stringency. Section 202(a)(2) of the Clean Air Act requires only that
the standards ``take effect after such period as the Administrator
finds necessary to permit the development and application of the
requisite technology, giving appropriate consideration to the cost of
compliance within such period.'' This language affords EPA considerable
discretion in how to weight the critical statutory factors of emission
reductions, cost, and lead time. See 76 FR 57129-57130.
    The alternatives presented here follow the format of the
alternatives addressed in the NPRM. Among the alternatives are a
preferred alternative (in this action, the ``final program''), more
stringent alternatives, and less stringent alternatives (including ``no
action'' alternatives). As discussed in this Preamble's Sections II
(Engines), III (Tractors), IV (Trailers), V (Vocational Vehicles), and
VI (Pickups and Vans), NHTSA and EPA determined Alternative 3 to be the
preferred alternative, or the final program, for each vehicle category.
This Section X describes all of the alternatives considered, and
provides context for the relative stringency associated with the final
program.

A. What are the alternatives that the agencies considered?

    The five alternatives below represent a broad range of potential
stringency levels, and thus a broad range of associated technologies,
costs and benefits for a HD vehicle fuel efficiency and GHG emissions
program. All of the alternatives were modeled using the same
methodologies described in Chapter 5 of the RIA.
    The alternatives considered for the final rule were conceptually
similar to (and for some elements, identical to) to the alternatives
considered for the proposal. The alternatives in order of increasing
fuel efficiency and GHG emissions reductions are as follows:

1. No action, baseline
2. Less stringent than the proposal
3. Preferred alternative
4. Proposed (not FRM) standards with less lead time
5. More stringent standards than the proposal with less lead time

    Comments on the alternatives overlapped with comments on the
overall stringency of the proposed Phase 2 program. These comments were
mixed. Some operators and manufacturers supported the least stringent
alternatives. Many other commenters, however, including most non-
governmental organizations, supported more stringent standards with
less lead time. They generally supported Alternative 4. Many technology
and component suppliers supported more stringent standards but with the
proposed lead time, and thus generally supported the Alternative 3
timeframe. Vehicle manufacturers strongly opposed the more stringent
standards and reduced lead time of Alternative 4. To the extent any of
these commenters provided technical information to support their
comments on stringency and lead time, it is discussed in Sections II
through VI.
    Many of the comments supporting more stringent standards stated
that they would be ``cost-effective.'' In general, however, we did not
find costs or cost-effectiveness to be a significantly limiting factor
in determining the stringency of the standards. Rather, we found that
actual technological feasibility and lead time to be the more limiting
factors. Manufacturers and suppliers have limited research and
development capacities, and although they have some ability to expand,
that ability is constrained by the lead time required. Lead time
includes time not only to design and develop a technology, but to bring
it to market in reliable form. During the prototype stage, all
prototype components must be available and extensive engine and vehicle
tests must be conducted. The production start-up phase would follow.
After that, significant efforts must be made to advance the system from
a prototype to a commercial product, which typically takes about five
years for complex systems. During this approximate five-year period,
multiple vehicles will go through weather condition tests, long lead-
time parts and tools will be identified, and market launch and initial
results on operating stability will be completed. Production designs
will be released, all product components should be made available,
production parts on customer fleets and weather road testing will be
verified before finally launching production, and distribution of parts
to the vehicle service network for maintenance and repair will be
readied. See Section I.C above; see also RIA Chapter 2.3.9. New
technologies then are ordinarily phased into the commercial market, so
that fleet operators are assured of technology reliability and utility
before making extensive purchases. Commenters supporting the more
stringent alternatives based on cost-effectiveness generally did not
address these very real lead time constraints.
(1) Alternative 1: No Action (The Baseline for Phase 2)
    OMB guidance regarding regulatory analysis indicates that proper
evaluation of the benefits and costs of regulations and their
alternatives requires agencies to identify a baseline:
    ``You need to measure the benefits and costs of a rule against a
baseline. This baseline should be the best assessment of the way the
world would look absent the proposed action. The choice of an
appropriate baseline may require consideration of a wide range of
potential factors, including:

 Evolution of the market
 changes in external factors affecting expected benefits and
costs
 changes in regulations promulgated by the agency or other
government entities
 degree of compliance by regulated entities with other
regulations

    It may be reasonable to forecast that the world absent the
regulation will resemble the present. If this is the case, however,
your baseline should reflect the future effect of current government
programs and policies. For review of an existing regulation, a baseline
assuming no change in the regulatory program generally provides an
appropriate basis for evaluating regulatory alternatives. When more
than one baseline is reasonable and the choice of baseline will
significantly affect estimated benefits and costs, you should consider
measuring benefits and costs against alternative baselines. In doing so
you can analyze the effects on benefits and costs of making different
assumptions about other agencies' regulations, or the degree of
compliance with your own existing rules. In all cases, you must
evaluate benefits and costs against the same baseline. You should also
discuss

the reasonableness of the baselines used in the sensitivity analyses.
For each baseline you use, you should identify the key uncertainties in
your forecast.'' \935\
---------------------------------------------------------------------------

    \935\ OMB Circular A-4, September 17, 2003. Available at http://www.whitehouse.gov/omb/circulars_a004_a-4.
---------------------------------------------------------------------------

    A no-action alternative is also required as a baseline against
which to measure environmental impacts of these standards and
alternatives. NHTSA, as required by the National Environmental Policy
Act, is documenting these estimated impacts in the EIS published with
this final rule.\936\
---------------------------------------------------------------------------

    \936\ NEPA requires agencies to consider a ``no action''
alternative in their NEPA analyses and to compare the effects of not
taking action with the effects of the reasonable action alternatives
to demonstrate the different environmental effects of the action
alternatives. See 40 CFR 1502.2(e), and 1502.14(d). CEQ has
explained that ``[T]he regulations require the analysis of the no
action alternative even if the agency is under a court order or
legislative command to act. This analysis provides a benchmark,
enabling decision makers to compare the magnitude of environmental
effects of the action alternatives. [See 40 CFR 1502.14(c).]* * *
Inclusion of such an analysis in the EIS is necessary to inform
Congress, the public, and the President as intended by NEPA. [See 40
CFR 1500.1(a).]'' Forty Most Asked Questions Concerning CEQ's
National Environmental Policy Act Regulations, 46 FR 18026 (1981)
(emphasis added).
---------------------------------------------------------------------------

    The No Action Alternative for today's analysis, alternatively
referred to as the ``baseline'' or ``reference case,'' assumes that the
agencies would not issue new rules regarding MD/HD fuel efficiency and
GHG emissions. That is, this alternative assumes that the Phase 1 MD/HD
fuel efficiency and GHG emissions program's model year 2018 standards
would be extended indefinitely and without change.
    The agencies recognize that there are a number of factors that
create uncertainty in projecting a baseline against which to compare
the future effects of the alternatives. The composition of the future
fleet--such as the relative position of individual manufacturers and
the mix of products they each offer--cannot be predicted with certainty
at this time. As reflected, in part, by the market forecast underlying
the agencies' analysis, we anticipate that the baseline market for
medium- and heavy-duty vehicles will continue to evolve within a
competitive market that responds to a range of factors. Additionally,
the heavy-duty vehicle market is diverse, as is the range of vehicle
purchasers.
    Heavy-duty vehicle manufacturers have reported that their
customers' purchasing decisions are influenced by their customers' own
determinations of minimum total cost of ownership, which can be unique
to a particular customer's circumstances. For example, some customers
(e.g., less-than-truckload or package delivery operators) operate their
vehicles within a limited geographic region and typically own their own
vehicle maintenance and repair centers within that region. These
operators tend to own their vehicles for long time periods, and
sometimes for the entire service life of the vehicle. Their total cost
of ownership is influenced by their ability to better control their own
maintenance costs, and thus they can afford to consider fuel efficiency
technologies that have longer payback periods, outside of the vehicle
manufacturer's warranty period. Other customers (e.g. truckload or
long-haul operators) tend to operate cross-country, and thus must
depend upon truck dealer service centers for repair and maintenance.
Some of these customers tend to own their vehicles for about four to
seven years, so that they typically do not have to pay for repair and
maintenance costs outside of either the manufacturer's warranty period
or some other extended warranty period. Many of these customers tend to
require seeing evidence of fuel efficiency technology payback periods
on the order of 18 to 24 months before seriously considering evaluating
a new technology for potential adoption within their fleet.\937\
Purchasing decisions, however, are not based exclusively on payback
period, but also include the considerations discussed in this section.
For the baseline analysis, the agencies use payback period as a proxy
for all of these considerations, and therefore the payback period used
for the baseline analysis may be shorter than the payback periods
industry typically identifies as thresholds for the further
consideration of a technology. Some owners accrue relatively few
vehicle miles traveled per year, such that they may be less likely to
adopt new fuel efficiency technologies, while other owners who use
their vehicle(s) with greater intensity may be even more willing to pay
for fuel efficiency improvements. Regardless of the type of customer,
their determination of minimum total cost of ownership involves the
customer balancing their own unique circumstances with a heavy-duty
vehicle's initial purchase price, availability of credit and lease
options, expectations of vehicle reliability, resale value and fuel
efficiency technology payback periods. The degree of the incentive to
adopt additional fuel efficiency technologies also depends on customer
expectations of future fuel prices, which directly impacts customer
expectations of the payback period.
---------------------------------------------------------------------------

    \937\ NAS 2010, Roeth et al. 2013, and Klemick et al. 2014.
---------------------------------------------------------------------------

    Another factor the agencies considered is that other federal and
state-level policies and programs are specifically aimed at stimulating
fuel efficiency technology development and deployment. Particularly
relevant to this sector are DOE's 21st Century Truck Partnership, EPA's
voluntary SmartWay Transport program, and California's AB32 fleet
requirements.938 939 940 The future availability of more
cost-effective technologies to reduce fuel consumption could provide
manufacturers an incentive to produce more fuel-efficient medium- and
heavy-duty vehicles, which in turn could provide customers an incentive
to purchase these vehicles. The availability of more cost-effective
technologies to reduce fuel consumption could also lead to a
substitution of less cost-effective technologies, where overall fuel
efficiency could remain fairly flat if buyers are less interested in
fuel consumption improvements than in reduced vehicle purchase prices
and/or improved vehicle performance and/or utility.
---------------------------------------------------------------------------

    \938\ http://energy.gov/eere/vehicles/vehicle-technologies-office-21st-century-truck.
    \939\ http://www3.epa.gov/smartway/.
    \940\ State of California Global Warming Solutions Act of 2006
(Assembly Bill 32, or AB32).
---------------------------------------------------------------------------

    We have also applied the EIA's AEO estimates of future fuel prices;
however, heavy-duty vehicle customers could have different expectations
about future fuel prices, and could therefore be more or less inclined
to apply new technology to reduce fuel consumption than might be
expected based on EIA's forecast. We expect that vehicle customers will
be uncertain about future fuel prices, and that this uncertainty will
be reflected in the degree of enthusiasm to apply new technology to
reduce fuel consumption.
    Considering all of these factors, the agencies have approached the
definition of the No Action Alternative separately for each vehicle and
engine category covered by today's rules. Except as noted below, these
baselines are largely the same as the proposed Alternatives 1a and 1b,
which reflected different assumptions about the extent to which the
market would pay for additional fuel-saving technology without new
Phase 2 standards. The agencies received limited comments on these
reference cases. Some commenters expressed support for the la baseline
in the context of the need for the regulations, arguing that little
improvement would occur without the regulations. Others supported the
1a

baseline because they believe it more fully captures the costs. Some
commenters thought it reasonable that the agencies consider both
baselines, given the uncertainty in this area. No commenters opposed
the consideration of both baselines. The agencies thus continued to
analyze two different baselines for the final rules as we recognize
that there are a number of factors that create uncertainty in
projecting a baseline against which to compare the future effects of
this action and the remaining alternatives. As was shown in the
previous sections, the standards are supported by the analysis using
either baseline.
    For trailers, the agencies considered two No Action alternatives to
cover a nominal range of uncertainty. The trailer category is unique in
the context of this rulemaking because it is the only heavy-duty
category not regulated under Phase 1. The agencies project that in
2018, about half of new 53' dry van and reefer trailers will have
technologies qualifying for the SmartWay label for aerodynamic
improvements and about 90 percent would have the lower rolling
resistance tires. About half also have automatic tire inflation systems
to maintain optimal tire pressure. For Alternative 1a as presented in
this action (referred to as the ``flat'' baseline), this technology
adoption remains constant after 2018. In the second case, Alternative
1b, the agencies projected that the combination of EPA's voluntary
SmartWay program, DOE's 21st Century Truck Partnership, California's
AB32 trailer requirements for fleets, and the potential for
significantly reduced operating costs should result in continuing
improvement to new trailers. The agencies projected that the fraction
of the in-use fleet qualifying for SmartWay will continue to increase
beyond 2027 as older trailers are replaced by newer trailers. We
projected that these improvements will continue until 2040 when 75
percent of new trailers will be assumed to include skirts.
    For vocational vehicles, the agencies considered one No Action
alternative. For the vocational vehicle category the agencies
recognized that these vehicles tend to operate over fewer vehicle miles
travelled per year. Therefore, the projected payback periods for fuel
efficiency technologies available for vocational vehicles are generally
longer than the payback periods the agencies consider likely to lead to
their adoption based solely on market forces. This is especially true
for vehicles used in applications in which the vehicle operation is
secondary to the primary business of the company using the vehicle. For
example, since the fuel consumption of vehicles used by utility
companies to repair power lines would generally be a smaller cost
relative to the other costs of repairing lines, fuel saving
technologies would generally not be as strongly demanded for such
vehicles. Thus, the agencies project that fuel-saving technologies will
either not be applied or will only be applied as a substitute for more
expensive fuel efficiency technologies, except as necessitated by the
Phase 1 fuel consumption and GHG standards.
    For tractors, the agencies considered two No Action alternatives to
cover a nominal range of uncertainty. For Alternative 1a the agencies
project that fuel-saving technologies will either not be applied or
will only be applied as a substitute for more expensive fuel efficiency
technologies to tractors (thereby enabling manufacturers to offer
tractors that are less expensive to purchase), except as necessitated
by the Phase 1 fuel consumption and GHG standards. In Alternative 1b
the agencies estimated that some available technologies will save
enough fuel to pay back fairly quickly--within the first six months of
ownership. The agencies considered a range of information to formulate
these two baselines for tractors.
    Both public \941\ and confidential historical information shows
that tractor trailer fuel efficiency improved steadily through
improvements in engine efficiency and vehicle aerodynamics over the
past 40 years, except for engine efficiency which decreased or was flat
between 2000 and approximately 2007 as a consequence of incorporating
technologies to meet engine emission regulations. Today vehicle
manufacturers, the Federal Government, academia and others continue to
invest in research to develop fuel efficiency improving technologies
for the future.
---------------------------------------------------------------------------

    \941\ Committee to Assess Fuel Economy Technologies for Medium-
and Heavy-Duty Vehicles; National Research Council; Transportation
Research Board (2010). ``Technologies and Approaches to Reducing the
Fuel Consumption of Medium- and Heavy-Duty Vehicles,'' (hereafter,
``NAS 2010''). Washington, DC. The National Academies Press.
Available electronically from the National Academies Press Web site
at http://www.nap.edu/catalog.php?record_id=12845 (last accessed
September 10, 2010).
---------------------------------------------------------------------------

    In public meetings and in meetings with the agencies, the trucking
industry stated that fuel cost for tractors is the number one or number
two expense for many operators, and therefore is a very important
factor for their business. However, the pre-Phase 1 market suggests
that tractor manufacturers and operators could be slow to adopt some
new technologies, even where the agencies have estimated that the
technology would have paid for itself within a few months of operation.
This phenomenon, which is discussed in Section IX.A, is often called
the energy paradox. Consistent with the discussion above of reasons for
needed lead time, tractor operators have told the agencies they
generally require technologies to be demonstrated in their fleet before
widespread adoption so they can assess the actual fuel savings for
their fleet and any increase in cost associated with effects on vehicle
operation, maintenance, reliability, mechanic training, maintenance and
repair equipment, stocking unique parts and driver acceptance, as well
as effects on vehicle resale value. Tractor operators often state that
they would consider conducting an assessment of technologies when
provided with data that show the technologies may payback costs through
fuel savings within 18 to 24 months, based on their assumptions about
future fuel costs. In other words they would treat this as a necessary
condition, but generally would not consider it to be sufficient. In
these cases, an operator may first conduct a detailed paper study of
anticipated costs and benefits. If that study shows likely payback in
18 to 24 months for their business, the fleet may acquire one or
several tractors with the technology to directly measure fuel savings,
costs and driver acceptance for their fleet. Small fleets may not have
resources to conduct assessments to this degree and may rely on
information from larger fleets or observations of widespread acceptance
of the technology within the industry before adopting a technology.
This uncertainty over the actual fuel savings and costs and the lengthy
process to assess technologies significantly slows the pace at which
fuel efficiency technologies are adopted.
    The agencies believe that using the two baselines addresses the
uncertainties we have identified for tractors. The six-month payback
period of Alternative 1b reflects the agencies' consideration of
factors, discussed above, that could limit--yet not eliminate--
manufacturers' tendencies to voluntarily improve fuel consumption. In
contrast, Alternative 1a reflects a baseline for vehicles other than
trailers wherein manufacturers either do not apply fuel efficiency
technologies or only apply them as a substitute for more expensive fuel
efficiency technologies, except as necessitated by the Phase 1 fuel
consumption and GHG standards.
    For HD pickups and vans, the agencies considered two No Action
alternatives to cover a nominal range of

uncertainty. In Alternative 1b the agencies considered additional
technology application, which involved the explicit estimation of the
potential to add specific fuel-saving technologies to each specific
vehicle model included in the agencies' HD pickup and van fleet
analysis, as discussed in Section VI. Estimated technology application
and corresponding impacts depend on the modeled inputs. Also, under
this approach a manufacturer that has improved fuel consumption and GHG
emissions enough to achieve compliance with the standards is assumed to
apply further improvements, provided those improvements reduce fuel
outlays by enough (within a specified amount of time, the payback
period) to offset the additional costs to purchase the new vehicle.
These calculations explicitly account for and respond to fuel prices,
vehicle survival and mileage accumulation, and the cost and efficacy of
available fuel-saving technologies. Therefore, all else being equal,
more technology is applied when fuel prices are higher and/or
technology is more cost-effective. However, considering factors
discussed above that could limit manufacturers' tendency to voluntarily
improve HD pickup and van fuel consumption, Alternative 1b applies a 6-
month payback period. In contrast, for Alternative 1a, the agencies
project that fuel-saving technologies will either not be applied or
only be applied as a substitute for more expensive fuel efficiency
technologies, except as necessitated by the Phase 1 fuel consumption
and GHG standards. The Method A sensitivity analysis presented in
Section VI of the NPRM also examined other payback periods. In terms of
impacts under reference case fuel prices, the payback period input
plays a more significant role under the No-Action Alternatives (defined
by a continuation of model year 2018 standards) than under the more
stringent regulatory alternatives for HD pickups and vans described
next.
(2) Alternative 2: Less Stringent Than the Preferred Alternative
    For vocational vehicles and combination tractor-trailers,
Alternative 2 represents a stringency level which is approximately half
as stringent overall as the final standards. The agencies developed
Alternative 2 to consider a continuation of the Phase 1 approach of
applying off-the-shelf technologies rather than requiring the
development of new technologies or fundamental improvements to existing
technologies. For tractors and vocational vehicles, this also involved
less integrated optimization of the vehicles and engines. Put another
way, Alternative 2 is not technology-forcing.\942\ See, e.g., Sierra
Club v. EPA, 325 F. 3d 374, 378 (D.C. Cir. 2003) (under a technology-
forcing provision, EPA ``must consider future advances in pollution
control capability''); see also similar discussion in Husqvarna AB v.
EPA, 254 F. 3d 195, 201 (D.C. Cir. 2001).
---------------------------------------------------------------------------

    \942\ As noted in Section I.C, in this context, the term
``technology-forcing'' has a specific legal meaning and is used to
distinguish standards that will effectively require manufacturers to
develop new technologies (or to significantly improve technologies)
from standards that can be met using off-the-shelf technology alone.
Technology-forcing standards do not require manufacturers to use any
specific technologies.
---------------------------------------------------------------------------

    The agencies' decisions regarding which technologies could be
applied to comply with Alternative 2 considered not only the use of
off-the shelf technologies, but also considered other factors, such as
how broadly certain technologies fit in-use applications and regulatory
structure. The resulting Alternative 2 could be met with fewer
technologies and lower penetration rates than those the agencies
project will be used to meet the final Phase 2 standards. Alternative 2
is estimated to be achievable without the application of some
technologies, at any level. These and other differences are described
below by category. Overall, Alternative 2 for the final rules is
conceptually similar to Alternative 2 in the NPRM. However, some
changes have been made to reflect new information provided in public
comments.
    The agencies project that Alternative 2 combination tractor
standards could be met by applying lower adoption rates of the
projected technologies for Alternative 3. This includes a projection of
slightly lower per-technology effectiveness for Alternative 2 versus 3.
Alternative 2 also assumes that there would be little optimization of
combination tractor powertrains.
    The Alternative 2 for vocational vehicles assessed for these final
rules does differ somewhat from the proposal because it reflects new
duty cycles that weight idle emissions more heavily. The agencies
project that the Alternative 2 vocational vehicle standard could be met
without any use of strong hybrids or any other type of transmission
technology. Rather, it could be met with off-the-shelf idle reduction
technologies, low rolling resistance tires, and axle efficiency
improvements.
    The Alternative 2 trailer standards would apply to only 53-foot dry
and refrigerated box trailers and could be met through the use of less
effective aerodynamic technologies and higher rolling resistance tires
versus what the agencies projected could be used to meet Alternative 3
(i.e., the final standards).
    As discussed above in Section VI, the HD pickup truck and van
alternatives are characterized by an annual required percentage change
(decrease) in the functions defining attribute-based targets for per-
mile fuel consumption and GHG emissions. Under the standards in each
alternative, a manufacturer's fleet would, setting aside any changes in
production mix, be required to achieve average fuel consumption/GHG
levels that increase in stringency every year relative to the standard
defined for MY 2018 (and held constant through 2020) that establishes
fuel consumption/GHG targets for individual vehicles. A manufacturer's
specific fuel consumption/GHG requirement is the sales-weighted average
of the targets defined by the work-factor curve in each year.
Therefore, although the alternatives involve steady increases in the
functions defining the targets, stringency increases faced by any
individual manufacturer may not be steady if changes in the
manufacturer's product mix cause fluctuations in the average fuel
consumption and GHG levels required of the manufacturer. See Section VI
for additional discussion of this topic. Alternative 2 represents a 2.0
percent annual improvement through 2025 in fuel consumption/GHG
emissions relative to the work-factor curve in 2020. This would be 0.5
percent less stringent per year compared to the standards of
Alternative 3.
    For HD pickups and vans in the Method A analysis, NHTSA projects
that most manufacturers could comply with the standards defining
Alternative 2 by applying technologies similar to those that could be
applied in order to comply with the Alternative 3 standards, but at
lower application rates. In EPA's Method B analysis, the biggest
technology difference EPA projects between Alternative 2 and the
Alternative 3 final standards is that most manufacturers could meet the
Alternative 2 standards without any use of stop-start or other mild or
strong hybrid technologies.
    The agencies are not adopting standards reflecting Alternative 2
for reasons of both policy and law. Technically feasible alternate
standards are available that provide for greater emission reductions
and reduced fuel consumption than provided under Alternative 2. These
more stringent standards, which are being adopted, are feasible at
reasonable cost, considering both per-vehicle and per-engine cost,
cost-effectiveness, direct benefits to

consumers in the form of fuel savings, and lead time. Consequently, the
agencies do not believe that the modest improvements in Alternative 2
would be appropriate or otherwise reasonable under section 202(a)(1)
and (2) of the Clean Air Act, or represent the ``maximum feasible
improvement'' within the meaning of 49 U.S.C. 32902(k)(2).
(3) Alternative 3: Preferred Alternative and Final Standards
    The agencies are adopting Alternative 3 for HD engines, HD pickup
trucks and vans, Class 2b through Class 8 vocational vehicles, Class 7
and 8 combination tractors, and trailers. Details regarding modeling of
this final program are included in Chapter 5 of the RIA. Note that
Alternative 3 for the final rules differs from the Alternative 3 in the
NPRM. The differences are largely in response to significant comments
on the proposed rule. Although some aspects of the final Alternative 3
are more aggressive than proposed (including adopting some aspects of
the proposed Alternative 4), others are less aggressive. As a result of
these changes, the preferred alternative in this final rule is
projected to achieve more GHG emission reductions and more reductions
of fuel consumption than the proposed alternative 4. See Section X.B
below and RIA Chapter 5.
    Unlike the Phase 1 standards where the agencies projected that
manufacturers could meet the Phase 1 standards with off-the-shelf
technologies only, the agencies project that meeting the Alternative 3
standards will require a combination of off-the-shelf technologies
applied at higher market penetration rates and new technologies that
are still in various stages of development and not yet in production.
Although this alternative is technology-forcing, it must be kept in
mind that the standards themselves are performance-based and thus do
not mandate that any particular technology be used to meet the
standards.\943\ The agencies recognize that there is some uncertainty
in projecting costs and effectiveness for those technologies not yet
available in the market, but we do not believe, as discussed
comprehensively in Sections II, III, IV, V, and VI, that such
uncertainty is sufficient to render Alternative 3 beyond the reasonable
or maximum feasible level of stringency for each of the engine and
vehicle categories covered by this program. Moreover, we have explained
what steps will be needed to bring these technologies to the commercial
market, and the lead time needed to do so. Given that nearly all of the
final standards are performance-based rather than mandates of specific
technologies, and given that the lead time for the most stringent
standards in Alternative 3 is approximately 10 years, the agencies
believe that the performance that is required by these stringency
levels of Alternative 3 allows each manufacturer to choose to develop
technology and apply it to their vehicles (and engines, where
applicable) in a way that balances their unique business constraints
and reflects their specific market position and customers' needs.\944\
---------------------------------------------------------------------------

    \943\ The one exception being design standards for certain non-
aero trailers.
    \944\ Those few standards that are design-based rather than
performance based reflect comments indicating that performance-based
flexibility would not be necessary or helpful for certain markets.
---------------------------------------------------------------------------

    We have described in detail above, and also in Chapter 2 of the
RIA, the precise bases for each of these standards (that is, for each
segment covered under the program). Sections II through VI of this
Preamble provide comprehensive explanations of the agencies' assessment
of the extent to which such standards could be met through the
accelerated application of technologies and our reasons for concluding
that the identified technologies for each of the vehicle and engine
standards that constitute the updated Alternative 3 represent the
maximum feasible (within the meaning of 49 U.S.C. 32902 (k)) and
reasonable (for purposes of CAA section 202(a)(1) and (2)) based on all
of the information available to the agencies at the time of this
rulemaking. In particular, the agencies determined that many engine
improvements could be achieved sooner than we projected in our NPRM
analysis, some even sooner than projected as part of the Alternative 4
analysis.
(4) Alternative 4: More Accelerated Than the Preferred Alternative in
the NPRM
    As indicated by its description in the title above, Alternative 4
represents standards that are effective on a more accelerated timeline
in comparison to the timeline of in the proposed Alternative 3
standards. This alternative is unchanged from Alternative 4 in the
proposal. The agencies believe that reanalyzing the same Alternative 4
provides a useful context for commenters who supported the proposed
Alternative 4.
    In the NPRM, Alternatives 3 and 4 were both designed to achieve
similar fuel efficiency and GHG emission levels in the long term but
with Alternative 4 being accelerated in its implementation timeline.
Specifically, Alternative 4 reflects the same or similar standard
stringency levels as the proposed Alternative 3, but 3 years sooner (2
years for heavy-duty pickups and vans), so that the final phase of the
standards would occur in MY 2024, or (for heavy duty pickups and vans)
2025.
    The agencies projected in the NPRM that meeting Alternative 4
combination tractor standards would require applying initially higher
adoption rates of the projected technologies for Alternative 3. This
included a projection of slightly higher per-technology effectiveness
for Alternative 4 versus 3. Alternative 4 also assumes that there would
be more optimization of combination tractor powertrains and earlier
market penetration of engine waste heat recovery systems.
    The agencies also projected that meeting the Alternative 4
vocational vehicle standard would require earlier adoption rates of the
same technology packages projected for Alternative 3.
    Meeting the Alternative 4 trailer standards would require earlier
implementation of more effective aerodynamic technologies, including
the use of aerodynamic skirts and boat tails. This would be in addition
to implementing lower rolling resistance tires for nearly all trailers.
    HD pickup truck and van standards defining Alternative 4 represent
a 3.5 percent annual improvement in fuel consumption and GHG emissions
through 2025 relative to the work-factor curves in 2020. This would
require earlier adoption of all the Alternative 3 technologies.
    As discussed above and in the feasibility discussions in Sections
II-VI, we are adopting those elements of the proposed Alternative 4
where we have determined them to be feasible in the lead time provided.
However, the agencies have determined that it is unlikely that all
elements of Alternative 4 could be achieved by 2024. In fact, the
agencies can only project that the engine improvements and some tire
improvements will be achievable on the Alternative 4 timeline. Thus, we
do not believe these alternative standards to be feasible overall, and
we are consequently unable to accurately estimate costs for them. The
agencies received many comments supporting the Alternative 4 standards
where the commenter noted they supported them because they would be
``cost-effective'' based on the proposed analysis of costs. However, we
do not consider this conclusion to be accurate. We do not believe the
proposed analysis fully represents the costs for this alternative

because it included little additional costs related to pulling ahead
the development of so many additional technologies. It also does not
reflect any costs associated with a decrease in the in-use reliability
and durability during the initial years of implementation. It does not
reflect costs of design and deployment outside of normal design cycles,
an example being the necessity of developing new engine platforms if
WHR were to be applied at higher penetration rates by MY 2024. See RIA
Chapter 2.7.5. As we have already noted, we did not find costs or cost-
effectiveness to be a significantly limiting factor in determining the
stringency of the standards. Rather, we found that actual technological
feasibility and lead time to be the more limiting factors. In this
respect, we found Alternative 4 to provide insufficient lead time for
any of the standards--engine, pickups and vans, vocational vehicles,
tractors, and trailers.
(5) Alternative 5: Even More Stringent Standards With Less Lead-Time
    Alternative 5 represents even more stringent standards compared to
Alternatives 3 and 4, as well as the same implementation timeline as
Alternative 4. As discussed in the NPRM, and as repeated above and in
the feasibility discussions in Sections II-VI, we are not adopting
Alternative 5 because we cannot project that manufacturers can develop
and introduce in sufficient quantities the technologies that could be
used to meet Alternative 5 standards. No commenters provided any new
information to refute this finding. We believe that for some or all of
the categories, the Alternative 5 standards are simply technically
infeasible within the lead time allowed. We have not fully estimated
costs for this alternative for tractors and vocational vehicles because
we believe that there would be such substantial additional costs
related to pulling ahead the development of so many additional
technologies that we cannot accurately predict these costs. (Indeed,
how can cost estimates for an alternative which essentially cannot be
done at all be realistic?) We also believe this alternative, if it
could somehow be effectuated, would result in a decrease in the in-use
reliability and durability of new heavy-duty vehicles and that we do
not have the ability to accurately quantify the costs that would be
associated with such problems. Instead, we merely note that costs would
be significantly greater than the estimated costs for Alternative 3,
assuming (against our view) that such standards would be feasible at
all.

B. How do these alternatives compare in overall fuel consumption and
GHG emissions reductions?

    The following tables compare the overall fuel consumption and GHG
emissions reductions of each of the regulatory alternatives the
agencies considered.
    Note that for tractors, trailers, pickups and vans the agencies
compared overall fuel consumption and GHG emissions reductions relative
to two different baselines, described above in the section on the No
Action alternative. Therefore, for tractors, trailers, pickups and vans
two results are listed; one relative to each baseline, namely
Alternative 1a and Alternative 1b.
    Also note that the agencies analyzed pickup and van overall fuel
consumption and emissions reductions and benefits and costs using the
NHTSA's CAFE model (Method A). In addition, the agencies used EPA's
MOVES model to estimate pickup and van fuel consumption and emissions
and a cost methodology that applied vehicle costs in different model
years (Method B). In both cases, the agencies used a version of the
CAFE model to estimate average per vehicle cost, and this analysis
extended through model year 2030.\945\ The agencies concluded that in
these instances the choice of baseline and the choice of modeling
approach (Method A versus Method B) did not impact the agencies'
decision to finalize Alternative 3.
---------------------------------------------------------------------------

    \945\ Although the agencies have considered regulatory
alternatives involving standards increasing in stringency through,
at the latest, 2027, the agencies extended the CAFE modeling
analysis through model year 2030 rather than model year 2027 in
order to obtain more fully stabilized results given projected
product cadence, multiyear planning, and application of earned
credits.
---------------------------------------------------------------------------

    The agencies are finalizing a more stringent program than proposed,
so that the preferred alternative for the FRM (Alternative 3) achieves
greater reductions and net benefits than the proposed program would
have. Moreover, because the agencies analyzed the same Alternative 4
for the FRM as for the NPRM, the FRM preferred alternative also
achieves greater reductions than Alternative 4 would have.
    The regulatory impact analysis (RIA) accompanying today's notice
presents more detailed results of the agencies' analysis.
(1) Impacts Using Analysis Method A
    Table X-1 through Table X-4 summarize the key NHTSA estimates of
the costs and benefit of the program using Method A. The first two
tables show the costs and benefits using a 3 percent discount rate
under both the flat and dynamic baselines. The third and fourth tables
show the costs and benefits using a 7 percent discount rate for both
baselines. Under all possible combinations of discount rate and
baseline the net benefits from highest to lowest are as follows:
Alternative 5; Alternative 3; Alternative 4; Alternative 2.

 Table X-1--MY 2018-2029 Lifetime Summary of Program Benefits and Costs, Discounted at 3% (Relative to Baseline
                                                 1a), Method A a
----------------------------------------------------------------------------------------------------------------
                 Vehicle segment                       Alt 2           Alt 3           Alt 4           Alt 5
----------------------------------------------------------------------------------------------------------------
                                   Discounted pre-tax fuel savings ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................            12.1            18.7            20.3            22.3
Vocational Vehicles.............................            13.5            25.5            23.6            34.6
Tractors/Trailers...............................            50.2           118.8           115.7           169.1
                                                 ---------------------------------------------------------------
    Total.......................................            75.7           163.0           159.6           225.9
----------------------------------------------------------------------------------------------------------------
                                  Discounted Total technology costs ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             3.1             6.8             8.2             9.9
Vocational Vehicles.............................             1.6             6.6             7.1             9.5
Tractors/Trailers...............................             9.0            11.0            11.6            26.8
                                                 ---------------------------------------------------------------

    Total.......................................            13.7            24.4            26.9            46.2
----------------------------------------------------------------------------------------------------------------
                               Discounted value of emissions reductions ($billon)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             3.4             5.3             5.7             6.3
Vocational Vehicles.............................             5.2             9.8             9.1            13.3
Tractors/Trailers...............................            21.9            50.9            50.9            73.4
                                                 ---------------------------------------------------------------
    Total.......................................            30.5            66.0            65.7            93.0
----------------------------------------------------------------------------------------------------------------
                                             Total costs ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             4.4             7.9             8.6            10.3
Vocational Vehicles.............................             2.4             7.3             8.8            11.3
Tractors/Trailers...............................            13.2            14.0            15.7            30.8
                                                 ---------------------------------------------------------------
    Total.......................................            20.0            29.2            33.1            52.4
----------------------------------------------------------------------------------------------------------------
                                            Total benefits ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................            18.1            28.1            30.4            33.3
Vocational Vehicles.............................            20.2            37.8            35.1            51.2
Tractors/Trailers...............................            78.1           179.8           176.5           255.5
                                                 ---------------------------------------------------------------
    Total.......................................           114.1           245.7           242.0           340.0
----------------------------------------------------------------------------------------------------------------
                                             Net benefits ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................            13.7            20.2            21.8            23.0
Vocational Vehicles.............................            17.8            30.5            26.3            39.9
Tractors/Trailers...............................            64.9           165.8           160.9           224.7
                                                 ---------------------------------------------------------------
    Total.......................................            94.1           216.5           208.9           287.6
----------------------------------------------------------------------------------------------------------------
Note:
\a\ For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less
  dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.

Table X-2--MY 2018-2029 Lifetime Summary of Program Benefits and Costs, Discounted at 3% (Relative to Baseline 1
                                                 b), Method A a
----------------------------------------------------------------------------------------------------------------
                 Vehicle segment                       Alt 2           Alt 3           Alt 4           Alt 5
----------------------------------------------------------------------------------------------------------------
                                   Discounted pre-tax fuel savings ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................            10.7            17.4            19.5            21.9
Vocational Vehicles.............................            13.5            25.5            23.6            34.6
Tractors/Trailers...............................            37.6           106.2           103.1           156.5
                                                 ---------------------------------------------------------------
    Total.......................................            61.8           149.1           146.2           213.0
----------------------------------------------------------------------------------------------------------------
                                  Discounted Total technology costs ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             2.8             6.4             7.5             9.8
Vocational Vehicles.............................             1.6             6.6             7.1             9.5
Tractors/Trailers...............................             8.8            10.7            11.3            26.6
                                                 ---------------------------------------------------------------
    Total.......................................            13.2            23.7            25.9            45.9
----------------------------------------------------------------------------------------------------------------
                               Discounted value of emissions reductions ($billon)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             3.0             4.9             5.5             6.2
Vocational Vehicles.............................             5.2             9.8             9.1            13.3
Tractors/Trailers...............................            16.4            45.4            45.4            67.9
                                                 ---------------------------------------------------------------
    Total.......................................            24.6            60.1            60.0            87.4
----------------------------------------------------------------------------------------------------------------
                                             Total costs ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             4.0             7.4             8.6            10.0
Vocational Vehicles.............................             2.4             7.3             8.8            11.3

Tractors/Trailers...............................            12.9            13.8            15.5            30.6
                                                 ---------------------------------------------------------------
    Total.......................................            19.3            28.5            32.9            51.9
----------------------------------------------------------------------------------------------------------------
                                            Total benefits ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................            16.0            26.0            29.2            32.7
Vocational Vehicles.............................            20.2            37.8            35.1            51.2
Tractors/Trailers...............................            59.2           161.0           157.7           236.7
                                                 ---------------------------------------------------------------
    Total.......................................            95.4           224.8           222.0           320.6
----------------------------------------------------------------------------------------------------------------
                                             Net benefits ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................            12.0            18.6            20.6            22.7
Vocational Vehicles.............................            17.8            30.5            26.3            39.9
Tractors/Trailers...............................            46.3           147.2           142.2           206.1
                                                 ---------------------------------------------------------------
    Total.......................................            76.1           196.3           189.1           268.7
----------------------------------------------------------------------------------------------------------------
Note:
\a\ For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less
  dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.

 Table X-3--MY 2018-2029 Lifetime Summary of Program Benefits and Costs, Discounted at 7% (Relative to Baseline
                                                 1a) Method A a
----------------------------------------------------------------------------------------------------------------
                 Vehicle segment                       Alt 2           Alt 3           Alt 4           Alt 5
----------------------------------------------------------------------------------------------------------------
                                   Discounted pre-tax fuel savings ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             7.1            10.9            11.9            13.0
Vocational Vehicles.............................             7.1            13.4            12.5            18.5
Tractors/Trailers...............................            26.6            62.7            61.8            90.7
                                                 ---------------------------------------------------------------
    Total.......................................            40.8            87.0            86.2           122.2
----------------------------------------------------------------------------------------------------------------
                                  Discounted Total technology costs ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             2.2             4.8             5.9             7.0
Vocational Vehicles.............................             1.1             4.4             4.8             6.5
Tractors/Trailers...............................             6.2             7.4             8.0            18.5
                                                 ---------------------------------------------------------------
    Total.......................................             9.5            16.6            18.7            32.0
----------------------------------------------------------------------------------------------------------------
                               Discounted value of emissions reductions ($billon)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             3.1             4.8             5.2             5.7
Vocational Vehicles.............................             4.2             7.8             7.3            10.7
Tractors/Trailers...............................            16.9            39.5            39.3            57.1
                                                 ---------------------------------------------------------------
    Total.......................................            24.2            52.1            51.8            73.5
----------------------------------------------------------------------------------------------------------------
                                             Total costs ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             3.0             5.5             6.1             7.3
Vocational Vehicles.............................             1.5             4.8             5.8             7.5
Tractors/Trailers...............................             8.5             9.2            10.2            20.7
                                                 ---------------------------------------------------------------
    Total.......................................            13.0            19.5            22.1            35.5
----------------------------------------------------------------------------------------------------------------
                                            Total benefits ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................            11.7            18.0            19.6            21.5
Vocational Vehicles.............................            12.1            22.6            21.1            31.0
Tractors/Trailers...............................            47.1           108.0           106.8           155.1
                                                 ---------------------------------------------------------------
    Total.......................................            70.9           148.6           147.5           207.6
----------------------------------------------------------------------------------------------------------------
                                             Net benefits ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             8.7            12.5            13.5            14.2

Vocational Vehicles.............................            10.6            17.8            15.3            23.5
Tractors/Trailers...............................            38.6            98.8            96.6           134.4
                                                 ---------------------------------------------------------------
    Total.......................................            58.0           129.1           125.4           172.1
----------------------------------------------------------------------------------------------------------------
Note:
\a\ For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less
  dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.

 Table X-4--MY 2018-2029 Lifetime Summary of Program Benefits and Costs, Discounted at 7% (Relative to Baseline
                                                 1b), Method A a
----------------------------------------------------------------------------------------------------------------
                 Vehicle segment                       Alt 2           Alt 3           Alt 4           Alt 5
----------------------------------------------------------------------------------------------------------------
                                   Discounted pre-tax fuel savings ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             6.3            10.1            11.5            12.9
Vocational Vehicles.............................             7.1            13.4            12.5            18.5
Tractors/Trailers...............................            19.9            56.1            55.2            84.1
                                                 ---------------------------------------------------------------
    Total.......................................            33.3            79.6            79.2           115.5
----------------------------------------------------------------------------------------------------------------
                                  Discounted Total technology costs ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             2.0             4.4             5.3             7.0
Vocational Vehicles.............................             1.1             4.4             4.8             6.5
Tractors/Trailers...............................             6.1             7.3             7.8            18.4
                                                 ---------------------------------------------------------------
    Total.......................................             9.2            16.1            17.9            31.9
----------------------------------------------------------------------------------------------------------------
                               Discounted value of emissions reductions ($billon)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             2.7             4.4             5.0             5.6
Vocational Vehicles.............................             4.2             7.8             7.3            10.7
Tractors/Trailers...............................            12.7            35.3            35.1            52.8
                                                 ---------------------------------------------------------------
    Total.......................................            19.6            47.5            47.4            68.2
----------------------------------------------------------------------------------------------------------------
                                             Total costs ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             2.7             5.1             6.0             7.1
Vocational Vehicles.............................             1.6             4.8             5.8             7.5
Tractors/Trailers...............................             8.4             9.0            10.1            20.6
                                                 ---------------------------------------------------------------
    Total.......................................            12.7            18.9            21.9            35.2
----------------------------------------------------------------------------------------------------------------
                                            Total benefits ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................            10.4            16.7            19.0            21.3
Vocational Vehicles.............................            12.1            22.7            21.1            31.0
Tractors/Trailers...............................            35.9            96.8            95.6           143.9
                                                 ---------------------------------------------------------------
    Total.......................................            58.4           136.2           135.7           195.2
----------------------------------------------------------------------------------------------------------------
                                             Net benefits ($billion)
----------------------------------------------------------------------------------------------------------------
HD pickups and Vans.............................             7.7            11.6            13.0            14.2
Vocational Vehicles.............................            10.5            17.9            15.3            23.5
Tractors/Trailers...............................            27.5            87.8            85.5           123.3
                                                 ---------------------------------------------------------------
    Total.......................................            45.7           117.3           113.8           161.0
----------------------------------------------------------------------------------------------------------------
Note:
\a\ For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less
  dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.

    Table X-5 and Table X-6 show the estimated fuel savings and GHG
reductions considering alternatives under both baselines. Under both
baselines, the reductions in both fuel and GHG's are highest under
Alternative 5, higher under Alternative 3 than Alternative 4, and
lowest under Alternative 2.

     Table X-5--MY 2018-2029 Lifetime Fuel Savings and GHG Emissions
   Reductions by Vehicle Segment, Relative to Baseline 1a, Method A a
------------------------------------------------------------------------
                                                          Upstream &
      MY 2018-2029 Total          Fuel reductions       downstream GHG
                                 (billion gallons)     reductions (MMT)
------------------------------------------------------------------------
                              Alternative 2
------------------------------------------------------------------------
HD Pickup Trucks/Vans.........                  6.2                   77
Vocational Vehicles...........                  6.5                   86
Tractors and Trailers.........                 23.4                  323
                               -----------------------------------------
    Total.....................                 36.1                  486
------------------------------------------------------------------------
                      Alt. 3--Preferred Alternative
------------------------------------------------------------------------
HD Pickup Trucks/Vans.........                  9.8                  120
Vocational Vehicles...........                 12.3                  162
Tractors and Trailers.........                 55.6                  767
                               -----------------------------------------
    Total.....................                 77.7                 1049
------------------------------------------------------------------------
                                 Alt. 4
------------------------------------------------------------------------
HD Pickup Trucks/Vans.........                 10.6                  130
Vocational Vehicles...........                 11.4                  150
Tractors and Trailers.........                 54.0                  744
                               -----------------------------------------
    Total.....................                 76.0                 1024
------------------------------------------------------------------------
                                 Alt. 5
------------------------------------------------------------------------
HD Pickup Trucks/Vans.........                 11.6                  143
Vocational Vehicles...........                 16.7                  219
Tractors and Trailers.........                 78.8                 1087
                               -----------------------------------------
    Total.....................                107.1                 1449
------------------------------------------------------------------------
Note:
\a\ For an explanation of analytical Methods A and B, please see
  Preamble Section I.D; for an explanation of the flat baseline, 1a, and
  dynamic baseline, 1b, please see Preamble Section X.A.1.

     Table X-6--MY 2018-2029 Lifetime Fuel Savings and GHG Emissions
    Reductions by Vehicle Segment, Relative to Baseline 1b Method A a
------------------------------------------------------------------------
                                                          Upstream &
      MY 2018-2029 Total          Fuel reductions       downstream GHG
                                 (billion gallons)     reductions (MMT)
------------------------------------------------------------------------
                              Alternative 2
------------------------------------------------------------------------
HD Pickup Trucks/Vans.........                  5.5                   68
Vocational Vehicles...........                  6.5                   86
Tractors and Trailers.........                 17.5                  242
                               -----------------------------------------
    Total.....................                 29.5                  396
------------------------------------------------------------------------
                      Alt. 3--Preferred Alternative
------------------------------------------------------------------------
HD Pickup Trucks/Vans.........                  9.0                  111
Vocational Vehicles...........                 12.4                  162
Tractors and Trailers.........                 49.7                  685
                               -----------------------------------------
    Total.....................                 71.1                  958
------------------------------------------------------------------------
                                 Alt. 4
------------------------------------------------------------------------
HD Pickup Trucks/Vans.........                 10.1                  125
Vocational Vehicles...........                 11.4                  150
Tractors and Trailers.........                 48.1                  663
                               -----------------------------------------
    Total.....................                 69.6                  938
------------------------------------------------------------------------

                                 Alt. 5
------------------------------------------------------------------------
HD Pickup Trucks/Vans.........                 11.3                  140
Vocational Vehicles...........                 16.7                  219
Tractors and Trailers.........                 72.9                 1006
                               -----------------------------------------
    Total.....................                100.9                 1365
------------------------------------------------------------------------
Note:
\a\ For an explanation of analytical Methods A and B, please see
  Preamble Section I.D; for an explanation of the flat baseline, 1a, and
  dynamic baseline, 1b, please see Preamble Section X.A.1.

  Table X-7--Annual GHG and Fuel Reductions Relative to the Dynamic Baseline in 2040 and 2050 Using Method A a
----------------------------------------------------------------------------------------------------------------
                                                     Upstream & downstream GHG       Fuel reductions (billion
                                                      Reductions (MMT CO2EQ)                 gallons)
                                                 ---------------------------------------------------------------
                                                       2040            2050            2040            2050
----------------------------------------------------------------------------------------------------------------
Alt. 2 Less Stringent--Total....................            49.1            57.3             3.6             4.2
    Tractors and Trailers.......................            30.9            36.6             2.2             2.7
    HD Pickups & Vans...........................             6.7             7.3             0.6             0.6
    Vocational Vehicles.........................            11.5            13.4             0.8             0.9
Alt. 3 Preferred--Total.........................             139             166            10.2            12.3
    Tractors and Trailers.......................             102             124             7.4             9.0
    HD Pickups & Vans...........................            12.6            13.8             1.0             1.2
    Vocational Vehicles.........................            24.1            28.2             1.8             2.1
Alt. 4 Less Lead Time--Total....................             116             136             8.6            10.1
    Tractors and Trailers.......................            83.1            98.7             6.0             7.2
    HD Pickups & Vans...........................            12.6            13.8             1.1             1.2
    Vocational Vehicles.........................            20.0            23.1             1.5             1.7
Alt. 5 More Stringent--Total....................             167             194            12.4            14.2
    Tractors and Trailers.......................             124             146             9.0            10.6
    HD Pickups & Vans...........................            14.8            16.2             1.3             1.3
    Vocational Vehicles.........................            27.8            32.0             2.1             2.3
----------------------------------------------------------------------------------------------------------------
Note:
\a\ For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the flat
  baseline, 1a, and dynamic baseline, 1b, please see Section X.A.1.

    Table X-8--Annual GHG and Fuel Reductions Relative to the Flat Baseline in 2040 and 2050 Using Method A a
----------------------------------------------------------------------------------------------------------------
                                                     Upstream & downstream GHG       Fuel reductions (billion
                                                      Reductions (MMT CO2EQ)                 gallons)
                                                 ---------------------------------------------------------------
                                                       2040            2050            2040            2050
----------------------------------------------------------------------------------------------------------------
Alt. 2 Less Stringent--Total....................            63.7            75.2             4.7             5.5
    Tractors and Trailers.......................            44.2            53.0             3.2             3.8
    HD Pickups & Vans...........................             8.0             8.8             0.6             0.7
    Vocational Vehicles.........................            11.5            13.4             0.9             1.0
Alt. 3 Preferred--Total.........................             153             184            11.3            13.7
    Tractors and Trailers.......................             115             141             8.4            10.2
    HD Pickups & Vans...........................            13.8            15.1             1.1             1.3
    Vocational Vehicles.........................            24.1            28.2             1.8             2.2
Alt. 4 Less Lead Time--Total....................             131             153             9.6            11.4
    Tractors and Trailers.......................            96.5             115             7.0             8.3
    HD Pickups & Vans...........................            14.0            15.3             1.1             1.3
    Vocational Vehicles.........................            20.0            23.1             1.5             1.8
Alt. 5 More Stringent--Total....................             181             213            13.4            15.6
    Tractors and Trailers.......................             137             163             9.9            11.8
    HD Pickups & Vans...........................            16.0            17.6             1.4             1.5
    Vocational Vehicles.........................            27.8            32.0             2.1             2.3
----------------------------------------------------------------------------------------------------------------
Note:
\a\ For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the flat
  baseline, 1a, and dynamic baseline, 1b, please see Section X.A.1.

(2) Impacts Using Analysis Method B
    Table X-9 summarizes EPA's estimates of GHG and fuel reductions of
the program using Method B for calendar years 2040 and 2050.

    Table X-9--Annual GHG and Fuel Reductions Relative to the Flat Baseline in 2040 and 2050 Using Method B a
----------------------------------------------------------------------------------------------------------------
                                                     Upstream & downstream GHG       Fuel reductions (billion
                                                      Reductions (MMT CO2EQ)                 gallons)
                                                 ---------------------------------------------------------------
                                                       2040            2050            2040            2050
----------------------------------------------------------------------------------------------------------------
Alt. 2 Less Stringent--Total....................            71.8            84.0             5.4             6.3
    Tractors and Trailers.......................            44.2            53.0             3.2             3.8
    HD Pickups & Vans...........................            16.1            17.6             1.4             1.5
    Vocational Vehicles.........................            11.5            13.4             0.9             1.0
Alt. 3 Preferred--Total.........................           166.5           198.9            12.5            14.9
    Tractors and Trailers.......................           115.5           140.7             8.4            10.2
    HD Pickups & Vans...........................            26.9            30.0             2.2             2.6
    Vocational Vehicles.........................            24.1            28.2             1.9             2.1
Alt. 4 More Stringent--Total....................           144.1           168.5            10.9            12.7
    Tractors and Trailers.......................            96.5           115.1             7.0             8.3
    HD Pickups & Vans...........................            27.7            30.3             2.3             2.6
    Vocational Vehicles.........................            20.0            23.1             1.5             1.8
Alt. 5 More Stringent--Total....................           196.8           230.0            14.8            17.2
    Tractors and Trailers.......................           136.9           162.9             9.9            11.8
    HD Pickups & Vans...........................            32.2            35.2             2.7             3.0
    Vocational Vehicles.........................            27.8            32.0             2.1             2.4
----------------------------------------------------------------------------------------------------------------
Note:
\a\ For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the flat
  baseline, 1a, and dynamic baseline, 1b, please see Section X.A.1.

XI. Natural Gas Vehicles and Engines

    NGV America estimates that approximately 65,200 natural gas trucks
were operating in the U.S. in 2014. This represents 0.3 percent of the
heavy-duty vehicle fleet in the U.S. based on EPA's estimated 17.5
million heavy-duty trucks operating in the U.S.946 947 While
medium and heavy-duty natural gas vehicles continue to be produced and
sold, the collapse of crude oil prices starting in 2014 has reduced the
economic incentive to expand the use of natural gas fueled trucks.
Although these natural gas versions are similar in many ways to their
petroleum counterparts, there are significant differences. There are
also both similarities and differences in the production and
distribution of natural gas relative to gasoline and diesel fuel.
---------------------------------------------------------------------------

    \946\ Yborra, Stephe; NGV Market Briefing to EPA and NHTSA,
August 12, 2014.
    \947\ MOVES2014; http://www3.epa.gov/otaq/models/moves/index.htm.
---------------------------------------------------------------------------

    This combined rulemaking by EPA and NHTSA is designed to regulate
two separate characteristics of heavy-duty vehicles: Emissions of GHGs
and fuel consumption (especially petroleum fuels). The use of natural
gas as a heavy-duty fuel can impact both of these. In the case of
diesel or gasoline powered vehicles, there is a close relationship
between GHG emissions and petroleum consumption. The situation is
different for non-petroleum fuels like natural gas. Natural gas also
has a lower carbon content than petroleum fuels. Thus, a natural gas
vehicle that could achieve the same fuel efficiency as a diesel-powered
vehicle would emit about 20 percent less CO2 when operating
on natural gas and consume no petroleum. A natural gas vehicle with the
same fuel efficiency as a gasoline vehicle would emit about 30 percent
less CO2.\948\ However, current natural gas engines are 5 to
15 percent less energy efficient than diesel engines. This means that,
although natural gas engines are typically less fuel efficient, they
can have lower CO2 emissions and consume much less
petroleum. In Phase 1, the agencies balanced these factors by applying
the gasoline and diesel CO2 standards to natural gas engines
based on the engine type of the natural gas engine. Fuel consumption
for these vehicles is then calculated according to their tailpipe
CO2 emissions. In essence, this applies a one-to-one
relationship between fuel efficiency and tailpipe CO2
emissions for all vehicles, including natural gas vehicles. The
agencies determined that this approach would likely create a small
balanced incentive for natural gas use. See 76 FR 57123; see also 77 FR
51705 (August 24, 2012) and 77 FR 51500 (August 27, 2012) (EPA and
NHTSA, respectively, further elaborating on basis for having Phase 1
apply at the tailpipe only, including for alternative fueled vehicles);
see also Delta Construction Co. v. EPA, 783 F. 3d 1291 (D.C. Cir. 2015)
(dismissing challenge to Phase 1 GHG standards as being arbitrary for
applying only on a tailpipe basis).
---------------------------------------------------------------------------

    \948\ Methane emissions above the heavy-duty 0.1 g/bhp-hr
methane tailpipe standard must be accounted for and offsets the
lower CO2 tailpipe emissions.
---------------------------------------------------------------------------

    For Phase 2, the agencies have reevaluated the potential use of
natural gas in the heavy-duty sector and the impacts of such use. As
discussed below, based on our review of the literature and external
projections we believe that the use of natural gas is unlikely to
become a major fuel source for medium and heavy-duty vehicles during
the Phase 2 time frame. Thus, since we project natural gas vehicles to
have little impact on both overall GHG emissions and fuel consumption
during the Phase 2 time frame, the agencies see no need to make
fundamental changes to the Phase 1 approach for natural gas engines and
vehicles.
    As part of this rulemaking, the agencies developed a lifecycle
analysis of natural gas used by the heavy-duty truck sector, which is
presented in Section XI.B. We also present the results of analyses
projecting the future use of natural gas by heavy-duty trucks, identify
a number of potential emission control technologies, and discuss the

approaches that could help to reduce the methane emissions from natural
gas trucks in the future. A more detailed discussion of these analyses
and issues can be found in RIA Chapter 13.

A. Natural Gas Engine and Vehicle Technology

    Both gasoline and diesel vehicles can be designed or modified to
use natural gas. Several engine parameters and characteristics come
into play in comparing engines powered by natural gas with engines
powered by conventional fuels.
    Gasoline-fueled engines are typically spark-ignition engines that
rely on stoichiometric combustion, which means that essentially all the
oxygen from the engine's intake air is consumed in the combustion
process. Converting a gasoline-fueled engine to run on natural gas
involves changing the hardware used to store and deliver fuel to the
engine, but the combustion strategy remains largely unchanged. The
engine must be recalibrated for the different fuel properties, but
combustion typically remains stoichiometric. In addition, the catalysts
may require significant changes to enable the heavy-duty engine to
comply with the emission standards.
    Diesel-fueled engines are compression-ignition engines that rely on
lean-burn combustion, which means that the engine takes in a
substantial quantity of excess air (oxygen) that is not consumed in the
combustion process. Engines usually have turbochargers to compress the
intake air, which allows for greater power output and thermodynamic
efficiency. Converting a diesel-fueled engine to run on natural gas may
involve a minimal set of changes to engine calibrations to maintain
lean-burn operation and the overall operating characteristics of a
compression-ignition engine, although there are substantial changes to
the fuel storage and delivery systems. Compressed ignition natural gas
engines either require the use of a pilot injection of a small amount
of diesel fuel to initiate the combustion event when the natural gas is
directly injected, or more commonly, a mixture (never more than 50
percent natural gas) of natural gas and diesel fuel is combusted for
fumigated natural gas engines. It is also possible to convert a diesel-
fueled engine to run on natural gas by adding a spark plug. The option
of changing the calibration strategy to rely on stoichiometric
combustion would allow for simpler engine design and operation, but it
would come at a cost of higher fuel consumption and CO2
emissions.
    Engines running on natural gas are capable of meeting the same
criteria and GHG emission standards that apply for gasoline and diesel
engines, although complying with the methane tailpipe emission standard
has posed a challenge for engine manufacturers up to this point. In the
case of reducing PM and CO2 emissions, there is an inherent
advantage for natural gas. In contrast, engines must be properly
calibrated and maintained to avoid high emission rates for
NOX, HC, and CO.
    On-vehicle fuel storage for natural gas is also an important design
parameter. The most common method today is compressed natural gas
(CNG), which involves storing the fuel as a gas at very high pressure
(up to ~3600 psi) to increase the density of the fuel, although the
fuel remains less dense than diesel fuel. Compared to diesel fuel, CNG
increases vehicle weight (because of heavier high pressure fuel tanks)
and generally reduces the range relative to gasoline or diesel
vehicles. Nevertheless, CNG technology is readily available and does
not involve big changes for operators. The alternative is to
extensively cool the fuel so that it can be stored as liquefied natural
gas (LNG) at a lower pressure, which involves more extensive hardware
changes for managing the fuel as a cryogenic liquid. LNG fuel storage
also involves a substantial weight increase, but LNG has a higher
density than CNG so LNG vehicles can store much more fuel than CNG
vehicles in the same volume. LNG technology is available for a limited
number of truck models, mostly for line-haul service where range is a
paramount consideration. The cryogenic fuel requires substantial
changes in hardware and procedures for refueling stations and
operators. An additional difference from CNG is that because LNG must
be kept cool to prevent evaporation, significant losses will occur if a
vehicle is not used frequently enough. For example, an LNG vehicle left
parked over a period of multiple days will eventually vent the fuel to
prevent tank failure, as the system takes on heat from the surrounding
environment and the pressure increases.

B. GHG Lifecycle Analysis for Natural Gas Vehicles

    This section is organized into three sections. The first section
summarizes the upstream emissions associated with natural production
and distribution. The second section summarizes the downstream
emissions associated with the actual use of the fuel. The last section
summarizes the results of the lifecycle emissions analysis and provides
a comparison between natural gas lifecycle and diesel fuel lifecycle
emissions. Only the overall results of the lifecycle emissions analysis
between natural gas and diesel fuel are presented here, with more
detail provided in Chapter 13 of the RIA.
(1) Upstream Emissions
    Upstream methane emissions (occurring in natural gas production,
processing, transmission, storage and distribution) have been estimated
and summarized in the annual EPA report Inventory of U.S. Greenhouse
Gas Emissions and Sinks (GHG Inventory) for the United Nations
Framework Convention on Climate Change (UNFCCC). As a basis for
estimating the lifecycle impact of natural gas use by heavy-duty
trucks, we used the year 2014 methane emission estimates in the most
recent GHG Inventory, published in 2016. Substantial amounts of new
information on methane emissions from oil and gas systems have become
available recently from a number of channels, including EPA's GHG
Reporting program, industry organizations, and various research
studies. EPA reviewed this information and revised its estimates of
methane emissions from natural gas and petroleum facilities for the
2016 GHG Inventory. Comparing the most recent GHG Inventory estimate
for 2013 to the previous GHG Inventory for 2013, methane emissions are
about one third higher for the aggregated natural gas system than the
previous estimate. The GHG Inventory also includes the quantity of
carbon dioxide which is coproduced with methane throughout the natural
gas system and emitted to the atmosphere through venting, flaring, and
as fugitive emissions. Since the GHG Inventory only represents U.S.-
based methane and carbon dioxide emissions, it does not estimate the
GHG emissions caused by the production of natural gas in Canada which
is imported to the U.S. The imported Canadian natural gas comprises
about 10 percent of U.S. natural gas consumption. To estimate the GHG
emissions from this Canadian natural gas, we assume that it has the
same GHG emissions profile as U.S.-produced natural gas.
    The GHG Inventory is updated annually to account for new emission
sources (e.g., new natural gas wells), updated data, emission factors
and/or methodologies, and to account for changes in emissions due to
policy changes, regulatory changes and changes in industry practices.
The GHG Inventory reflects emission reductions due to existing state
regulations, National Emission Standards for Hazardous Air Pollutants
(NESHAP)

promulgated by EPA in 1999,\949\ the New Source Performance Standards
(NSPS) promulgated by EPA in 2012,\950\ and Natural Gas Star (a
flexible, voluntary partnership that encourages oil and natural gas
companies to adopt proven, cost-effective technologies and practices
that improve operational efficiency and reduce methane emissions).\951\
---------------------------------------------------------------------------

    \949\ National Emission Standards for Hazardous Air Pollutants
(NESHAP): For the Oil and Natural Gas Production and Natural Gas
Transmission and Storage, Final Rule, 40 CFR part 63, subpart HH;
June 17, 1999.
    \950\ Oil and Natural Gas Sector: New Source Performance
Standards and National Emission Standards for Hazardous Air
Pollutants Reviews; Final Rule, 40 CFR parts 60 and 63,
Environmental Protection Agency, August 16, 2012.
    \951\ www3.epa.gov/gasstar/.
---------------------------------------------------------------------------

    Emission estimates in the GHG Inventory are generally bottom-up
estimates which are per-unit (compressor, pneumatic valve, etc.)
emission estimates based on measured or calculated emission rates from
such emission sources.
    In addition to the national-level data available through the GHG
Inventory, facility-level petroleum and natural gas systems data are
also available through EPA's Greenhouse Gas Reporting Program
(GHGRP).\952\ These data represent a significant step forward in
understanding GHG emissions from this sector and EPA expects that it
will be an important tool for the agency and the public to analyze
emissions, and to understand emission trends. EPA is using GHGRP data
to update emission estimates in the GHG inventory, and we plan to
continue to leverage GHGRP data to update future GHG Inventories.
---------------------------------------------------------------------------

    \952\ See 40 CFR part 98, subparts PP and RR.
---------------------------------------------------------------------------

    The EPA-promulgated 2012 New Source Performance Standards (NSPS
OOOO) will reduce emissions of ozone precursors from natural gas
facilities and have methane and hazardous air pollutant reduction co-
benefits. The NSPS standards require that emissions from natural gas
wells that are hydraulically fractured be controlled using flaring or
reduced emission completion (REC) technology from completions and
workovers starting in 2012. RECs used by natural gas well drillers
capture the natural gas emissions that occur during well completion,
instead of venting or flaring the emissions. Starting in January 2015,
RECs are required for natural gas well completions and workovers. The
NSPS also regulates the emissions from certain new natural gas
production equipment, including dehydrator vents and condensate tanks.
    The Energy Information Administration (EIA) projects natural gas
production to increase by about 19 percent by 2025. However, as noted
in the 2016 Second Biennial Report of the United States of America, EPA
projects emissions of methane to increase, by only 5 percent during
this timeframe; thus, methane emissions in 2025 are expected to be 12
percent lower than in 2014 per equivalent volume of natural gas being
produced.
    EPA is taking additional steps to reduce the emissions of methane
from natural gas and oil production facilities. On May 12, 2016, EPA
finalized regulations (2016 NSPS OOOOa) which, among other things,
include methane standards for oil and gas equipment used across the oil
and gas sources currently only regulated for VOCs, and require the use
of reduced emissions completions at hydraulically fractured oil
wells.\953\ In March of 2016, the U.S. EPA and Canadian Environment and
Climate Change Canada (ECCC) announced plans to regulate emissions from
existing oil and gas sources.954 955 956 The goal of these
various actions is to achieve an aggregated 40 to 45 percent reduction
in methane emissions relative to methane emissions in 2012. The
lifecycle analysis presented here and in RIA Chapter 13 attempts to
represent GHG emissions in the year 2025, but probably overestimates
those emissions because the analysis does not take into account the
2016 NSPS, or any future action that would address existing sources.
---------------------------------------------------------------------------

    \953\ Oil and Natural Gas Sector: Emission Standards for New and
Modified Sources; 40CFR 60, May 12, 2016.
    \954\ https://www.whitehouse.gov/the-press-office/2016/03/10/us-canada-joint-statement-climate-energy-and-arctic-leadership.
    \955\ https://blog.epa.gov/blog/2016/03/epa-taking-steps-to-cut-methane-emissions-from-existing-oil-and-gas-sources.
    \956\ Canada achieving methane emissions reductions from its
natural gas sector is important to the US GHG footprint because
about 10 percent of the natural gas consumed in the US is imported
from Canada.
---------------------------------------------------------------------------

    In the GHG Inventory, emissions associated with powering the units
or equipment (i.e., compressors, pumps) used in natural gas production,
processing, transmission and distribution are aggregated with all the
other fossil fuel combustion activities. Rather than attempt to
disaggregate those specific GHG emissions from the rest of the process
emissions in the GHG Inventory, we instead used the estimated emissions
for these sources provided by GREET.
(2) Downstream Emissions
    Downstream emissions associated with natural gas differ between CNG
and LNG. We discuss the emissions of both types below.
(a) Compressed Natural Gas (CNG)
    Natural gas used as CNG is compressed at the retail stations that
sell the CNG and the fleet facilities which fuel the CNG fleet
vehicles. Thus, it is typically off-loaded from the broader natural gas
system where the vehicles using CNG are refueled. To get the natural
gas to the CNG retail facilities, which are mostly located in or near
urban areas, the natural gas is normally shipped through the
distribution system downstream of the natural gas transmission system.
CNG trucks are then refueled at the retail stations providing CNG. Each
time a CNG refueling event occurs, a small amount of natural gas is
released to the environment. We estimated the volume of CNG emitted by
this equipment during refueling based on past data collected on these
types of fueling fittings (described in RIA Chapter <IP_ADDRESS>). Since
CNG storage systems are designed handle very high pressures, they must
be designed to have no leaks, so the CNG could remain stored in the CNG
tanks indefinitely. However, should a leak occur, the very high
pressure at which CNG is stored dramatically increases fugitive
emissions. We do not have any data to suggest that fugitive emissions
from CNG trucks and assume for this analysis that CNG fugitive
emissions from CNG storage at retail/fleet facilities and by trucks is
zero. However, we recognize that this clearly underestimates the
methane emissions from these storage facilities since they are unlikely
to be leak-free in every instance.
    Stored at 3600 psi the energy density of CNG is only about 25
percent of the energy density of diesel fuel. This lower energy density
is a disincentive for using CNG in long haul trucks because it limits
the vehicle's range. However, as described in the Chapter <IP_ADDRESS> of
the RIA, using an adsorbent for natural gas (ANG) could improve the
energy density of CNG, which would make it a better candidate for
natural gas storage for long range combination trucks.\957\ Or, if used
to store CNG at the same density, could reduce the compression energy
required to compress the CNG since it could be stored at a lower
pressure.
---------------------------------------------------------------------------

    \957\ Menon, V.C., Komarneni, S. 1998 ``Porous Adsorbents for
Vehicular Natural Gas Storage: A Review,'' Journal of Porous
Materials 5, 43-58 (1998); Burchell, T ``Carbon Fiber Composite
Adsorbent Media for Low Pressure Natural Gas Storage'' Oak Ridge
National Laboratory.

---------------------------------------------------------------------------

(b) Liquefied Natural Gas (LNG)
    A primary reason for liquefying natural gas is that it allows
storing the natural gas at about 60 percent of the density of diesel
fuel, which is more than twice as dense as CNG. For this reason, LNG is
a primary fuel being considered by long haul trucks.
    Liquefaction is the first step downstream of the natural gas
production, processing and distribution system for making LNG available
to trucks. This step involves cooling the natural gas until it
undergoes a phase change from a gas to a liquid at a low pressure. LNG
plants are configured differently depending on their ultimate capacity.
Large LNG export facilities produce 5 million metric tons, or more, per
year of LNG and the economy of scale of these large plants supports the
significant addition of capital to reduce their operating costs and
energy use. An LNG plant solely producing LNG for truck fuel would
likely be significantly smaller (i.e., 0.1 million metric tons per
year) and have a poorer economy of scale than the LNG export
facilities. Their energy efficiency would be expected to be much lower
on a percentage basis. The California Air Resources Board estimated
that the liquefaction plants used for producing truck LNG fuel are 80
percent efficient, compared to 90 percent efficient for LNG export
facilities.\958\ In other words, the amount of energy used to liquefy
the natural gas would be equivalent to the energy content 10 to 20
percent of the natural gas coming into the facility. CARB recently
conducted its lifecycle assessments for LNG assuming both 90 percent
efficiency value as well as 80 percent efficiency due to the
uncertainty of where the LNG would be sourced from (this assessment by
CARB is solely for illustrative purposes--to qualify for credit under
the Low Carbon Fuel Standard (LCFS), the actual LNG plant performance
would need to be the basis for any submission for requesting credit
under the LCFS). For this lifecycle analysis of LNG as a truck fuel, we
assume that LNG plants are 80 percent efficient, which is consistent
with the types of LNG plants that would be dedicated producers of LNG
for transportation purposes. We also estimated the fugitive methane
emissions at the plant, as well as carbon dioxide emissions emitted by
the processes which liquefy the natural gas. Because LNG plants are
located separate from the retail facilities, they can be located to
access the lowest cost feedstock. This means the natural gas for LNG
can be sourced from the larger natural gas transmission pipelines which
are upstream of the distribution pipelines. Once the natural gas is
liquefied at the liquefaction plant, it is stored in an insulated
storage tank to keep the LNG liquefied.
---------------------------------------------------------------------------

    \958\ Detailed California-Modified GREET Pathway for Liquefied
Natural Gas (LNG) from North American and Remote Natural Gas
Sources, Version 1.0, California Air Resources Board, July 20, 2009.
---------------------------------------------------------------------------

    LNG is typically transported to the retail station using insulated
trailers designed specifically for transporting LNG. Boil-off emissions
can occur during transport, but only if the temperature of the LNG
increases to the point the pressure relief valve opens. However, since
the LNG is super cooled, boil off events are likely to be rare. LNG is
also stored in an insulated storage tank at the retail facility. Heat
gain in the storage tank could eventually lead to boil-off emissions.
Service stations with little LNG demand are at a higher risk of boil-
off emissions compared to service stations which have a significant
throughput volume. LNG stations could be configured to avoid boil-off
events to the atmosphere, such as venting to a co-located CNG facility,
venting to a nearby natural gas pipeline, or oxidizing the methane to
carbon dioxide. In the absence of other information, we used CARB's
estimate of boil-off emissions for LNG transportation by the tanker
truck between the LNG plant and retail outlets and from LNG retail
facilities.\959\
---------------------------------------------------------------------------

    \959\ Ibid.
---------------------------------------------------------------------------

    LNG vehicles generally refuel LNG retail outlets or fleet refueling
facilities much the same as other vehicles. However, because the fuel
is under pressure, when the refueling nozzle is disconnected from the
LNG tank nozzle, a small amount of methane is released to the
environment. We estimated the volume of LNG emitted by this equipment
during refueling based on past data collected on these types of fueling
fittings (described in RIA Chapter 13). In addition, operators
sometimes reduce the pressure in the truck's LNG tank to speed up the
refueling process, which can emit methane as well. In some cases the
retail station is equipped with another hose and associated piping to
vent the excess gas to the retail stations' storage tank where it would
usually condense back to a liquid due to the lower temperature of that
tank, or perhaps be vented to a natural gas pipeline. However, for
those retail outlets without such vent lines to the storage tank, the
operator may simply vent the truck's storage tank to the atmosphere. We
estimated the emissions for a boil-off event or venting an LNG tank
prior to refueling as part of a sensitivity analysis for our lifecycle
analysis.
(c) Comparing CNG to LNG
    The differences between CNG and LNG refueling patterns are
important. Only a single facility, the retail outlet, is required for
distributing CNG, while LNG requires both a liquefaction plant and a
retail outlet and a means for transporting the LNG from the
liquefaction plant to retail. Relying on a single facility simplifies
the logistics of providing CNG and reduces the opportunity for methane
leakage to the environment. However, this emissions disadvantage of LNG
compared to CNG is offset somewhat because LNG is expected to access
natural gas from the upstream transmission system (due to lower
prices), which avoids methane emissions associated with the downstream
natural gas distribution system.
(d) Vehicle Emissions
    There are several different ways that diesel heavy-duty engines can
be configured to use natural gas as a fuel. The first is a spark
ignition (Otto cycle) natural gas (SING) engine. The SING heavy duty
engine burns the fuel stoichiometrically and uses a three-way catalyst,
and some also add an oxidation catalyst to provide the greatest
emissions reduction. In this case the engine compression ratio is
reduced similar to that of a gasoline engine and thus its thermal
efficiency is lower than a diesel-like engine by about 10-15 percent.
    The second is a direct injection natural gas (DING), diesel cycle.
The DING engine uses a small quantity of diesel fuel (pilot injection)
or a glow plug as ignition sources. As the injection system for the
diesel fuel does not have the capability of greater injection
quantities, this option has no dual-fuel properties. On the other hand,
an optimization of the pilot injection can be made to achieve lower
emissions. An advanced high pressure direct injection (HPDI) fuel
system combining the injection of both diesel fuel and natural gas can
be used for lean burn combustion. This enables the engine to maintain
the efficiency advantage of a compression ignition engine while running
mainly CNG/LNG.
    The third is a mixed-fuel natural gas (MFNG), diesel cycle. In a
mixed-fuel engine, natural gas is mixed with intake air before
induction to the cylinder and diesel fuel is used as ignition source.
Mixed-fuel vehicle/engine means any vehicle/engine engineered and
designed to be operated on the original fuel(s), or a mixture of two or
more fuels that are

combusted together. Engine results have shown that the efficiency of
the engine could decrease by about 2-5 percent in mixed-fuel mode
compared to diesel mode and that the diesel replacement was
approximately 40-60 percent.
    Each of these natural gas engine types has its merits. The SING
engine is less costly, but is less fuel efficient and because of the
lower compression ratio it has less torque than the DING and MFNG
diesel cycle engines. Furthermore, the SING engine usually is designed
for a shorter lifespan. The DING engine is likely the most expensive
because of the special natural gas/diesel fuel injection system and
large required amount of natural gas (LNG or CNG) storage since the
truck must run on natural gas. However, because the truck can run
almost completely on natural gas, the DING engine has the potential to
more quickly pay down the higher investment cost of the natural gas
truck. The MFNG engine provides the truck owner the flexibility to
operate either on both natural gas and diesel fuel, or solely on diesel
fuel, but at the expense of a slower natural gas investment pay down
rate because at most 60 percent of the fuel it consumes can be natural
gas.
    Phase 1 set methane emission standards for both CNG and LNG trucks,
so it is important to separate those trucks built before 2014 from
those built in 2014 and later. The trucks built before 2014 only needed
to meet standards for nonmethane hydrocarbon (NMHC) and other criteria
pollutants, which means that the methane emissions from these trucks
are unregulated. Our certification data show that the methane tailpipe
emissions from these trucks/buses ranges from 2-5 g/bhp-hr for both
spark ignition (gasoline type) and compression ignition (diesel type)
engines.
    For 2014 and later, DING and MFNG natural gas trucks or natural gas
conversions of 2014 and later diesel trucks, the trucks must meet a 0.1
g/bhp-hr methane emission standard in the case of a larger truck engine
tested with an engine dynamometer, and a 0.05 g/mile methane emission
standard in the case of smaller trucks tested on a chassis
dynamometer.\960\ For SING engines, the methane standards take effect
in 2016.\961\ Natural gas truck manufacturers are allowed to offset
methane emissions exceeding the methane emission standard by converting
the methane emission exceedances into CO2 equivalent
emissions and using CO2 credits. For the natural gas engine
certifications that EPA received for 2014, 2015 and 2016, the truck
manufactures chose to continue to emit high levels of methane (up to 2
g/bhp-hr) and use carbon dioxide credits to offset those emissions. We
do not know whether this practice will continue in the future; however,
for evaluating the lifecycle impacts of natural gas heavy-duty trucks,
we assume that natural gas trucks emit higher amounts of methane than
the standard. It is worth noting that, because manufacturers have less
experience controlling methane emissions, the potential exists for
deterioration or malfunction of the engines, fuel supplies, or
associated emission control devices on these trucks to occur in such a
manner to result in higher methane emissions in actual use. We have not
specifically accounted for the potential for increased methane
emissions from high-emitter natural gas trucks.
---------------------------------------------------------------------------

    \960\ An exception is that small volume, heavy-duty natural gas
truck manufacturers are exempt from EPA's GHG regulations.
    \961\ See 76 FR 57192, 40 CFR 1036.108(a)(2) and 1037.104(c)
(which is proposed to be redesignated as 40 CFR 86.189-14(k)(5)).
---------------------------------------------------------------------------

    Some amount of combustion gases typically leaks into the crankcase
across the piston rings (blow-by) These crankcase emissions generally
include some unburned fuel along with other combustion products, and
for natural gas engines, this includes methane. The crankcase of the
spark ignition engines is vented into the intake of the engines; thus,
any methane that ends up in the crankcase is rerouted back to the
engine where it would be combusted. For compression ignition engines,
however, the crankcase emissions are allowed to be vented into the
exhaust pipe downstream of the aftertreatment devices, and therefore
can be released to the atmosphere, provided the manufacturer measures
them and includes them in the total emissions. This means that
crankcase emissions of methane count against the Phase 1 methane
standard. Another potential source of methane emissions from CNG and
LNG trucks is fugitive emissions from the engine and from the piping
which routes the fuel to the engine. Thus, either while parked or
operated, this part of the vehicle fuel and engine systems could leak
methane to the environment (which is different from boil-off emissions
from LNG trucks discussed below). We do not have data nor did we
develop an estimate for these potential fugitive emissions from these
types of in-use leaks. If the natural gas vehicles are well maintained,
these emissions are likely to be very low.
    The thermal efficiency (the ratio of energy converted to work
versus energy consumed) of the natural gas engine also plays a role in
the lifecycle emissions of the truck. Natural gas engines are generally
less efficient than their gasoline and diesel counterparts.
Furthermore, manufacturers often choose to produce spark-ignition
stoichiometric natural gas engines for use in diesel applications.
Spark-ignition natural gas engines can be as much as 15 percent less
efficient than compressed ignition engines which operate on diesel
fuel. In our lifecycle analysis, we provide two different sensitivities
for natural gas vehicles assuming that they are 5 percent and 15
percent less efficient.
    An important difference between CNG and LNG is the way in which the
fuels are stored on the vehicle. The CNG is contained in a permanently
sealed system while the LNG system is potentially open to the
environment (depending on operating patterns). Provided that there are
no leaks in the storage system, the CNG truck is inherently low (zero)
emitting with respect to evaporative emission and a parked truck would
contain the CNG indefinitely. However, this is not so for LNG trucks,
which would have very high emissions if the truck were to be parked so
long that its entire contents would boil off and be emitted to the
environment. Methane venting emissions mean loss of fuel for the
operator, which creates a disincentive to allow the fuel to warm to the
point of venting. Nevertheless, even occasional venting events can have
significant impacts. Thus, EPA remains concerned about boil-off
emissions from LNG truck fuel storage systems. When the liquefied
natural gas is pumped into the truck LNG tanks, it is ``supercooled,''
meaning that the pressure of the LNG is well below the pressure at
which the natural gas vent valve would relieve the LNG pressure. If the
truck is driven extensively, the drawdown of liquid level will reduce
the pressure in in the storage tank which will cause some of the fuel
to boil off and the heat of vaporization would thus cool the rest of
the liquid in the LNG storage tank. It is possible that the fuel would
maintain its supercooled temperature, or possibly even cool further
below its supercooled temperature, the entire time until the LNG is
completely consumed.
    Unless the truck is driven enough to consume the LNG fuel while is
still at the very low-temperature and low-pressure, it will warm due to
the ambient temperature gradient through the tank wall, and vaporize,
causing the temperature and pressure of the LNG to rise. When the
pressure reaches a maximum of 230 psi a safety release valve releases
the methane gas to vent

excess pressure. There are two industry standards used to design tanks
to reduce the temperature increase, one for a 3-day hold time \962\ and
one for a 5-day hold time.\963\ Hold time is the time elapsed between
the LNG refueling and venting.
---------------------------------------------------------------------------

    \962\ National Fire Protection Association 52, Compressed
Natural Gas (CNG) Vehicular Fuel System Code, 2002 Edition.
    \963\ SAE International (2008) SAE J2343: Recommended Practice
for LNG Medium and Heavy-Duty Powered Vehicles. Warrendale,
Pennsylvania.
---------------------------------------------------------------------------

    A large amount of methane can be released with each boil-off event.
If aware of the impending boil-off, such as when the truck is being
maintained, the truck driver could hook up the LNG tank to a hose which
would vent the natural gas emissions to a CNG system which could reuse
the boil-off natural gas as CNG, or vent the natural gas emission to a
natural gas pipeline. Otherwise the boil-off emission would simply vent
to the atmosphere. If the truck had 200 gallons of LNG storage
capacity, the estimated quantity of boil-off emissions would range from
3 to 9 gallons of LNG for each boil-off event depending on the fill
level of the LNG tank, assuming that the boil-off event results in a
drop of pressure in the LNG tank from 230 psi to 170 psi. Each boil-off
event has the potential to release on the order of 5,300-15,800 grams
of CH4 which equates to 132-400 kilograms of CO2-
equivalent emissions, using a methane global warming potential (GWP) of
25 (assessed over 100 years).\964\ If the vehicle continues to sit for
five more days and boil-off events occur each day to several times per
day as the tank vents and rebuilds in pressure, the sum total of the
boil-off events can result in over a million grams of CO2-
equivalent emissions.
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    \964\ See Section XI.D.(2)(a) for a discussion of different
values for the GWP of methane.
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(3) Results of Lifecycle Analysis
    To estimate the lifecycle impact of natural gas used by heavy-duty
trucks, we totaled the estimated CO2, CH4
N2O emissions for the upstream and downstream portions of
the natural gas system. The methane and nitrous oxide emissions are
converted to carbon dioxide-equivalent emissions using the appropriate
GWP conversion factors. The GWP conversion factors EPA currently uses
in this analysis are for a 100-year timeframe, are 25 and 298 for
methane and nitrous oxide, respectively.\965\
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    \965\ These global warming potential values are based on the
Fourth Assessment Report authored by the Intergovernmental Panel on
Climate Change.
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    To establish the impacts of natural gas use in the heavy-duty
fleet, it was necessary to compare the lifecycle impacts of natural gas
against the base fuel it is replacing, which generally is diesel fuel.
The lifecycle impact of diesel fuel was estimated by the 2015 GREET
model for the current production and use of diesel fuel. In 2015, the
National Energy Technology Laboratory (NETL) updated its diesel fuel
lifecycle analysis to assess diesel fuel use by trucks in the year
2014.\966\ The revised analysis shows much higher upstream emissions
compared to GREET, but much lower truck GHG emission compared to GREET,
and on balance is slightly lower than GREET. Thus, if we used the NETL
lifecycle analysis, on a relative basis, natural gas trucks would
appear slightly higher emitting than diesel engines.
---------------------------------------------------------------------------

    \966\ Cooney, Greg of Booze Allen Hamilton; Approaches to
Developing a Cradle-to-Grave Lifecycle Analysis of Conventional
Petroleum Fuels Produced in the U.S. with an Outlook to 2040; for
the National Energy Technology Laboratory (NETL), October 6, 2015.
---------------------------------------------------------------------------

    To illustrate the relative full lifecycle impact of natural gas-
fueled heavy-duty vehicles compared to diesel fueled heavy-duty
vehicles, we assessed two different scenarios. The first is a
conversion of a 2014 or later diesel engine to use CNG. Of the tens of
thousands of heavy-duty natural gas trucks currently in use, most are
of this type. It is likely that nearly all CNG conversions being done
in 2021 and later will be for vehicles subject to the 2014 and 2016
methane emissions standards. Thus, for this analysis we assume that all
converted natural gas trucks will need to comply with the methane
standards. The methane standard requires heavy-duty trucks to comply
with a 0.1 g/bhp-hr or a 0.05 g/mile methane tailpipe standard. Based
on certification data for post-2014 CNG trucks, the trucks emit from
0.7 to 2 g/bhp-hr methane and thus require the use of CO2
emission credits to show compliance with the methane standard. For the
purposes of this review, we assume that these trucks emit 1 gram of
methane per brake horsepower hour. We provide two sensitivities to
capture the lower thermal efficiencies of natural gas trucks: 5 percent
less thermally efficient (thermal high) which is representative of a
diesel cycle engine and 15 percent less energy efficient (thermal low,
which is 10 percent worse thermal efficiency than the 5 percent less
thermally efficient case) which is representative of a gasoline cycle
engine.
    The second scenario we assessed is a combination LNG tractor
trailer (LNG is most common with tractors because it provides a greater
range of operation). While the fuel storage in this case is LNG (as
opposed to CNG in the case above), the engine options are similar to
the above case (diesel and gasoline cycle as represented by the thermal
efficiency sensitivities). Also similar to the CNG case, we assume that
these engines continue to emit 1 gram per brake-horsepower-hour of
methane despite being subjected to either the 0.1 gram per brake
horsepower-hour or the 0.05 gram per mile methane emission standard. We
make two different assumptions with respect to refueling and boil off
emissions. In the LNG average case, we assume a modest quantity of
refueling and boil-off methane emissions as estimated by GREET. The
second boil-off emission estimate is a sensitivity analysis which
assumes that the LNG storage tank is either vented to the atmosphere
each time the driver refills his tank, or that there is a boil-off
event for each LNG tank filling. As discussed above, we do not expect
such high refueling and boil-off emissions to be common practices for
newer trucks that are operated regularly. However, as the use of these
trucks decreases as they age and are sold into the secondary market,
the risk for refueling and boil-off emission events increases--this
estimate provides a simple sensitivity emission estimate. The relative
lifecycle analysis is shown in Figure XI-1.
    A third comparison made in Figure XI-1 is the relative tailpipe-
only emissions for diesel and natural gas trucks. The quantity of
carbon dioxide, methane and nitrous oxide emissions from a diesel truck
is from GREET. The carbon dioxide emissions from a natural gas-fueled
truck is calculated and is based on the carbon-hydrogen content of
methane. The methane emissions from a natural gas-fueled truck is based
on natural gas truck certification data (and so does not include any
methane emissions from the natural gas storage tanks onboard the truck
nor other fugitive emissions).

[GRAPHIC] [TIFF OMITTED] TR25OC16.038

    The first two bars of Figure XI-1 show that based solely on
tailpipe emissions (with thermal efficiency adjustments and assuming 1
g/bhp-hr methane emissions at the truck), CNG trucks are estimated to
emit about 10 percent less GHG emissions than diesel engines if the
engine is only 5 percent less efficient than a diesel engine, and about
the same GHG emissions if the engine is 15 percent less efficient than
a diesel engine. The four full lifecycle analyses represented by the
right four bars in the figure show that CNG trucks are estimated to
emit less GHG emissions than diesel trucks, although if their thermal
efficiency is much lower (15 percent less than the diesel fueled
engine) their GHG emissions would decrease to 5 percent lower than
diesel trucks.
    Figure XI-1 also shows that LNG trucks with an average extent of
boil-off emissions can have about the same greenhouse gas footprint as