                                      N/A
                                     Pass
                                    -3.69%
                                     Fail
                                -1.79% to 3.24%
                                    767-3F
                               Out of Production
                                   (by 2028)
                                      N/A
                                     Fail
                                     7.91%
                                     Fail
                                 10% to 15.67%

In-scope aircraft not listed on this table pass all stringency scenario requirements.

Technology Response by Aircraft by Scenario
A380 (-842 / -861)
Exhibit 7.3: A380 Incremental Improvement Technology Supply Curve

Scenario 1
The A380 will be out of production by scenario 1's stringency year (2028), therefore no technology response is required.  As the A380 fleet is retired, ICF expects its routes will be taken over by the A350XWB and the 777.
Scenario 2
The A380 passes scenario 2's metric value stringency requirement by -3.7%, therefore no technology response is required.
Scenario 3
The A380 passes scenario 3 SL 8, but fails SL 9 by 3.24% -- so it requires a technology response.  Adding the 1% design margin, the technology response must total to 4.24% in expected MV improvement.  Furthermore, we assume the OEM would have implemented Advanced Wingtip Devices and Engine Technologies in the course of achieving the metric value reductions projected by the smoothed forecast.  Doing so would in fact mean that 1.71% of excess reductions would already have been achieved, leaving 1.53% of reductions to be achieved through technology response.  Adding the 1% design margin, the net target becomes 2.53%.  The most economical solution is for A380 to implement Adaptive Trailing Edge if design margin is not required but, Adaptive Trailing Edge and ECS Aero if design margin is required.  The non-recurring cost to implement these improvements are $493M and $580M, respectively (see Exhibit 7.4 below).
1% Design Margin Implementation on A380
Exhibit 7.4: A380 Scenario 3  -  1% Design Margin Implementation Compared To No Design Margin

                               No Design Margin
                               1% Design Margin
                             % Gap to MV Standard
                                     3.24%
                                     4.24%
                      Residual Implemented MV Improvement
                                    (1.71%)
                                    (1.71%)
                    Technology Response Improvement Target
                                     1.53%
                                     2.53%
                 Technology Response:  Adaptive Trailing Edge
                           2.00% of A380 baseline MV
                           2.00% of A380 baseline MV
                        Technology Response:  ECS Aero
                                      N/A
                           0.63% of A380 baseline MV
              Non-Recurring Cost to Implement Technology Response
                                     $493M
                                    $580M

Recurring Costs of Technology Response
For the aircraft operators, ICF anticipates there would be very low and possibly no recurring costs associated with incorporating these technologies (e.g., additional maintenance, material, labor, and tooling costs) due to these technologies having relatively similar recurring cost requirements and characteristics to existing equivalent technologies. This is driven by the fact that technologies need to be economically feasible for the operators to implement and/or utilize. Technologies that are not able to be economical will not be adopted by the operators.
 Furthermore, given that the aircraft has already had trailing edges and ECS implemented with their respective recurring cost, the new technologies implemented must not have additional significant recurring cost, due to an existing cost benchmark. In other words, if the new implemented technologies were to add significant recurring cost, operators would likely object to them being added.
767-3F
Exhibit 7.5: 767 Incremental Improvement Technology Supply Curve

Scenario 1
The 767-3F is out of production by scenario 1's stringency year (2028), therefore no technology response is required.  As the 767 freighter fleet retires, ICF expects its routes will be taken up by A330 and 777 freighters.
Scenario 2
According to the incremental improvement metric value forecast, 767-3F will fail stringency scenario 2 at its stringency year (2023) with a smoothed forecasted metric value gap of 7.91%.  Considering the large metric value gap that 767-3F has, and that 2023 is the final year of production for the aircraft model, it is likely that 767-3F will pull forward its final year of production by a year (to 2022) to avoid mandatory technological insertion.  This response would be much less costly than the investment required to implement technology response sufficient to address such a large MV gap.
Scenario 3
According to the incremental improvement metric value forecast, 767-3F will fail stringency scenario 3 at its stringency year (2023) with a smoothed forecasted metric value gap of 15.67%.  Considering the large metric value gap that 767-3F has, and that 2023 is the final year of production for the aircraft model, it is likely that 767-3F will pull forward its final year of production by a year (to 2022) to avoid mandatory technological insertion.  This response would be much less costly than the investment required to implement technology response sufficient to address such a large MV gap.

1% Design Margin Implementation on 767-3F
Exhibit 7.6: 767 Scenarios 2 & 3  -  1% Design Margin Implementation Compared To No Design Margin

                                  Scenario 2
                               No Design Margin
                                  Scenario 2
                               1% Design Margin
                                  Scenario 3
                               No Design Margin
                                  Scenario 3
                               No Design Margin
                             % Gap to MV Standard
                                     7.91%
                                     8.91%
                                    15.67%
                                    16.67%
                      Residual Implemented MV Improvement
                                    (2.29%)
                                    (2.29%)
                                    (2.46%)
                                    (2.46%)
                    Technology Response Improvement Target
                                     5.61%
                                     6.61%
                                    13.22%
                                    14.22%
                              Technology Response
                                      N/A
                                      N/A
                                      N/A
                                      N/A
              Non-Recurring Cost to Implement Technology Response
                                      N/A
                                      N/A
                                      N/A
                                      N/A

For Scenarios 2 and 3, technology response to address such a large MV gap on 767-3F is prohibitively expensive; adding a 1% design margin potentially adds even more expense.
2028 Freighter Delay
Under stringency scenarios 2 and 3, selected freighter aircraft may be allowed to have their stringency years delayed to 2028. Therefore, ICF conducted an additional analysis to estimate the effects of this potential delay on the compliance of the in-scope freighter aircraft.

Exhibit 7.7: Freighter Aircraft Stringency Delay to 2028 Analysis for Scenarios 2&3 (stringency year 2023)

As shown in Exhibit 7.7, all but one (767-3ERF) of the in-scope freighters will be out of production by 2023. Therefore, delaying the stringency year for freighter aircraft will have minimal benefit to the manufacturers.  Aircraft that go out-of-production will leave behind active in-service fleets.  We expect that the aircraft listed in Exhibit 7.7 above could be replaced with the newer freighter aircraft shown in Exhibit 7.8:
Exhibit 7.8: Potential Future Freighter Aircraft Replacement

                           Freighter Aircraft Model
                        Replacement Freighter Aircraft
                                    A330-2F
                               A330neo freighter
                                    747-8F
                                777X freighter
                                   767-3ERF
                      A330neo freighter / 777X freighter
                                   777-2LRF
                                777X freighter

Exhibit 7.8 shows that current freighter variants retiring in the future will be replaced with A330neo or 777X freighters.  Section VII.2.5 analyzes these in-development freighter aircraft for their compliance to the stringency standard.
Low Volume Exemption
Introduction to Low Volume Exemption
For the CO2 standard, ICAO agreed to provide flexibility for certain aircraft with low volume production.  Thus, if by the implementation date a non-compliant aircraft is still in production, it may be exempt from having to meet the ICAO standard (and thus, having to make mandatory an accelerated technological insertion). This exemption will be dependent upon two main factors:
 Total aircraft left to be produced (per type certificate)
 Magnitude of the aircraft model's metric value margin to the regulatory standard
The specific exemption criteria were agreed to at the CAEP Steering Group in December 2016, which was after the CAEP10 meeting in February 2016, and it is not yet available to the public in the form of a published ICAO document.  (These specific criteria are expected to be available to the public after the CAEP11 meeting in February 2019.)  Thus, this report will only generally describe the exemption criteria.
Low Volume Exemption for In-Scope Aircraft based on PIANO Data
Exhibit 7.9: Aircraft Production Forecast Beyond Stringency Years
                           Aircraft Type Certificate
                            End of Production Year
                                     2023
                                     2024
                                     2025
                                     2026
                                     2027
                                     2028
                                     2029
                                     2030
                    Total Production Beyond Stringency Year
                                     A380
                                     2025
                                      12
                                      12
                                      12
                                       0
                                       0
                                       0
                                       0
                                       0
                                      36
                                      767
                                     2023
                                      10
                                       0
                                       0
                                       0
                                       0
                                       0
                                       0
                                       0
                                      10
As shown in Exhibit 7.9, ICF first developed an aircraft production forecast for aircraft models that have metric value gaps against stringency requirements to determine the possibility of qualifying for a low volume exemption. The far right column sums the number of aircraft left to be produced during and after the stringency year.  This sum is then compared to the low volume exemption aircraft production threshold.

Exhibit 7.10: Aircraft Low Volume Exemption by Scenario
                             A/C Type Certificate
                    Total Production Beyond Stringency Year
                               End of Prod. Year
                                  Scenario 1
                                  Scenario 2
                                  Scenario 3

                                 PIANO MV Gap
                               Exempt. Quantity
                              Low Volume Exempt.
                                 PIANO MV Gap
                               Exempt. Quantity
                              Low Volume Exempt.
                                 PIANO MV Gap
                               Exempt. Quantity
                              Low Volume Exempt.
                                     A380
                                      36
                                     2025
                                      N/A
                                      N/A
                                      N/A
                                      N/A
                                      N/A
                                      N/A
                                     3.24%
                                      61
                                    Qualify
                                      767
                                      10
                                     2023
                                      N/A
                                      N/A
                                      N/A
                                     7.91%
                                      42
                                    Qualify
                                    15.67%
                                      15
                                    Qualify
Exhibit 7.10 depicts the production beyond stringency year against low volume exemption thresholds for those cases when there is a gap to the stringency standard.  Both aircraft are out of production before Scenario 1 goes into effect.  767F qualifies for the low volume exemption in Scenario 2 and both A380 (both models) and 767F will qualify for the low volume exemption under Scenario 3 because the total aircraft production beyond their stringency years are below the exemption quantities.

In-Development Freighter Aircraft Analysis
To analyze the compliance of in-development freighter aircraft, namely A330neo and 777X freighter variants, ICF mainly utilized a historical benchmarking analysis approach:
 ICF compared the baseline metric values for previous generation passenger variants against their freighter variants
 ICF determined the baseline metric values for in-development freighter aircraft based on the analyzed previous generation and current metric value of passenger versions of in-development freighter aircraft (i.e. A330neo and 777X passenger versions)
 ICF assumed comparable year-over-year metric value improvements for in-development freighter variants to its passenger variant
 ICF derived annual metric values based on derived baseline metric value and year-over-year metric value improvements
Exhibit 7.11 A330neoF and 777XF stringency compliance

Exhibit 7.11 shows the results of the analysis using the above methodology.  ICF expects that both A330neo and 777X freighter variants will be compliant with all the stringency scenarios.

Appendices
2015 Technology Impact Model Methodology
Introduction
Exhibit 8.1. ICF Technology Impact Methodology
ICF developed a detailed methodological framework to analyze the potential impact of new technology introduction on aircraft fuel efficiency and CO2 emissions. This framework involved five basic steps.  First, we identified the technologies that could reduce CO2 emissions of new in-production aircraft.  Second, we then assessed each technology for the magnitude of potential CO2 reduction and the mechanisms by which reduction is achieved.  Both of these were analyzed by aircraft category.  Third and fourth, the technologies were passed through technical success probability and commercial probability success screens, respectively.  Last, individual aircraft differences were considered within aircraft category to develop a CO2 emissions reduction forecast by technology by aircraft model. This entire methodological framework detailed above will be referred to henceforth as the expected value methodology.

ICF additionally identified and evaluated some 70 engine and airframe technologies for their ability to reduce CO2 emissions on new, in-production aircraft. Select critical technologies are further profiled in Appendix 6.
Exhibit 8.2. ICF Airframe & Systems Technologies List[37]

                             Airframe Technologies
                                  Aerodynamic
                                  Structural
                                    Systems
   Adaptive Trailing Edge
   Advanced Wingtip Devices
   Variable Camber Trailing Edge
   Re-Wing (non-retrofittable)
   Riblet Coatings
   Laminar Flow Control
    Natural and Hybrid
    Nacelle, Empennage, and Wing
   Advanced Configurations (non-retrofittable)
   Environmental Control System (ECS) Inlet
   Gap Reductions
   Aft Body Redesign
   Light Profile
   Advanced Metals
   Increased Composite Application
   Advanced Composites (non-retrofittable)
   Re-Wing (non-retrofittable)
   Advanced Configurations (non-retrofittable)
   Titanium Landing Gear
   Lightweight Paint / Surface Treatment

   Lightweight Lightening Strike Protection
   More Electric Systems
   On demand Environmental Control Systems (ECS)
   Fuel cell Auxiliary Power Unit (APU)
   Light interior
   Fly By Wire
   Carbon brakes
   Zonal Drying
   Control Surface

Exhibit 8.3. ICF Engine Technologies List
                              Engine Technologies
                                   Materials
                                 Architecture
                                    Systems
   Titanium Aluminide (TiAl) turbine airfoils
   TiAl compressor airfoils
   Ceramic-matrix composites (CMC) turbine shrouds/ Outer Air Seal (OAS)
   CMC High Pressure Turbine (HPT) blades/ vanes
   CMC Low Pressure (LP) blades/ vanes
   Organic Matrix Composite (OMC) fan blades
   OMC case
   CMC exhaust nozzle
   Ceramic bearings
   Turbine coatings
   OMC stator
   OMC comp. cases
   Ultra High By Pass(UHBP) engine (above 10 Bypass Ratio (BPR))
   UHBP (above 20 BPR)
   Open rotor
   Variable cycle
   Intercooled compressors
   Integrated propulsion system
   Lightweight component fab techniques
   Reduced hub-tip ratio fan
   Fan drive gear
   Next gen load sharing architecture
   Bleedless engines
   Electric engine start
   High Pressure Compressor (HPC) mod. Clearance control
   Turbine mod. Clearance control
   Clearance control w/ feedback
   High Pressure (HP)/LP power extraction sharing
   High eff. Oil/air cooler
   Recuperative exhaust
                                 Aerodynamics
                                    Sealing
                               Coating / Cooling
   Next gen engine airfoil designs
   Optimized fan root fairing
   Scalloped fan exhaust
   Low Pressure Ratio (PR) fan
   Low drag inlet/nacelle
   Compressor blisks
   Turbine blisks

   Compressor airfoil coating
   Turbine air cooling air cooling
   Next gen. turbine airfoil cooling design

Magnitude and Sources of Historical CO2 Reductions
Since the advent of gas turbine engine powered air transport in 1958, aircraft fuel efficiency has improved about 1.5% per annum through a combination of major redesigns and incremental improvements.  Major redesigns refer not only to completely redesigned aircraft, but also to significant partial redesigns  -  redesigned wings (re-winging) and re-engine-d aircraft.  Incremental improvements are less extensive changes to the production standard of the aircraft, such as winglets or performance improvement packages (PIPs) that are introduced into airframes or engines mid-life.  ICF research indicates that major redesigns account for as much as two-thirds of historical fuel burn reduction.  By implication, incremental improvements account for about one-third of reductions, or about 0.5% per year.  Furthermore, it appears more of the incremental reductions in recent times are due to improvements in aerodynamics than in engines.  In contrast, engine technology has been the primary driver of major redesign aircraft efficiency improvements.  Secondary research and interview input point to a 0.8 to 1.0% annual improvement in engine efficiency from major redesign technology while incremental improvements yield about 0.2% better fuel burn per annum.

The Nature of Technology Insertion
Major redesigns yield large fuel burn reductions  -  10% to 20% over the prior generation they replace.  As one might expect, the significant fuel burn reductions of major redesigns do not happen frequently.  One of the best examples of this is the Boeing 737 program.  Debuting in 1968 with two variants and powered by low bypass JT8D engines, the airplane has undergone major redesigns three times  -  they entered service in 1984, 1998, and will enter in 2017, respectively, or about every 16 years.

Exhibit 8.4. Major Redesign History of the Boeing 737

Insofar as we are going through a wave of major redesign and service entry now, prospects for further step-function improvements will be low in the coming 10-15 years.  The outlook for major redesigns is described below in the Exhibit 8.5:

Exhibit 8.5. Outlook for Major Redesigns by Aircraft Category

                                 Photo Example
Aircraft Category
                              Entry Into Service
                                Major Redesign
                            Major Redesign Outlook

                                  Very  Large
                                747-100 (1969)
                                  A380 (2007)
                                747-400 (1989)
                                 747-8 (2011)
                 This category is experiencing sluggish sales.
                   No other major redesign until after 2025.

                               Large Twin Aisle
                              777-200/300 (1995)
                               777-200LR (2004)
                                A350-900 (2015)
                                 777-9X (2020)
                                 777-8X (2020)
                   No other major redesign until after 2030

                               Small Twin Aisle
                                  767 (1982)
                                  A330 (1994)
                                 787-8 (2011)
                               767-400ER (2000)
                                A330neo (2017)
                   No other major redesign until after 2030

                                 Single Aisle
                                737-100 (1968)
                                  A320 (1988)

                              737 Classic (1984)
                                 737NG (1998)
                          CS100 (2015), CS300 (2016)
                                A320neo (2015)
                                 737MAX (2017)
                                  C919 (2018)
                                 MS-21 (2018)
The decision by Boeing and Airbus to re-engine the 737 and A320 will delay introduction of a major redesign western single-aisle until well beyond 2025

                                 Regional Jet
                                CRJ-100 (1992)
                                 E 170 (2004)

                                CRJ-700 (2001)

          The regional jet category was ripe for new major redesigns
                                 ARJ21 (2015)
                                  MRJ (2017)
                               Embraer E2 (2018)
          Major redesigns can be expected in the 2025-2030 timeframe

                                   Large BGA
                              Gulfstream V(1995)
                                  G550 (2004)
Contrary to all other aircraft size segments, business jets undergo frequent minor changes and somewhat frequent major redesigns

                                   Small BGA
                             Learjet 40/45 (1998)
                             Learjet 70/75 (2013)
Contrary to all other aircraft size segments, business jets undergo frequent minor changes and somewhat frequent major redesigns

                                  Turbo-prop
                                Saab 340 (1983)
                                  Q400 (1997)
                               Saab 2000 (1994)
                                 ATR 72 (1989)
                                 ATR 42 (1985)
                                 Q400 Next Gen
Major redesign expected by early 2020s, ATR 90 turboprop derivative possible before then

Furthermore, increasingly, technologies developed for major redesigns eventually make their way onto mature aircraft  -  first technologies are researched to technology readiness level (TRL) 6, then they are incorporated into development programs where they are thoroughly tested and developed for applications on the aircraft.  Lastly, they can be chosen to be incorporated into a PIP on an existing aircraft.  Finally, new development cycles are very lengthy.  It is not unusual for new aircraft and engine designs to take 8-10 years to develop, from preliminary design to entry into service.

If past trends continue into the future, we can expect:
 Overall fuel efficiency to improve by 1.5% per annum
 Major redesign activities will contribute about two-thirds of this improvement; incremental technology introductions will reduce emissions by 0.5% per annum
 Engine technologies will drive major redesign aircraft improvements but aerodynamics will be a larger contributor of incremental improvements
 Major redesign activity will be infrequent and will not be seen for 10-15 years for most aircraft categories after the current redesign wave has passed
 Technologies researched and developed during the current wave of major redesign aircraft will be ripe for incorporation onto existing mature platforms (i.e., new in-production aircraft)
 The coming drought of major redesigns means incremental improvements to new in-production aircraft will be the primary lever for CO2 reductions for the next 10-15 years.

Long-Term Technology Impact Model Methodology
Introduction
ICF developed a parametric approach to forecast annual improvement in outbound years of the metric value forecast based on primary fuel burn reducing factors and differentiated by aircraft type. This long-term forecast methodology is appropriate for the outbound forecast years because the short/mid-term forecast methodology is based on predicting metric value improvements contributed by specific existing technologies that are implemented, and we predict that around the 2030 timeframe a new round of technology implementation will begin that will require us to reassess the forecasting method. The methodology will consist of deriving 1-5 scoring indices that will correspond to high scores being favorable outcome, while low scores being unfavorable outcome. The results of this parametric approach will be in forms of multiplier indices, which are used to determine if the rates of short/mid-term annual metric value improvements are accelerated or decelerated based on each aircraft type for the outbound years of the forecast. A high overall scoring index will correspond to an accelerated metric value improvement rate and a low index will correspond to a decelerated metric value improvement rate (relative to an extrapolated short/mid-term annual metric value improvement).
Methodology overview
ICF developed the following methodology to estimate the accelerated/decelerated rate of annual metric value improvement in outbound forecast years (i.e. 2030-2040) relative to short/mid-term annual metric value improvement:
 Identify the elements of fuel burn technology factors, and determine fuel burn reduction prospect scoring index for each technology factor, with a 1-5 scoring for each aircraft type
 Determine the long-term market prospect scoring index, with a 1-5 scoring based on the amount of potential R&D that will be conducted on various technologies for each aircraft type
 Based on combining fuel burn reduction prospect scoring index and long-term market prospect scoring index, determine overall metric value improvement acceleration index that will indicate the amount of acceleration/deceleration of annual metric value improvement rate
Derive fuel burn reduction prospect index
We firstly identified the technology factors that primarily contribute to fuel burn. The following factors drive the fuel burn in each technology that is typically implemented in each aircraft:
 Weight: The lighter the aircraft, the less fuel it will typically burn if everything else stays the same. However, for reasons elaborated in sections IV.1 and V.3.1 of this report, we are excluding weight-reducing factors in this analysis.
 Sealing: Imperfect air sealing in the engine leads to leaking that decreases the engine efficiency (especially in the engine compressor) that ultimately increases the fuel burn.
 Propulsive efficiency: This is the portion of the kinetic energy added to the air that contributes to thrust. (Not to be confused with the overall propulsive efficiency, which is the product of the propulsive efficiency and the thermal efficiency). Increasing bypass ratio is the main way to increase propulsive efficiency and thus reduce fuel burn.
 Thermal efficiency: This is the efficiency with which the chemical energy of the fuel is converted into mechanical power. The main way to increase the thermal efficiency is by increasing the turbine entry temperature.
 Reduced cooling: To cool the hotter parts of the engine, bleed air is taken from the engine compressor stage. This leads to a loss that on its own increases the fuel burn, but contributes to increasing the thermal efficiency by making it possible to increase the turbine entry temperature (see above).
 Reduced power extraction: Bleed air is also commonly used for other aircraft systems (anti-icing, cabin pressurization, pneumatic actuators, etc.). In addition to power extraction through bleeding air, shaft power may be extracted through electric generators to power aircraft systems. The lower the power extraction, the lower the fuel burn.
 Induced drag reduction: This type of drag is induced by the generation of lift. For a given lift, this can be reduced by optimizing the distribution of pressures on the wing through aerodynamic shaping, increasing wing span, and adding wing tip devices. The lower the induced drag, the lower the fuel burn.
 Friction drag reduction: This type of drag is due to mechanical friction of the air with the aircraft surface. This can be reduced by reducing the exposed area, improving surface finishing, and through aerodynamic shaping. The lower the friction drag, the lower the fuel burn.
 Profile drag reduction: This type of drag is due to flow separation that causes a turbulent wake where energy is dissipated. Profile drag can be reduced by aerodynamic shaping.

Afterwards, we took the technology factors and scored each of them on three scoring dimensions that we believe will drive the overall fuel burn reduction effectiveness in the outbound forecast years. The three scoring dimensions include:
 Effectiveness of technology in reducing fuel burn
 Likelihood of technology implementation
 Level of research effort required
Out of these three scoring dimensions, we believe that effectiveness of technology in reducing fuel burn and level of research effort required will be the predominant drivers in the technical factors. These two factors are most important because the effectiveness of technology in reducing fuel burn would most incentivize the OEMs to pursue the research, while level of research effort will dictate how economically feasible the technology is. Therefore, we assigned heavier weightings onto those two factors (40% weight each) than likelihood of implementation (20% weight) in our assessment. We then averaged the scoring of each technical factors on the three dimensions to derive an overall fuel burn reduction prospect index.
Derive market driver index
We then derived market driver indices for each aircraft type. This assessment is based on where we believe the market will shift towards in the outbound years, and therefore the amount of research & development that OEMs will conduct will also be weighted towards where the market is headed. We believe that the market will be more focused on improvements of single aisle and small twin aisle aircraft types, and less focused on large quad aircraft. We believe that especially engine OEMs will be able to produce more efficient engines in upcoming years that will enable more point-to-point travel that will reduce the need for large quad aircraft, and will drive more market demand for single aisle and small twin-aisle aircraft. Furthermore, we believe that with current year developments being heavy on re-engine improvements, there will be much potential for an airframe redesign in the next round of technological improvement that we believe will be due in early 2030s. Business jets, turboprops, and regional jet aircraft types will grow somewhat slower than average. We expect these categories of aircraft to be relatively stagnant in the outbound years and will grow somewhat slower compared to in the recent past. We expect highest growth on single aisle and small twin aisle aircraft size categories.
Derive overall metric value improvement acceleration index
Lastly, we will combine the fuel burn reduction prospect index with the market driver index for each aircraft type to determine the overall metric value improvement acceleration index. A scoring of 1 translates to a 60% improvement rate relative to extrapolated short/mid-term annual metric value improvement, a scoring of 3 translates to a continued extrapolated short/mid-term annual metric value improvement, and a scoring of 5 translates to a 140% improvement rate relative to extrapolated short/mid-term annual metric value improvement. We are putting slightly more weight onto the technological factors with 65% scoring weight, compared to market factors with 35% scoring weight. This weighting is appropriate because despite fuel burn prospects being the biggest consideration for OEMs, how the overall market is evolving (i.e. more single aisle aircraft) will affect how the OEMs allocate their research efforts.
We then expanded our short/mid-term metric value improvement impact figures to the end of the long-term forecast horizon (i.e. 2040) and applied the overall metric value improvement acceleration index scoring derived by each aircraft type.
Example: Narrowbody Long-Term Metric Value Forecast
To derive the overall metric value improvement acceleration index, we firstly derived initial scorings for each technical factors for the single aisle aircraft type as shown in exhibit 8.6.

 Exhibit 8.6. Single Aisle Fuel Burn Reduction Prospect Index Scoring

Single Aisle Technical Factors:
Effectiveness in reducing fuel burn (1-5) [40%]
Likelihood of implementation in new technology (1-5) [20%]
Level of Research Effort Required (1-5) [40%]
Fuel Burn Reduction Prospect Index
Weight
N/A
N/A
N/A
N/A
Sealing
1
2
4
2.4
Propulsive efficiency
3
3
2
2.6
Thermal efficiency
3
3
2
2.6
Reduced cooling
3
3
3
3
Reduced power extraction
3
3
3
3
Reduced thermal management
3
3
3
3
Induced drag reduction
5
4
1
3.2
Friction drag reduction
5
4
1
3.2
Profile drag reduction
1
2
3
2

Overall Fuel Burn Reduction Prospect Index:
2.78

We believe that for single aisle, it is likely that there will be a new clean sheet design that will enable considerable aerodynamics improvement that will reduce drag, as well as latest engine technologies to supplement the new aircraft design that will have the latest engine technologies. Therefore, there are a lot of potential from fuel burn effectiveness and likelihood of implementation standpoints. However, because of the efforts required, there will be risks associated with achieving the improvement. This rationale drove to an overall fuel burn reduction prospect index that is slightly decelerated solely from a technical standpoint.
On the other hand, we also identified that the single aisle market will be flourishing in the long-term as there will be more point-to-point travel with the availabilities of fuel-efficient technologies. Therefore, we believe that the market driver index for single aisle is very favorable with a scoring of 5, because we believe that OEMs will focus its research efforts onto this flourishing market.
Combining the fuel burn reduction prospect index and the market driver index, we arrive at a metric value improvement acceleration index of 3.56 as shown below:
Fuel Burn Reduction Prospect Index [65%]
Market Driver Index [35%]
Metric Value Improvement Acceleration Index
                                       5
2.78
3.56

This score of 3.56 indicates that single aisle metric value improvement will be accelerated faster than an extrapolated short/mid-term metric value improvement rate. Following the linear regression of a scoring of 1 indicating 60% annual metric value decelerated improvement rate and a scoring of 5 indicating a 140% annual metric value accelerated improvement rate, a scoring of 3.56 indicates that annually, single aisle will annually accelerate at a rate of 111%. This annual metric value accelerated improvement rate figure is then incorporated into the extrapolated short/mid-term MV forecast for the appropriate aircraft models.
Long-Term Replacement Aircraft Analysis (Replacement Aircraft circa 2030-2040)
Historical Aircraft Emissions Performance
To understand how aircraft emissions will improve in the long-term, we firstly performed a historical benchmarking analysis. In this analysis, we found that every 15 to 25 years after entry into service, aircraft models typically go through major redesigns that are driven by aerodynamics or engine efficiency improvements that drive down fuel burn. These major re-designs typically yield large fuel burn and MV reductions  -  10% to 20% over the prior generation they replace, depending on the type of redesign. There are three types of major aircraft redesigns: redesigned engines (re-engine), redesigned wings (re-wing), or clean sheet development.

Exhibit 8.7. Historical Example of OEM-Realized Step Change Improvement in Fuel Burn
                            Aircraft Size Category
                                 Aircraft OEM
                                   Aircraft
                                First Model EIS
                             Replace-ment Aircraft
                                 Redesign Type
                           Replace-ment Aircraft EIS
                                Design Duration
                Last Model to Replace-ment Fuel Burn Reduction
                                   Widebody
                                    Boeing
                                    767-300
                                     1986
                                    787-900
                                  Clean Sheet
                                     2014
                                      28
                                      20%
                            Narrowbody/Regional Jet
                                    Airbus
                                     A319
                                     1996
                                    CSeries
                                  Clean Sheet
                                     2016
                                      20
                                      22%
                                  Large Quad
                                    Boeing
                                    747-400
                                     1989
                                     747-8
                                    Re-Wing
                                     2011
                                      22
                                      16%
                                  Narrowbody
                                    Boeing
                          737 Original    (-100/200)
                                     1968
                         737 Classic  (-300/400/ 500)
                                    Re-Wing
                                     1984
                                      16
                                      20%
                                  Narrowbody
                                    Boeing
                        737 Classic     (-300/400/ 500)
                                     1984
                   737 Next Generation  (-600/700/ 800/900)
                                    Re-Wing
                                     1998
                                      14
                                      15%
                                 Regional Jet
                                    Embraer
                                     E175
                                     2004
                                    E175-E2
                                    Re-Wing
                                     2021
                                      17
                                      16%
                                 Regional Jet
                                    Embraer
                                     E190
                                     2005
                                    E190-E2
                                    Re-Wing
                                     2018
                                      13
                                      16%
                                  Narrowbody
                                    Airbus
                                     A320
                                     1988
                                    A320neo
                                   Re-Engine
                                     2015
                                      27
                                      15%
                                  Narrowbody
                                    Boeing
                   737 Next Generation  (-600/700/ 800/900)
                                     1998
                                    737MAX
                                  (-7/8/9/10)
                                   Re-Engine
                                     2017
                                      19
                                      13%

Exhibit 8.7 demonstrates historical examples major re-design improvements that have been realized and published by each of the aircraft OEMs. As shown above, clean sheet re-designs have historically produced approximately 20+%, re-wing have historically produced approximately 15-20%, while re-engine have historically produced approximately 10-15%. Additionally, our research indicates that major redesigns account for as much as two-thirds of historical fuel burn reduction, and a lot of these step change improvements are due to engine technologies. Despite the OEMs not publishing strictly MV improvement values, the majority of fuel burn improvements consist of aerodynamic improvements as opposed to weight reductions, and therefore we expect the MV improvement values to be similar.
Long-term metric value forecast
Based on this historical analysis, ICF then analyzed potential long-term replacement aircraft based on extrapolating the design transitions, metric value improvement step-down per aircraft generation, and timing of aircraft design transition. Analyzing these factors, we derived potential long-term aircraft replacements that current/new generation aircraft will transition into in the outbound years of the forecast. We have identified the potential aircraft replacements as shown in exhibit 8.8
Exhibit 8.8. Long-Term Potential Replacement Aircraft
                                Market Category
                                 Aircraft Type
                             2030-2040 Replacement
                                 Estimated EIS
                            MV Improvement Estimate
                            Uncertainty Band (+/-)
                                 Air Transport
                                  Large Quad
                            No direct replacement.
                                      N/A
                                      N/A
                                      N/A
                                 Air Transport
                               Large Twin Aisle
                                     777X
                                  beyond 2040
                                      N/A
                                      N/A
                                 Air Transport
                               Small Twin Aisle
                     Re-wing or re-engine small twin aisle
                                   late 2030
                                     ~15%
                                      3%
                                 Air Transport
                                 Single Aisle
                             Clean sheet aircraft
                                  early 2030
                                     ~20%
                                      4%
                                 Air Transport
                                 Regional Jet
                             Re-wing regional jet
                                  early 2030
                                     ~10%
                                      2%
                                 Air Transport
                                   Turboprop
                    Re-wing or re-engine turboprop aircraft
                                  early 2030
                                     ~10%
                                      2%
                                 Air Transport
                                   Freighter
                           A330neo or 777X freighter
                                   late 2020
                                      N/A
                                      N/A
                                      BGA
                                   Large BGA
                    Re-wing or re-engine large business jet
                                  early 2030
                                     ~10%
                                      2%
                                      BGA
                                   Small BGA
                    Re-wing or re-engine small business jet
                                  early 2030
                                     ~10%
                                      2%

We also utilized the historical analysis as a basis to determine the long-term aircraft replacement, in which we analyzed two main factors: historical re-design type and aircraft size. We analyzed the historical re-design type to figure out what re-designs were employed in the aircraft's recent iteration and utilized that conclusion to predict the future re-design type. We also analyzed the size class to determine the seat class and aircraft type that will replace the existing aircraft.
Detailed rationale, results, and commentary on the long-term replacement and reference aircraft analysis can be found in EPA's Technology Response Database. In that document, we analyzed the long-term replacement aircraft for all in-scope models, as well as forecasted an estimate MV for these long-term replacement aircraft based on available MV of reference aircraft, grouped by aircraft type and OEM. Further details on the background and detailed elaboration of the technology response database's purpose is shown in appendix VIII.8
Furthermore, due to the uncertain nature of the long-term forecast, we have also included uncertainty bands in determining the metric value improvement estimates. These uncertainty bands vary by the magnitude of design improvement that we expect by aircraft type. The more rigorous the design improvement, the larger the uncertainty band. For example, designing a clean sheet aircraft will yield a higher potential metric value improvement, but there are more risks associated with achieving the design improvement; hence a larger uncertainty band. A re-engine design improvement has less risk associated with the improvement; hence a smaller uncertainty band.

2015 Development Cost Model Methodology
Introduction
ICF developed an independent bottom-up cost curve especially focused on categorizing the non-recurring cost of implementing minor (0-10% metric value) improvement on existing aircraft platforms. This area is of particular importance for determining the costs of compliance with a number of proposed stringency options, and was also an area neglected by previous non-recurring cost (NRC) methodologies. The results of the ICF curve were a supply-curve of available technology options and associated non-recurring costs for each aircraft platform. For most aircraft, this methodology was limited to predicting improvements in the 0-10% range.  Also, ICF's research indicated that, given the lack of verifiable publically available cost data for small metric value improvements, it would be most effective to create bottom-up technology applicability and cost analyses by aircraft model, and then validate these through case studies, secondary research, and targeted interviews.
Methodology Overview
ICF developed the following methodology to estimate the non-recurring costs (NRC) by aircraft:
  Categorize incremental technologies into groupings by impactful-ness  -  either Minor PIP or Large Incremental Update
  Identify the elements of non-recurring cost
  Develop baseline NRC element proportions by incremental technology category for single-aisle aircraft
  Scale the baseline NRC elements to the other aircraft categories
  Determined the NRC costs for single aisle aircraft and applied the scaled costs to the other aircraft categories
  Compiled technology supply curves by aircraft model
Categorizing Incremental Technologies
Incremental technologies fall into two categories:  minor PIPs and large incremental updates.    Minor PIPs are aerodynamic cleanups (e.g., redesigned fairings, APU inlets, ECS exhausts, etc.) and other improvements that often can be certified by analysis without dedicated flight test aircraft, and with only minor ground, wind tunnel, and flight tests.  Minor PIP costs scale only incrementally with aircraft size.  Most of the technologies ICF researched were minor PIPs, providing in the range of 0-2% fuel burn improvement.
Large incremental updates are significant aerodynamic or structural improvements (e.g., winglets) that require flight test programs  -  usually with production aircraft. These types of improvements, singly or grouped into a large package, can provide from 2-10% fuel burn reduction.  Tooling and facilities costs are not driving factors for these improvements.  Large incremental upgrades scale highly with aircraft size.
Elements of Non-Recurring Cost
Non-recurring cost is fundamentally driven by three elements:  engineering and integration, testing (flight and ground) and tooling, capital equipment, and infrastructure.  Engineering and Integration (Engrg) includes the engineering and Research & Development (R&D) required to progress a given technology from its current TRL so it can be integrated onto a production airframe.  It also includes all airframe and technology integration costs.
Flight and Ground Testing (Testing) includes fixed costs for test instrumentation, infrastructure, and program management and variable costs related to the degree of flight and ground testing required.
Tooling, Capital Equipment, and Infrastructure (Capital) includes tooling required to modify the production line to support the PIP, incorporates any capitalized changes to plant, property, and equipment, and includes other miscellaneous costs such as Information Technology (IT) system, supply chain system, and other costs associated with a particular design change.
Baseline Non-Recurring Cost Element Proportions
For incremental technologies applicable to single aisle aircraft, the proportion of engineering and integration, flight and ground testing, and tooling, capital equipment, and infrastructure varies depending on whether it is an airframe or an engine technology and, for airframe technologies, whether the technology is a minor PIP or a large incremental update.  Exhibit 8.9 illustrates the cost element proportions for single aisle aircraft. In general, engine PIP development costs are heavily driven by both flight and ground testing. This includes the cost of test hardware, recurring flight and ground test costs, test engineering and analysis, and the like. Small airframe PIPs, on the other hand, are dominated by engineering costs. This is because small airframe PIPs generally do not require a dedicated flight testing program. Therefore, costs are concentrated on the engineering design and analysis required to analytically verify the safety and performance of the PIP. Large airframe PIPs do require a flight test program, and therefore have a large portion of their total costs allocated to the testing effort.
Exhibit 8.9. Single Aisle NRC Cost Element Proportions

Non-Recurring Cost Scaling Factors
Non-recurring costs exhibit different scaling behavior with aircraft size.  Engineering and integration cost for a given technology and metric value improvement is not strongly correlated with aircraft size; rather, it scales with a 5% differential of aircraft complexity.  ICF used aircraft realized sale price to scale this element.  Flight and ground testing scales with aircraft operating costs.  ICF used direct block hour average operating costs to scale this element.  Lastly, for Minor PIPs, tooling, capital equipment, and infrastructure costs are not strongly correlated with aircraft size.  As with engineering, average realized aircraft sale price was used to scale this element.
ICF used independently verifiable data to calculate the NRC scaling factors, shown in Exhibit 8.10.  Average realized sale price is the scaling parameter used for Engineering, as well as for Capital NRC.  Average operating cost was used as the scaling parameter for Testing NRC.  Testing scales with 100% of the operating cost differential, using single aisle as the baseline.  Engineering and Capital scale by 15% of the differential in average realized sale price, using single aisle as the baseline.
Exhibit 8.10. Aircraft Cost Element Scaling Factor Sources

--------------------------------------------------------------------------------
Source: Block hour operating cost and averaged realized price data from The Airline Monitor
The end result was factors that were used to scale the cost elements in reference to the baseline single aisle aircraft to every aircraft category, illustrated in Exhibit 8.11.

Exhibit 8.11. Non-Recurring Cost Element Scaling Factors

Considerations for Recurring Costs
In implementing new technologies, there is an implication that the new technology may entail further costs, that may include additional maintenance, material, labor, and tooling. OEMs have to keep this in mind when developing the technologies to ensure that there are low to none recurring costs, or that the recurring cost requirements are similar to current technologies that are being implemented. This report assumes that the technologies being implemented will be able to meet these criteria and operators will be incentivized to implement the technologies.
Cost Calculations
Applying the scaling factors, NRC was calculated for every technology across every aircraft category.  An example is provided below.
Example:  Large Incremental Update NRC (Wingtip Devices)
Wingtip devices are a "Large Incremental Update"  - level technology.  For the baseline single aisle aircraft, total cost is composed of 3% baseline fixed costs, 52% engineering & integration, 40% testing, and 5% capital equipment.  The calculation assumes a minimum $5M fixed cost.  (We used this amount for all of the incremental upgrades.  It does not vary by technology or aircraft category.) This fixed cost is an allowance for basic program management overhead that accompanies any level of design change at an aircraft OEM. An example of this approach in practice is shown below in Exhibit 8.12, which in this case represents winglets. For this technology, interview input and secondary research indicated a total non-recurring cost for winglet implementation of $173M for single aisle aircraft. Given this known data point, ICF used the cost element breakdown shown in Exhibit 8.10 above to split the total NRC into the constituent elements.  Note in Exhibit 8.11 below that Engineering and Capital NRCs exhibit only minor scaling factors.

Exhibit 8.11. Large Incremental Update Cost Scaling by Aircraft Category

Table of Aircraft MV Forecast (PIANO Data)
The following table shows the aircraft metric value forecast by aircraft model utilizing PIANO baseline data. As the forecast year progresses, we could observe that the metric values incrementally improve as new technologies are being introduced and retrofitted to the aircraft.
                                Aircraft Model
                                 Manufacturer
                                Market Category
                                 Aircraft Type
                                    2015 MV
                                    2018 MV
                                    2020 MV
                                    2023 MV
                                    2028 MV
                                    2030 MV
                                    2040 MV
                                   A380-842
                                    AIRBUS
                                 Air Transport
                                  Large Quad
                                    2.9007
                                    2.8582
                                    2.8220
                                    2.7665
                                    2.6838
                                    2.6495
                                    2.5156
                                   A380-861
                                    AIRBUS
                                 Air Transport
                                  Large Quad
                                    2.9007
                                    2.8582
                                    2.8220
                                    2.7665
                                    2.6838
                                    2.6495
                                    2.5156
                                    B747-8
                                    BOEING
                                 Air Transport
                                  Large Quad
                                    2.5462
                                    2.5096
                                    2.4783
                                    2.4303
                                    2.3608
                                    2.3317
                                    2.2177
                                    B747-8F
                                    BOEING
                                 Air Transport
                                  Large Quad
                                    2.6503
                                    2.6122
                                    2.5796
                                    2.5296
                                    2.4573
                                    2.4270
                                    2.3084
                                   A330-203
                                    AIRBUS
                                 Air Transport
                               Large Twin Aisle
                                    1.6506
                                    1.6264
                                    1.6058
                                    1.5742
                                    1.5272
                                    1.5068
                                    1.4132
                                   A330-223
                                    AIRBUS
                                 Air Transport
                               Large Twin Aisle
                                    1.6506
                                    1.6264
                                    1.6058
                                    1.5742
                                    1.5272
                                    1.5068
                                    1.4132
                                   A330-243
                                    AIRBUS
                                 Air Transport
                               Large Twin Aisle
                                    1.6506
                                    1.6264
                                    1.6058
                                    1.5742
                                    1.5272
                                    1.5068
                                    1.4132
                                    A330-2F
                                    AIRBUS
                                 Air Transport
                               Large Twin Aisle
                                    1.6258
                                    1.6020
                                    1.5817
                                    1.5506
                                    1.5042
                                    1.4841
                                    1.3920
                                    A330-2F
                                    AIRBUS
                                 Air Transport
                               Large Twin Aisle
                                    1.6258
                                    1.6020
                                    1.5817
                                    1.5506
                                    1.5042
                                    1.4841
                                    1.3920
                                   A330-303
                                    AIRBUS
                                 Air Transport
                               Large Twin Aisle
                                    1.6169
                                    1.5932
                                    1.5730
                                    1.5421
                                    1.4960
                                    1.4760
                                    1.3844
                                   A330-323
                                    AIRBUS
                                 Air Transport
                               Large Twin Aisle
                                    1.6169
                                    1.5932
                                    1.5730
                                    1.5421
                                    1.4960
                                    1.4760
                                    1.3844
                                   A330-343
                                    AIRBUS
                                 Air Transport
                               Large Twin Aisle
                                    1.6169
                                    1.5932
                                    1.5730
                                    1.5421
                                    1.4960
                                    1.4760
                                    1.3844
                                  B777-200ER
                                    BOEING
                                 Air Transport
                               Large Twin Aisle
                                    1.9493
                                    1.9257
                                    1.9046
                                    1.8723
                                    1.8265
                                    1.8060
                                    1.7105
                                  B777-200LR
                                    BOEING
                                 Air Transport
                               Large Twin Aisle
                                    2.1836
                                    2.1572
                                    2.1336
                                    2.0974
                                    2.0460
                                    2.0231
                                    1.9161
                                  B777-300ER
                                    BOEING
                                 Air Transport
                               Large Twin Aisle
                                    2.1439
                                    2.1179
                                    2.0948
                                    2.0592
                                    2.0088
                                    1.9863
                                    1.8812
                                   B777-2LRF
                                    BOEING
                                 Air Transport
                               Large Twin Aisle
                                    2.1846
                                    2.1582
                                    2.1346
                                    2.0983
                                    2.0470
                                    2.0241
                                    1.9170
                                   A350-800
                                    AIRBUS
                                 Air Transport
                               Large Twin Aisle
                                    1.5110
                                    1.4897
                                    1.4714
                                    1.4434
                                    1.4029
                                    1.3851
                                    1.3028
                                   A350-900
                                    AIRBUS
                                 Air Transport
                               Large Twin Aisle
                                    1.6060
                                    1.5833
                                    1.5639
                                    1.5342
                                    1.4911
                                    1.4722
                                    1.3847
                                   A350-1000
                                    AIRBUS
                                 Air Transport
                               Large Twin Aisle
                                    1.7640
                                    1.7391
                                    1.7178
                                    1.6851
                                    1.6378
                                    1.6171
                                    1.5209
                                 A330-800-NEO
                                    AIRBUS
                                 Air Transport
                               Large Twin Aisle
                                    1.4700
                                    1.4700
                                    1.4585
                                    1.4406
                                    1.4156
                                    1.4061
                                    1.3632
                                 A330-900-NEO
                                    AIRBUS
                                 Air Transport
                               Large Twin Aisle
                                    1.4410
                                    1.4410
                                    1.4297
                                    1.4121
                                    1.3877
                                    1.3783
                                    1.3363
                                    B777-9x
                                    BOEING
                                 Air Transport
                               Large Twin Aisle
                                    1.7830
                                    1.7830
                                    1.7741
                                    1.7483
                                    1.7125
                                    1.6987
                                    1.6340
                                    B777-8x
                                    BOEING
                                 Air Transport
                               Large Twin Aisle
                                    1.8210
                                    1.8210
                                    1.8119
                                    1.7855
                                    1.7490
                                    1.7349
                                    1.6688
                                   B767-3ER
                                    BOEING
                                 Air Transport
                               Small Twin Aisle
                                    1.5695
                                    1.5484
                                    1.5309
                                    1.5039
                                    1.4639
                                    1.4456
                                    1.3588
                                   B767-3ER
                                    BOEING
                                 Air Transport
                               Small Twin Aisle
                                    1.5695
                                    1.5484
                                    1.5309
                                    1.5039
                                    1.4639
                                    1.4456
                                    1.3588
                                   B767-3ERF
                                    BOEING
                                 Air Transport
                               Small Twin Aisle
                                    1.5854
                                    1.5641
                                    1.5463
                                    1.5191
                                    1.4787
                                    1.4602
                                    1.3725
                                    B787-8
                                    BOEING
                                 Air Transport
                               Small Twin Aisle
                                    1.4102
                                    1.3933
                                    1.3795
                                    1.3581
                                    1.3269
                                    1.3123
                                    1.2408
                                    B787-8
                                    BOEING
                                 Air Transport
                               Small Twin Aisle
                                    1.4102
                                    1.3933
                                    1.3795
                                    1.3581
                                    1.3269
                                    1.3123
                                    1.2408
                                    B787-9
                                    BOEING
                                 Air Transport
                               Small Twin Aisle
                                    1.5105
                                    1.4924
                                    1.4776
                                    1.4547
                                    1.4213
                                    1.4057
                                    1.3291
                                    B787-9
                                    BOEING
                                 Air Transport
                               Small Twin Aisle
                                    1.5105
                                    1.4924
                                    1.4776
                                    1.4547
                                    1.4213
                                    1.4057
                                    1.3291
                                    B787-10
                                    BOEING
                                 Air Transport
                               Small Twin Aisle
                                    1.4747
                                    1.4571
                                    1.4426
                                    1.4203
                                    1.3876
                                    1.3724
                                    1.2976
                                    B787-10
                                    BOEING
                                 Air Transport
                               Small Twin Aisle
                                    1.4747
                                    1.4571
                                    1.4426
                                    1.4203
                                    1.3876
                                    1.3724
                                    1.2976
                                   A318-122
                                    AIRBUS
                                 Air Transport
                                 Single Aisle
                                    0.8412
                                    0.8307
                                    0.8224
                                    0.8098
                                    0.7899
                                    0.7804
                                    0.7369
                                  A318-112/CJ
                                    AIRBUS
                                 Air Transport
                                 Single Aisle
                                    0.8412
                                    0.8307
                                    0.8224
                                    0.8098
                                    0.7899
                                    0.7804
                                    0.7369
                                   A319-115
                                    AIRBUS
                                 Air Transport
                                 Single Aisle
                                    0.8750
                                    0.8640
                                    0.8554
                                    0.8423
                                    0.8216
                                    0.8117
                                    0.7664
                                   A319-133
                                    AIRBUS
                                 Air Transport
                                 Single Aisle
                                    0.8750
                                    0.8640
                                    0.8554
                                    0.8423
                                    0.8216
                                    0.8117
                                    0.7664
                                  A319-115/CJ
                                    AIRBUS
                                 Air Transport
                                 Single Aisle
                                    0.8968
                                    0.8856
                                    0.8768
                                    0.8633
                                    0.8421
                                    0.8319
                                    0.7856
                                  A319-133/CJ
                                    AIRBUS
                                 Air Transport
                                 Single Aisle
                                    0.8968
                                    0.8856
                                    0.8768
                                    0.8633
                                    0.8421
                                    0.8319
                                    0.7856
                                   A320-233
                                    AIRBUS
                                 Air Transport
                                 Single Aisle
                                    0.8670
                                    0.8562
                                    0.8477
                                    0.8347
                                    0.8141
                                    0.8043
                                    0.7595
                                   A320-214
                                    AIRBUS
                                 Air Transport
                                 Single Aisle
                                    0.8670
                                    0.8562
                                    0.8477
                                    0.8347
                                    0.8141
                                    0.8043
                                    0.7595
                                   A321-211
                                    AIRBUS
                                 Air Transport
                                 Single Aisle
                                    0.9990
                                    0.9865
                                    0.9767
                                    0.9617
                                    0.9380
                                    0.9267
                                    0.8751
                                   A321-231
                                    AIRBUS
                                 Air Transport
                                 Single Aisle
                                    0.9990
                                    0.9865
                                    0.9767
                                    0.9617
                                    0.9380
                                    0.9267
                                    0.8751
                                   B737-700
                                    BOEING
                                 Air Transport
                                 Single Aisle
                                    0.8762
                                    0.8656
                                    0.8573
                                    0.8446
                                    0.8245
                                    0.8148
                                    0.7701
                                   B737-700W
                                    BOEING
                                 Air Transport
                                 Single Aisle
                                    0.8365
                                    0.8264
                                    0.8185
                                    0.8063
                                    0.7872
                                    0.7779
                                    0.7353
                               B737-700IGW (BBJ)
                                    BOEING
                                 Air Transport
                                 Single Aisle
                                    0.9110
                                    0.9000
                                    0.8913
                                    0.8781
                                    0.8572
                                    0.8471
                                    0.8007
                                   B737-800
                                    BOEING