The agencies developed baseline SET values for medium and heavy heavy-duty diesel engines based on 2009 model year confidential manufacturer data and from testing conducted by EPA.  The agencies adjusted the pre-2010 data to represent 2010 model year engine maps by using predefined technologies including SCR and other systems that are being used in current 2010 model year production.  If an engine utilized did not meet the 0.20 g/bhp-hr NOX level, then the individual engine's CO2 result was adjusted to accommodate aftertreatment strategies that would result in a 0.20 g/bhp-hr NOX emission level as described in RIA Chapter <IP_ADDRESS>.  The engine CO2 results were then sales weighted within each regulatory subcategory (i.e., medium heavy-duty diesel or heavy heavy-duty diesel) to develop an industry average 2010 model year reference engine.  Although, most of the engines fell within a few percent of this baseline at least one engine was more than six percent above this average baseline.
Table III-8: 2010 Model Year Baseline Diesel Engine Performance

CO2 Emissions (g/bhp-hr)
Fuel Consumption (gallon/100 bhp-hr)
Medium Heavy-Duty Diesel - SET
518
5.09
Heavy Heavy-Duty Diesel - SET
490
4.81
Engine Technology Package Effectiveness
The MHD and HHD diesel engine technology package for the 2014 model year includes engine friction reduction, improved aftertreatment effectiveness, improved combustion processes, and low temperature EGR system optimization.  The agencies considered improvements in parasitic and friction losses through piston designs to reduce friction, improved lubrication, and improved water pump and oil pump designs to reduce parasitic losses.  The aftertreatment improvements are available through lower backpressure of the systems and optimization of the engine-out NOX levels.  Improvements to the EGR system and air flow through the intake and exhaust systems, along with turbochargers can also produce engine efficiency improvements. We note that individual technology improvements are not additive due to the interaction of technologies.  The agencies assessed the impact of each technology over each of the 13 SET modes to project an overall weighted SET cycle improvement in the 2014 model year of 3 percent, as detailed in RIA Chapter <IP_ADDRESS> through <IP_ADDRESS>.  All of these technologies represent engine enhancements already developed beyond the research phase and are available as "off the shelf" technologies for manufacturers to add to their engines during the engine's next design cycle.  We have estimated that manufacturers will be able to implement these technologies on or before the 2014 engine model year. The agencies adopted a standard that therefore reflects a 100 percent application rate of this technology package.  The agencies gave consideration to finalizing a more stringent standard based on the application of turbocompounding, a mechanical means of waste heat recovery, but concluded that manufacturers would have insufficient lead-time to complete the necessary product development and validation work necessary to include this technology across the industry by model year 2014.
As explained earlier, EPA's heavy-duty highway engine standards for criteria pollutants apply in three year increments.  The heavy-duty engine manufacturer product plans have fallen into three year cycles to reflect these requirements. The agencies are finalizing fuel consumption and CO2 emission standards recognizing the opportunity for technology improvements over this timeframe while reflecting the typical heavy-duty engine manufacturer product plan redesign and refresh cycles.  Thus, the agencies are finalizing to set a more stringent standard for heavy-duty engines beginning in the 2017 model year.
The MHDD and HHDD engine technology package for the 2017 model year includes the continued development of the 2014 model year technology package including refinement of the aftertreatment system plus turbocompounding.  The agencies calculated overall reductions in the same manner as for the 2014 model year package.  The weighted SET cycle improvements lead to a 6 percent reduction on the SET cycle, as detailed in RIA Chapter <IP_ADDRESS>.  The agencies' final standards are premised on a 100 percent application rate of this technology package.
We gave consideration to finalizing an even more stringent standard based on the use of waste heat recovery via a Rankine cycle (also called bottoming cycle) but concluded that there is insufficient lead-time between now and 2017 for this promising technology to be developed and applied generally to all heavy-duty engines.  TIAX noted in their report to the NAS committee that the engine improvements beyond 2015 model year included in their report are highly uncertain, though they include Rankine cycle type waste heat recovery as applicable sometime between 2016 and 2020.  The Department of Energy, along with industry are both working to develop waste heat recovery systems for heavy-duty engines.  At the Diesel Engine-Efficiency and Emissions Research (DEER) conference in 2010, Caterpillar presented details regarding their waste heat recovery systems development effort.  In their presentation, Caterpillar clearly noted that the work is a research project and therefore does not imply commercial viability.  At the same conference, Concepts NREC presented a status of exhaust energy recovery in heavy-duty engines.  The scope of Concepts NREC included the design and development of prototype parts.  Cummins, also in coordination with DOE, is also active in developing exhaust energy recovery systems.  Cummins made a presentation to the DEER conference in 2009 providing an update on their progress which highlighted opportunities to achieve a 10 percent engine efficiency improvement during their research, but indicated the need to focus their future development on areas with the highest recovery opportunities (such as EGR, exhaust, and charge air).  Cummins also indicated that future development would focus on reducing the high additional costs and system complexity.  Based upon the assessment of this information, the agencies did not include these technologies in determining the stringency of the final standards.  However, we do believe the bottoming cycle approach represents a significant opportunity to reduce fuel consumption and GHG emissions in the future.  EPA and NHTSA are therefore both finalizing provisions described in Section IV to create incentives for manufacturers to continue to invest to develop this technology.
Derivation of Engine Standards
EPA developed the final 2014 model year CO2 emissions standards (based on the SET cycle) for diesel engines by applying the three percent reduction from the technology package (just explained above) to the 2010 model year baseline values determined using the SET cycle.  EPA developed the 2017 model year CO2 emissions standards for diesel engines while NHTSA similarly developed the 2017 model year diesel engine fuel consumption standards by applying the 6 percent reduction from the 2017 model year technology package (reflecting performance of turbocompounding plus the 2014 MY technology package) to the 2010 model year baseline values.  The final standards are included in Table III-9.
Table III-9: Final Diesel Engine Standards Over the SET Cycle
Model Year

MHD Diesel Engine
HHD Diesel Engine
2014  -  2016
CO2 Standard (g/bhp-hr)
502
475

Voluntary Fuel Consumption Standard (gallon/100 bhp-hr)
4.93
4.67
2017 and later
CO2 Standard (g/bhp-hr)
487
460

Fuel Consumption (gallon/100 bhp-hr)
4.78
4.52

Engine Technology Package Costs
EPA has historically used two different approaches to estimate the indirect costs (sometimes called fixed costs) of regulations including costs for product development, machine tooling, new capital investments and other general forms of overhead that do not change with incremental changes in manufacturing volumes.  Where the Agency could reasonably make a specific estimate of individual components of these indirect costs, EPA has done so.  Where EPA could not readily make such an estimate, EPA has instead relied on the use of markup factors referred to as indirect cost multipliers (ICMs) to estimate these indirect costs as a ratio of direct manufacturing costs.  In general, EPA has used whichever approach it believed could provide the most accurate assessment of cost on a case by case basis.  The agencies' general approach used elsewhere in this action (for HD pickup trucks, gasoline engines, combination tractors, and vocational vehicles) estimates indirect costs based on the use of ICMs.  See also 75 FR 25376.  We have used this approach generally because these standards are based on installing new parts and systems purchased from a supplier.  In such a case, the supplier is conducting the bulk of the research and development on the new parts and systems and including those costs in the purchase price paid by the original equipment manufacturer.  In this situation, we believe that the ICM approach provides an accurate and clear estimate of the additional indirect costs borne by the manufacturer.
For the heavy-duty diesel engine segment, however, the agencies do not consider this model to be the most appropriate because the primary cost is not expected to be the purchase of parts or systems from suppliers or even the production of the parts and systems, but rather the development of the new technology by the original equipment manufacturer itself.  Most of the technologies the agencies are projecting the heavy-duty engine manufacturers will use for compliance reflect modifications to existing engine systems rather than wholesale addition of technology (e.g., improved turbochargers rather than adding a turbocharger where it did not exist before as was done in our light-duty joint rulemaking in the case of turbo-downsizing).  When the bulk of the costs come from refining an existing technology rather than a wholesale addition of technology, a specific estimate of indirect costs may be more appropriate.  For example, combustion optimization may significantly reduce emissions and cost a manufacturer millions of dollars to develop but will lead to an engine that is no more expensive to produce.  Using a bill of materials approach would suggest that the cost of the emissions control was zero reflecting no new hardware and ignoring the millions of dollars spent to develop the improved combustion system.  Details of the cost analysis are included in the RIA Chapter 2.  The agencies did not receive any comments regarding the cost approach used in the proposal.
The agencies developed the engineering costs for the research and development of diesel engines with lower fuel consumption and CO2 emissions.  The aggregate costs for engineering hours, technician support, dynamometer cell time, and fabrication of prototype parts are estimated at $6.8 million (2009 dollars) per manufacturer per year over the five years covering 2012 through 2016.  In aggregate, this averages out to $284 per engine during 2012 through 2016 using an annual sales value of 600,000 light-, medium- and heavy-HD engines.  The agencies received comments from Horriba regarding the assumption the agencies used in the proposal that said manufacturers would need to purchase new equipment for measuring N20 and the associated costs.  Horriba provided information regarding the cost of stand-alone FTIR instrumentation (estimated at $50,000 per unit) and cost of upgrading existing emission measurement systems with NDIR analyzers (estimated at $25,000 per unit).  The agencies further analyzed our assumptions along with Horriba's comments.  Thus, we have revised the equipment costs estimates and assumed that 75 percent of manufacturers would update existing equipment while the other 25 percent would require new equipment.  The agencies are estimating costs of $63,087 (2009 dollars) per engine manufacturer per engine subcategory (light-, medium- and heavy-HD) to cover the cost of purchasing photo-acoustic measurement equipment for two engine test cells. This would be a one-time cost incurred in the year prior to implementation of the standard (i.e., the cost would be incurred in 2013).  In aggregate, this averages out to less than $1 per engine in 2013 using an annual sales value of 600,000 light-, medium- and heavy-HD engines.
Where we projected that additional new hardware was needed to the meet the final standards, we developed the incremental costs for those technologies and marked them up using the ICM approach. Table III-10 below summarizes those estimates of cost on a per item basis.  All costs shown in Table III-18 include a low complexity ICM of 1.15 and flat-portion of the curve learning is considered applicable to each technology.
Table III-10: Heavy-duty Diesel Engine Component Costs for Combination Tractors (2009$)
                                  Technology
                                     2014
                                     2017
Cylinder Head
                                                                             $6
                                                                             $6
Turbo efficiency
                                                                            $18
                                                                            $17
EGR cooler
                                                                             $4
                                                                             $3
Water pump
                                                                            $91
                                                                            $84
Oil pump
                                                                             $5
                                                                             $4
Fuel pump
                                                                             $5
                                                                             $4
Fuel rail
                                                                            $10
                                                                             $9
Fuel injector
                                                                            $11
                                                                            $10
Piston
                                                                             $3
                                                                             $3
Engine Friction Reduction of Valvetrain
                                                                            $82
                                                                            $76
Turbo-compounding (engines placed in combination tractors only)
                                                                             $0
                                                                           $875
MHHD and HHDD Total (combination tractors)
                                                                           $234
                                                                         $1,091
     Note:
     [a] Costs for aftertreatment improvements for MH and HH diesel engines are covered via the engineering costs (see text).  For LH diesel engines, we have included the cost of aftertreatment improvements as a technology cost.
The overall diesel engine technology package cost for a engine being placed in a combination tractor is $234 in the 2014 model year and $1,091in the 2017 model year.
Reasonableness of the Final Standards
The final engine standards appear to be reasonable and consistent with the agencies' respective statutory authorities.  With respect to the 2014 and 2017 MY standards, all of the technologies on which the standards are predicated have already been demonstrated in some capacity and their effectiveness is well documented.  The final standards reflect a 100 percent application rate for these technologies.  The costs of adding these technologies remain modest across the various engine classes as shown in Table III-10.  Use of these technologies would add only a small amount to the cost of the vehicle, and the associated reductions are highly cost effective, an estimated $20 per ton of CO2eq per vehicle.  This is even more cost effective than the estimated cost effectiveness for CO2eq removal under the light-duty vehicle rule, already considered by the agencies to be a highly cost effective reduction.  Even the more expensive 2017 MY final standard still represents only a small fraction of the vehicle's total cost and is even more cost effective than the light-duty vehicle rule.  Moreover, costs are more than offset by fuel savings.  Accordingly, EPA and NHTSA view these standards as reflecting an appropriate balance of the various statutory factors under section 202(a) of the CAA and under NHTSA's EISA authority at 49 U.S.C. 32902(k)(2).
Temporary Alternative Standard for Certain Engine Families
As discussed above in Section II.B (1)(b), notwithstanding the general reasonableness of the final standards, the agencies recognize that heavy-duty engines have never been subject to GHG or fuel consumption (or fuel economy) standards and that such control has not necessarily been an independent priority for manufacturers.  The result is that there are a group of legacy engines with emissions higher than the industry baseline for which compliance with the final 2014 MY standards may be more challenging and for which there may simply be inadequate lead time.  The issue is not whether these engines' GHG and fuel consumption performance cannot be improved by utilizing the technology packages on which the final standards are based.  Those technologies can be utilized by all engines and the same degree of reductions obtained.  Rather the underlying base engine components of these engines reflect designs that are decades old and therefore have base performance levels below what is typical for the industry as a whole today.  Manufacturers have been gradually replacing these legacy products with new engines.  Engine manufacturers have indicated to the agencies they will have to align their planned replacement of these products with our final standards and at the same time add additional technologies beyond those identified by the agencies as the basis for the final standard.  Because these changes will reflect a larger degree of overall engine redesign, manufacturers may not be able to complete this work for all of their legacy products prior to model year 2014.  To pull ahead these already planned engine replacements would be impossible as a practical matter given the engineering structure and lead-times inherent in the companies' existing product development processes.  We have also concluded that the use of fleet averaging would not address the issue of legacy engines because each manufacturer typically produces only a limited line of MHDD and HHDD engines.  (Because there are ample fleetwide averaging opportunities for heavy-duty pickups and vans, the agencies do not perceive similar difficulties for these vehicles.)
Facing a similar issue in the light-duty vehicle rule, EPA adopted a Temporary Lead Time Allowance provision whereby a limited number of vehicles of a subset of manufacturers would meet an alternative standard in the early years of the program, affording them sufficient lead time to meet the more stringent standards applicable in later model years.  See 75 FR 25414-25418.  The agencies are finalizing a similar approach here.  As explained above in Section II B. (1) (b), the agencies are finalizing a regulatory alternative whereby a manufacturer, for a limited period, would have the option to comply with a unique standard requiring the same level of reduction of emissions (i.e., percent removal) and fuel consumption as otherwise required, but the reduction would be measured from its own 2011 model year baseline.  We are thus finalizing an optional standard whereby manufacturers would elect to have designated engine families meet a standard of 3 percent reduction from their 2011 baseline emission and fuel consumption levels for that engine family or engine subcategory.  Our assessment is that this three percent reduction is appropriate based on use of similar technology packages at similar cost as we have estimated for the primary program.  In the NPRM, we solicited comment on extending this alternative (See 75 FR at 74202).  As explained earlier, we are not finalizing that the option to select an alternative standard continues past the 2016 MY.  By this time, the engines should have gone through a redesign cycle which will allow manufacturers to replace those legacy engines which resulted in abnormally high baseline emission and fuel consumption levels and to achieve the MY 2017 standards which would be feasible using the technology package set out above (optimized NOX aftertreatment, improved EGR, reductions in parasitic losses, and turbocharging).  Manufacturers would, of course, be free to adopt other technology paths which meet the final MY 2017 standards.
Since the alternative standard is premised on the need for additional lead time, manufacturers would first have to utilize all available flexibilities which could otherwise provide that lead time.  Thus, as proposed, the alternative would not be available unless and until a manufacturer had exhausted all available credits and credit opportunities, and engines under the alternative standard could not generate credits.  See 75 FR 25417-25419 (similar approach for vehicles which are part of Temporary Lead Time Allowance under the light-duty vehicle rule). We are finalizing that manufacturers can select engine families for this alternative standard without agency approval, but are finalizing to require that manufacturers notify the agency of their choice and to include in that notification a demonstration that it has exhausted all available credits and credit opportunities.  Manufacturers would also have to demonstrate their 2011 baseline calculations as part of the certification process for each engine family for which the manufacturer elects to use the alternative standard.  See Section V.C.1(b)(i) below.
Alternative Engine Standards Considered
The agencies are not finalizing engine standards less stringent than the final standards because the agencies believe these final standards are appropriate, highly cost effective, and technologically feasible, as just described.
The agencies considered finalizing engine standards which are more stringent.  Since the final standards reflect 100 percent utilization of the various technology packages, some additional technology would have to be added.  The agencies are finalizing 2017 model year standards based on the use of turbocompounding.  As discussed above in Section III.A.2.b.iii, the agencies considered the inclusion of more advanced heat recovery systems, such as Rankine or bottoming cycles, which would provide further reductions.  However, the agencies are not finalizing this level of stringency because our assessment is that these technologies would not be available for production by the 2017 model year.
Heavy-Duty Pickup Trucks and Vans
This section describes the process the agencies used to develop the standards the agencies are finalizing for HD pickups and vans.  We started by gathering available information about the fuel consumption and CO2 emissions from recent model year vehicles.  The core portion of this information comes primarily from EPA's certification databases, CFEIS and VERIFY, which contain the publicly available data regarding emission and fuel economy results.  This information is not extensive because manufacturers have not been required to chassis test HD diesel vehicles for EPA's criteria pollutant emissions standards, nor have they been required to conduct any testing of heavy-duty vehicles on the highway cycle.  Nevertheless, enough certification activity has occurred for diesels under EPA's optional chassis-based program, and, due to a California NOX requirement for the highway test cycle, enough test results have been voluntarily reported for both diesel and gasoline vehicles using the highway test cycle, to yield a reasonably robust data set.  To supplement this data set, for purposes of this rulemaking EPA initiated its own testing program using in-use vehicles.  This program and the results from it thus far are described in a memorandum to the docket for this rulemaking.
Heavy-duty pickup trucks and vans are sold in a variety of configurations to meet market demands.  Among the differences in these configurations that affect CO2 emissions and fuel consumption are curb weight, GVWR, axle ratio, and drive wheels (two-wheel drive or four-wheel drive).  Because the currently-available test data set does not capture all of these configurations, it is necessary to extend that data set across the product mix using adjustment factors.  In this way a test result from, say a truck with two-wheel drive, 3.73:1 axle ratio, and 8000 lb test weight, can be used to model emissions and fuel consumption from a truck of the same basic body design, but with four-wheel drive, a 4.10:1 axle ratio, and 8,500 lb test weight.  The adjustment factors are based on data from testing in which only the parameters of interest are varied.  These parameterized adjustments and their basis are also described in a memorandum to the docket for this rulemaking.
The agencies requested and received from each of the three major manufacturers confidential information for each model and configuration, indicating the values of each of these key parameters as well as the annual production (for the U.S. market).  Production figures are useful because, under our final standards for HD pickups and vans, compliance is judged on the basis of production-weighted (corporate average) emissions or fuel consumption level, not individual vehicle levels.  For consistency and to avoid confounding the analysis with data from unusual market conditions in 2009, the production and vehicle specification data is from the 2008 model year.  We made the simplifying assumption that these sales figures reasonably approximate future sales for purposes of this analysis.
One additional assessment was needed to make the data set useful as a baseline for the standards selection.  Because the appropriate standards are determined by applying efficiency-improving technologies to the baseline fleet, it is necessary to know the level of penetration of these technologies in the latest model year (2010).  This information was also provided confidentially by the manufacturers.  Generally, the agencies found that the HD pickup and van fleet was at a roughly consistent level of technology application, with (1) the transition from 4-speed to 5- or 6-speed automatic transmissions mostly accomplished, (2) coupled cam phasing to achieve variable valve control on gasoline engines likewise mostly in place, and (3) substantial remaining potential for optimizing catalytic diesel NOX aftertreatment to improve fuel economy (the new heavy-duty NOX standards having taken effect in the 2010 model year).
Taking this 2010 baseline fleet, and applying the technologies determined to be feasible and appropriate by the 2018 model year, along with their effectiveness levels, the agencies could then make a determination of appropriate final standards.  The assessment of feasibility, described immediately below, takes into account the projected costs of these technologies.  The derivation of these costs, largely based on analyses developed in the light-duty GHG and fuel economy rulemaking, are described in Section III.B(3).
Our assessment concluded that the technologies that the agencies considered feasible and appropriate for HD pickups and vans could be consistently applied to essentially all vehicles across this sector by the 2018 model year.  Therefore we did not apply varying penetration rates across vehicle types and models in developing and evaluating the final standards.
Since the manufacturers of HD pickups and vans generally only have one basic pick-up truck and van with different versions ((i.e., different wheel bases, cab sizes, two-wheel drive, four-wheel drive, etc.) and do not have the flexibility of the light-duty fleet to coordinate model improvements over several years, changes to the HD pickups and vans to meet new standards must be carefully planned with the redesign cycle taken into account.  The opportunities for large-scale changes (e.g., new engines, transmission, vehicle body and mass) thus occur less frequently than in the light-duty fleet, typically at spans of 8 or more years.  However, opportunities for gradual improvements not necessarily linked to large scale changes can occur between the redesign cycles.  Examples of such improvements are upgrades to an existing vehicle model's engine, transmission and aftertreatment systems.  Given this long redesign cycle and our understanding with respect to where the different manufacturers are in that cycle, the agencies have initially determined that the full implementation of the final standards would be feasible and appropriate by the 2018 model year.
 Although we did not determine that it was necessary for feasibility to apply varying technology penetration levels to different vehicles, we did decide that a phased implementation schedule would be appropriate to accommodate manufacturers' redesign workload and product schedules, especially in light of this sector's relatively low sales volumes and long product cycles.  We did not determine a specific cost of implementing the final standards immediately in 2014 without a phase-in, but we assessed it to be much higher than the cost of the phase-in we are finalizing, due to the workload and product cycle disruptions it would cause, and also due to manufacturers' resulting need to develop some of these technologies for heavy-duty applications sooner than or simultaneously with light-duty development efforts.  See generally 75 FR 25467-25468 explaining why attempting major changes outside the redesign cycle period raises very significant issues of both feasibility and cost.  On the other hand, waiting until 2018 before applying any new standards could miss the opportunity to achieve meaningful and cost-effective early reductions not requiring a major product redesign when the largest changes and reductions are expected to occur.
The final phase-in schedule, 15-20-40-60-100 percent in 2014-2015-2016-2017-2018, respectively, was chosen to strike a balance between meaningful reductions in the early years (reflecting the technologies' penetration rates of 15 and 20 percent) and providing manufacturers with needed lead time via a gradually accelerating ramp-up of technology penetration.   By expressing the final phase-in in terms of increasing fleetwide stringency for each manufacturer, while also providing for credit generation and use (including averaging, carry-forward, and carry-back), we believe our program affords manufacturers substantial flexibility to satisfy the phase-in through a variety of pathways:  the gradual application of technologies across the fleet (averaging a fifth of total production in each year), greater application levels on only a portion of the fleet, or a mix of the two.
We considered setting more stringent standards that would require the application of additional technologies by 2018.  We expect, in fact, that some of these technologies may well prove feasible and cost-effective in this timeframe, and may even become technologies of choice for individual manufacturers.  This dynamic has played out in EPA programs before and highlights the value of setting performance-based standards that leave engineers the freedom to find the most cost-effective solutions.
However, the agencies do believe that at this stage there is not enough information to conclude that the additional technologies provide an appropriate basis for standard-setting.  For example, we believe that 42V stop-start systems can be applied to gasoline vehicles with significant GHG and fuel consumption benefits, but we recognize that there is uncertainty at this time over the cost-effectiveness of these systems in heavy-duty applications, and over customer acceptance of vehicles with high GCWR towing large loads that would routinely stop running at idle.  Hybrid electric technology likewise could be applied to heavy-duty vehicles, and in fact has already been so applied on a limited basis.  However, the development, design, and tooling effort needed to apply this technology to a vehicle model is quite large, and seems less likely to prove cost-effective in this timeframe, due to the small sales volumes relative to the light-duty sector.  Here again, potential customer acceptance would need to be better understood because the smaller engines that facilitate much of a hybrid's benefit are typically at odds with the importance pickup trucks buyers place on engine horsepower and torque, whatever the vehicle's real performance.
We also considered setting less stringent standards calling for a more limited set of applied technologies.  However, our assessment concluded with a high degree of confidence that the technologies on which the final standards are premised are clearly available at reasonable cost in the 2014-2018 timeframe, and that the phase-in and other flexibility provisions allow for their application in a very cost-effective manner, as discussed in this section below.
More difficult to characterize is the degree to which more or less stringent standards might be appropriate because of under- or over-estimating effectiveness of the technologies whose performance is the basis of the final standards.  Our basis for these estimates is described in Section III. B. (1) (1) .  Because for the most part these technologies have not yet been applied to HD pickups and vans, even on a limited basis, we are relying to some degree on engineering judgment in predicting their effectiveness.  Even so, we believe that we have applied this judgment using the best information available, primarily from our recent rulemaking on light-duty vehicle GHGs and fuel economy, and have generated a robust set of effectiveness values.
What Technologies Did the Agencies Consider?
The agencies considered over 35 vehicle technologies that manufacturers could use to improve the fuel consumption and reduce CO2 emissions of their vehicles during MYs 2014-2018.  The majority of the technologies described in this section is readily available, well known, and could be incorporated into vehicles once production decisions are made.  Several of the technologies have already been introduced into the heavy duty pickup and van market (i.e., variable valve timing, improved accessories, etc.) in a limited number of applications. Other technologies considered may not currently be in production, but are beyond the research phase and under development, and are expected to be in production in highway vehicles over the next few years.  These are technologies which are capable of achieving significant improvements in fuel economy and reductions in CO2 emissions, at reasonable costs.  The agencies did not consider technologies in the research stage because there is insufficient time for such technologies to move from research to production during the model years covered by this final action.

The agencies received comments regarding applicability of certain advanced technologies described in the TIAX 2009 report submitted to NAS.  Specifically mentioned where turbo-charging and downsizing of gasoline vehicles and hydraulic hybrid systems.  While turbo-charging and downsizing of gasoline vehicles was a principal technology in the light duty rule, the agencies determined that in the realm of heavy duty vehicles, this approach provides much less benefit to vehicles which are required to regularly operate at high and sustained loads.  In light duty applications, downsizing of a typically oversized engine largely results in benefits mainly under partial and light load conditions.  This approach is more applicable to light duty vehicles because they infrequently require high or full power.  Further, while turbo downsizing was already occurring in a portion of the light duty fleet, it has not been demonstrated in the heavy duty fleet likely due to concerns with durability of this technology. Similarly, other light duty technologies (i.e., cylinder deactivation, engine start stop) were also determined to not be compatible with the duty cycle of heavy duty vehicles for similar reasons. Due to the relatively aggressive implementation of this rule and the lack of commercialization in the heavy duty market, hydraulic hybrid systems were not considered a technology that could be implemented in the timeframe of this rule, particularly in the HD pickup and van sector.

The technologies considered in the agencies' analysis are briefly described below.  They fall into five broad categories:  engine technologies, transmission technologies, vehicle technologies, electrification/accessory technologies, and hybrid technologies.

In this class of trucks and vans, diesel engines are installed in about half of all vehicles.  The ratio between gasoline and diesel engine purchases by consumers has tended to track changes in the overall cost of oil and the relative cost of gasoline and diesel fuels.  When oil prices are higher, diesel sales tend to increase.  This trend has reversed when oil prices fall or when diesel fuel prices are significantly higher than gasoline.  In the context of our technology discussion for heavy-duty pickups and vans, we are treating gasoline and diesel engines separately so each has a set of baseline technologies.  We discuss performance improvements in terms of changes to those baseline engines.  Our cost and inventory estimates contained elsewhere reflect the current fleet baseline with an appropriate mix of gasoline and diesel engines.  Note that we are not basing the final standards on a targeted switch in the mix of diesel and gasoline vehicles.  We believe our final standards require similar levels of technology development and cost for both diesel and gasoline vehicles.  Hence the final program does not force, nor does it discourage, changes in a manufacturer's fleet mix between gasoline and diesel vehicles.  Although we considered setting a single standard based on the performance level possible for diesel vehicles, we are not finalizing such an approach because the potential disruption in the HD pickup and van market from a forced shift would not be justified.  Types of engine technologies that improve fuel efficiency and reduce CO2 emissions include the following:

   * Low-friction lubricants  -  low viscosity and advanced low friction lubricants oils are now available with improved performance and better lubrication. If manufacturers choose to make use of these lubricants, they would need to make engine changes and possibly conduct durability testing to accommodate the low-friction lubricants.

   * Reduction of engine friction losses  -  can be achieved through low-tension piston rings, roller cam followers, improved material coatings, more optimal thermal management, piston surface treatments, and other improvements in the design of engine components and subsystems that improve engine operation.

   * Cylinder deactivation  -  deactivates the intake and exhaust valves and prevents fuel injection into some cylinders during light-load operation.  The engine runs temporarily as though it were a smaller engine which substantially reduces pumping losses.

   * Variable valve timing  -  alters the timing of the intake valve, exhaust valve, or both, primarily to reduce pumping losses, increase specific power, and control residual gases.

   * Stoichiometric gasoline direct-injection technology  -  injects fuel at high pressure directly into the combustion chamber to improve cooling of the air/fuel charge within the cylinder, which allows for higher compression ratios and increased thermodynamic efficiency.

   * Diesel engine improvements and diesel aftertreatment improvements  -  improved EGR systems and advanced timing can provide more efficient combustion and, hence, lower fuel consumption.  Aftertreatment systems are a relatively new technology on diesel vehicles and, as such, improvements are expected in coming years that allow the effectiveness of these systems to improve while reducing the fuel and reductant demands of current systems.

Types of transmission technologies considered include:

   * Improved automatic transmission controls  -  optimizes shift schedule to maximize fuel efficiency under wide ranging conditions, and minimizes losses associated with torque converter slip through lock-up or modulation.

   * Six-, seven-, and eight-speed automatic transmissions  -  the gear ratio spacing and transmission ratio are optimized for a broader range of engine operating conditions specific to the mating engine.

Types of vehicle technologies considered include:

   * Low-rolling-resistance tires  -  have characteristics that reduce frictional losses associated with the energy dissipated in the deformation of the tires under load, therefore improving fuel efficiency and reducing CO2 emissions.

   * Aerodynamic drag reduction  -  is achieved by changing vehicle shape or reducing frontal area, including skirts, air dams, underbody covers, and more aerodynamic side view mirrors.

   * Mass reduction and material substitution  -  Mass reduction encompasses a variety of techniques ranging from improved design and better component integration to application of lighter and higher-strength materials.  Mass reduction is further compounded by reductions in engine power and ancillary systems (transmission, steering, brakes, suspension, etc.).  The agencies recognize there is a range of diversity and complexity for mass reduction and material substitution technologies and there are many techniques that automotive suppliers and manufacturers are using to achieve the levels of this technology that the agencies have modeled in our analysis for this program.

Types of electrification/accessory and hybrid technologies considered include:

   * Electric power steering and Electro-Hydraulic power steering   -  are electrically-assisted steering systems that have advantages over traditional hydraulic power steering because it replaces a continuously operated hydraulic pump, thereby reducing parasitic losses from the accessory drive.

   * Improved accessories  -  may include high efficiency alternators, electrically driven (i.e., on-demand) water pumps and cooling fans.  This excludes other electrical accessories such as electric oil pumps and electrically driven air conditioner compressors.

   * Air Conditioner Systems  -  These technologies include improved hoses, connectors and seals for leakage control.  They also include improved compressors, expansion valves, heat exchangers and the control of these components for the purposes of improving tailpipe CO2 emissions as a result of A/C use.

How Did the Agencies Determine the Costs and Effectiveness of Each of These Technologies?
Building on the technical analysis underlying the 2012-2016 MY light-duty vehicle rule, the agencies took a fresh look at technology cost and effectiveness values for purposes of this final action.  For costs, the agencies reconsidered both the direct or "piece" costs and indirect costs of individual components of technologies.  For the direct costs, the agencies followed a bill of materials (BOM) approach employed by NHTSA and EPA in the light-duty rule.

For two technologies, stoichiometric gasoline direct injection (SGDI) and turbocharging with engine downsizing, the agencies relied to the extent possible on the available tear-down data and scaling methodologies used in EPA's ongoing study with FEV, Incorporated.  This study consists of complete system tear-down to evaluate technologies down to the nuts and bolts to arrive at very detailed estimates of the costs associated with manufacturing them.

For the other technologies, considering all sources of information and using the BOM approach, the agencies worked together intensively to determine component costs for each of the technologies and build up the costs accordingly.  Where estimates differ between sources, we have used engineering judgment to arrive at what we believe to be the best cost estimate available today, and explained the basis for that exercise of judgment.

Once costs were determined, they were adjusted to ensure that they were all expressed in 2009 dollars using a ratio of gross domestic product (GDP) values for the associated calendar years, and indirect costs were accounted for using the new approach developed by EPA and used in the 2012-2016 light-duty rule.  NHTSA and EPA also reconsidered how costs should be adjusted by modifying or scaling content assumptions to account for differences across the range of vehicle sizes and functional requirements, and adjusted the associated material cost impacts to account for the revised content, although some of these adjustments may be different for each agency due to the different vehicle subclasses used in their respective models.

Regarding estimates for technology effectiveness, NHTSA and EPA used the estimates from the 2012-2016 light-duty rule as a baseline but adjusted them as appropriate, taking into account the unique requirement of the heavy-duty test cycles to test at curb weight plus half payload versus the light-duty requirement of curb plus 300 lb.  The adjustments were made on an individual technology basis by assessing the specific impact of the added load on each technology when compared to the use of the technology on a light-duty vehicle.  The agencies also considered other sources such as the 2010 NAS Report, recent CAFE compliance data, and confidential manufacturer estimates of technology effectiveness.  NHTSA and EPA engineers reviewed effectiveness information from the multiple sources for each technology and ensured that such effectiveness estimates were based on technology hardware consistent with the BOM components used to estimate costs.  Together, the agencies compared the multiple estimates and assessed their validity, taking care to ensure that common BOM definitions and other vehicle attributes such as performance and drivability were taken into account.

The agencies note that the effectiveness values estimated for the technologies may represent average values applied to the baseline fleet described earlier, and do not reflect the potentially-limitless spectrum of possible values that could result from adding the technology to different vehicles.  For example, while the agencies have estimated an effectiveness of 0.5 percent for low friction lubricants, each vehicle could have a unique effectiveness estimate depending on the baseline vehicle's oil viscosity rating.  Similarly, the reduction in rolling resistance (and thus the improvement in fuel efficiency and the reduction in CO2 emissions) due to the application of LRR tires depends not only on the unique characteristics of the tires originally on the vehicle, but on the unique characteristics of the tires being applied, characteristics which must be balanced between fuel efficiency, safety, and performance.  Aerodynamic drag reduction is much the same -- it can improve fuel efficiency and reduce CO2 emissions, but it is also highly dependent on vehicle-specific functional objectives.  For purposes of this NPRM, NHTSA and EPA believe that employing average values for technology effectiveness estimates is an appropriate way of recognizing the potential variation in the specific benefits that individual manufacturers (and individual vehicles) might obtain from adding a fuel-saving technology.

The following section contains a detailed description of our assessment of vehicle technology cost and effectiveness estimates.  The agencies note that the technology costs included in this NPRM take into account only those associated with the initial build of the vehicle.

Engine Technologies
NHTSA and EPA have reviewed the engine technology estimates used in the 2012-2016 light-duty rule. In doing so NHTSA and EPA reconsidered all available sources and updated the estimates as appropriate.  The section below describes both diesel and gasoline engine technologies considered for this program.
Low Friction Lubricants
One of the most basic methods of reducing fuel consumption in both gasoline and diesel engines is the use of lower viscosity engine lubricants.  More advanced multi-viscosity engine oils are available today with improved performance in a wider temperature band and with better lubricating properties.  This can be accomplished by changes to the oil base stock (e.g., switching engine lubricants from a Group I base oils to lower-friction, lower viscosity Group III synthetic) and through changes to lubricant additive packages (e.g., friction modifiers and viscosity improvers).  The use of 5W-30 motor oil is now widespread and auto manufacturers are introducing the use of even lower viscosity oils, such as 5W-20 and 0W-20, to improve cold-flow properties and reduce cold start friction.  However, in some cases, changes to the crankshaft, rod and main bearings and changes to the mechanical tolerances of engine components may be required.  In all cases, durability testing would be required to ensure that durability is not compromised.  The shift to lower viscosity and lower friction lubricants will also improve the effectiveness of valvetrain technologies such as cylinder deactivation, which rely on a minimum oil temperature (viscosity) for operation.
Based on the 2012-2016 MY light-duty vehicle rule, and previously-received confidential manufacturer data, NHTSA and EPA estimated the effectiveness of low friction lubricants to be between 0 to 1 percent.

In the light-duty rule, the agencies estimated the cost of moving to low friction lubricants at $3 per vehicle (2007$).  That estimate included a markup of 1.11 for a low complexity technology.  For HD pickups and vans, we are using the same base estimate but have marked it up to 2009 dollars using the GDP price deflator and have used a markup of 1.24 for a low complexity technology to arrive at a value of $4 per vehicle.  As in the light-duty rule, learning effects are not applied to costs for this technology and, as such, this estimate applies to all model years.[,]
Engine Friction Reduction)
In addition to low friction lubricants, manufacturers can also reduce friction and improve fuel consumption by improving the design of both diesel and gasoline engine components and subsystems.  Approximately 10 percent of the energy consumed by a vehicle is lost to friction, and just over half is due to frictional losses within the engine.  Examples include improvements in low-tension piston rings, piston skirt design, roller cam followers, improved crankshaft design and bearings, material coatings, material substitution, more optimal thermal management, and piston and cylinder surface treatments.  Additionally, as computer-aided modeling software continues to improve, more opportunities for evolutionary friction reductions may become available.
All reciprocating and rotating components in the engine are potential candidates for friction reduction, and minute improvements in several components can add up to a measurable fuel efficiency improvement.  The 2012-2016 light-duty final rule, the 2010 NAS Report, and NESCCAF and Energy and Environmental Analysis reports, as well as confidential manufacturer data, indicate a range of effectiveness for engine friction reduction to be between 1 to 3 percent.  NHTSA and EPA continue to believe that this range is accurate.
Consistent with the 2012-2016 MY light-duty vehicle rule, the agencies estimate the cost of this technology at $15 per cylinder compliance cost (2008$), including the low complexity ICM markup value of 1.24.  Learning impacts are not applied to the costs of this technology and, as such, this estimate applies to all model years. This cost is multiplied by the number of engine cylinders.
Coupled Cam Phasing
Valvetrains with coupled (or coordinated) cam phasing can modify the timing of both the inlet valves and the exhaust valves an equal amount by phasing the camshaft of an overhead valve engine.  For overhead valve engines, which have only one camshaft to actuate both inlet and exhaust valves, couple cam phasing is the only variable valve timing implementation option available and requires only one cam phaser.
Based on the 2012-2016 light-duty final rule, previously-received confidential manufacturer data, and the NESCCAF report, NHTSA and EPA estimated the effectiveness of couple cam phasing to be between 1 and 4 percent.  NHTSA and EPA reviewed this estimate for purposes of the NPRM, and continue to find it accurate.
The agencies received comments questioning the exclusion of cam phasing from the technology packages.  During the rulemaking process, manufacturers introduced many new or updated gasoline engines resulting in the majority of the 2010 gasoline heavy duty engines including cam phasing.  Because of this, the baseline analysis of technology for the 2010 heavy duty gasoline fleet already includes the benefits of cam phasing and therefore it is not appropriate for the agencies to include this as a technology that is available for most manufactures to add to their current gasoline engines.
Cylinder Deactivation
In conventional spark-ignited engines throttling the airflow controls engine torque output.  At partial loads, efficiency can be improved by using cylinder deactivation instead of throttling.  Cylinder deactivation can improve engine efficiency by disabling or deactivating (usually) half of the cylinders when the load is less than half of the engine's total torque capability  -  the valves are kept closed, and no fuel is injected  -  as a result, the trapped air within the deactivated cylinders is simply compressed and expanded as an air spring, with reduced friction and heat losses.  The active cylinders combust at almost double the load required if all of the cylinders were operating.  Pumping losses are significantly reduced as long as the engine is operated in this "part-cylinder" mode.
 Cylinder deactivation control strategy relies on setting maximum manifold absolute pressures or predicted torque within a range in which it can deactivate the cylinders.  Noise and vibration issues reduce the operating range to which cylinder deactivation is allowed, although manufacturers are exploring vehicle changes that enable increasing the amount of time that cylinder deactivation might be suitable.  Some manufacturers may choose to adopt active engine mounts and/or active noise cancellations systems to address Noise Vibration and Harshness (NVH) concerns and to allow a greater operating range of activation.  Cylinder deactivation is a technology keyed to more lightly loaded operation, and so may be a less likely technology choice for manufacturers designing for effectiveness in the loaded condition required for testing, and in the real world that involves frequent operation with heavy loads.
Cylinder deactivation has seen a recent resurgence thanks to better valvetrain designs and engine controls.  General Motors and Chrysler Group have incorporated cylinder deactivation across a substantial portion of their light duty V8-powered lineups.

Effectiveness improvements scale roughly with engine displacement-to-vehicle weight ratio: the higher displacement-to-weight vehicles, operating at lower relative loads for normal driving, have the potential to operate in part-cylinder mode more frequently.  For heavy duty vehicles tested and operated at loaded conditions, the power to weight ratio is considerably lower than the light duty case greatly reducing the opportunity for "part-cylinder" mode and therefore was not considered in this rulemaking as an effective technology for heavy duty applications.
Stoichiometric Gasoline Direct Injection
SGDI engines inject fuel at high pressure directly into the combustion chamber (rather than the intake port in port fuel injection).  SGDI requires changes to the injector design, an additional high pressure fuel pump, new fuel rails to handle the higher fuel pressures and changes to the cylinder head and piston crown design.  Direct injection of the fuel into the cylinder improves cooling of the air/fuel charge within the cylinder, which allows for higher compression ratios and increased thermodynamic efficiency without the onset of combustion knock.  Recent injector design advances, improved electronic engine management systems and the introduction of multiple injection events per cylinder firing cycle promote better mixing of the air and fuel, enhance combustion rates, increase residual exhaust gas tolerance and improve cold start emissions.  SGDI engines achieve higher power density and match well with other technologies, such as boosting and variable valvetrain designs.
Several manufacturers have recently introduced vehicles with SGDI engines, including GM and Ford and have announced their plans to increase dramatically the number of SGDI engines in their portfolios.  The 2012-2016 light-duty final rule estimated the range of 1 to 2 percent for SGDI. NHTSA and EPA reviewed this estimate for purposes of the NPRM, and continue to find it accurate.
Consistent with the 2012-2016 light-duty final rule, NHTSA and EPA cost estimates for SGDI take into account the changes required to the engine hardware, engine electronic controls, ancillary and NVH mitigation systems.  Through contacts with industry NVH suppliers, and manufacturer press releases, the agencies believe that the NVH treatments will be limited to the mitigation of fuel system noise, specifically from the injectors and the fuel lines.  For this analysis, the agencies have estimated the costs at $481 (2009$) in the 2014 model year.  Flat-portion of the curve learning is applied to this technology.  This technology was considered for gasoline engines only, as diesel engines already employ direct injection.
Diesel Engine Technologies
Diesel engines have several characteristics that give them superior fuel efficiency compared to conventional gasoline, spark-ignited engines.  Pumping losses are much lower due to lack of (or greatly reduced) throttling.  The diesel combustion cycle operates at a higher compression ratio, with a very lean air/fuel mixture, and turbocharged light-duty diesels typically achieve much higher torque levels at lower engine speeds than equivalent-displacement naturally-aspirated gasoline engines.  Additionally, diesel fuel has a higher energy content per gallon.  However, diesel fuel also has a higher carbon to hydrogen ratio, which increases the amount of CO2 emitted per gallon of fuel used by approximately 15 percent over a gallon of gasoline.
Based on confidential business information and the 2010 NAS Report, two major areas of diesel engine design will be improved during the 2014-2018 timeframe.  These areas include aftertreatment improvements and a broad range of engine improvements.
Aftertreatment Improvements
The HD diesel pickup and van segment has largely adopted the SCR type of aftertreatment system to comply with criteria pollutant emission standards.  As the experience base for SCR expands over the next few years, many improvements in this aftertreatment system such as construction of the catalyst, thermal management, and reductant optimization will result in a significant reduction in the amount of fuel used in the process.  This technology was not considered in the 2012-2016 light-duty final rule.  Based on confidential business information, EPA and NHTSA estimate the reduction in CO2 as a result of these improvements at 3 to 5 percent.
The agencies have estimated the cost of this technology at $25 for each percentage improvement in fuel consumption.  This estimate is based on the agencies' belief that this technology is, in fact, a very cost effective approach to improving fuel consumption.  As such, $25 per percent improvement is considered a reasonable cost.  This cost would cover the engineering and test cell related costs necessary to develop and implement the improved control strategies that would allow for the improvements in fuel consumption.  Importantly, the engineering work involved would be expected to result in cost savings to the aftertreatment and control hardware (lower platinum group metal loadings, lower reductant dosing rates, etc.).  Those savings are considered to be included in the $25 per percent estimate described here.  Given the 4 percent average expected improvement in fuel consumption results in an estimated cost of $119 (2009$) for a 2014 model year truck or van.  This estimate includes a low complexity ICM of 1.24 and flat-portion of the curve learning from 2012 forward.
Engine Improvements
Diesel engines in the HD pickup and van segment are expected to have several improvements in their base design in the 2014  -  2018 timeframe.  These improvements include items such as improved combustion management, optimal turbocharger design, and improved thermal management.  This technology was not considered in the 2012-2016 light-duty final rule. Based on confidential business information, EPA and NHTSA estimate the reduction in CO2 as a result of these improvements at 4 to 6 percent.
The cost for this technology includes costs associated with low temperature exhaust gas recirculation, improved turbochargers and improvements to other systems and components.  These costs are considered collectively in our costing analysis and termed "diesel engine improvements."  The agencies have estimated the cost of diesel engine improvements at $148 based on the cost estimates for several individual technologies.  Specifically, the direct manufacturing costs we have estimated are:  improved cylinder head, $9; turbo efficiency improvements, $16; EGR cooler improvements, $3; higher pressure fuel rail, $10; improved fuel injectors, $13; improved pistons, $2; and reduced valve train friction, $95.  All values are in 2009 dollars and are applicable in the 2014MY.  Applying a low complexity ICM of 1.24 results in a cost of $184 (2009$) applicable in the 2014MY.  We consider flat-portion of the curve learning to be appropriate for these technologies.
Transmission Technologies
NHTSA and EPA have also reviewed the transmission technology estimates used in the 2012-2016 light-duty final rule.  In doing so, NHTSA and EPA considered or reconsidered all available sources and updated the estimates as appropriate.  The section below describes each of the transmission technologies considered for the final standards.
Improved Automatic Transmission Control (Aggressive Shift Logic and Early Torque Converter Lockup)
Calibrating the transmission shift schedule to upshift earlier and quicker, and to lock-up or partially lock-up the torque converter under a broader range of operating conditions can reduce fuel consumption and CO2 emissions.  However, this operation can result in a perceptible degradation in NVH.  The degree to which NVH can be degraded before it becomes noticeable to the driver is strongly influenced by characteristics of the vehicle, and although it is somewhat subjective, it always places a limit on how much fuel consumption can be improved by transmission control changes.  Given that the Aggressive Shift Logic and Early Torque Converter Lockup are best optimized simultaneously due to the fact that adding both of them primarily requires only minor modifications to the transmission or calibration software, these two technologies are combined in the modeling.  We consider these technologies to be present in the baseline, since 6-speed automatic transmissions are installed in the majority of Class 2b and 3 trucks in the 2010 model year timeframe.
Automatic 6- and 8-Speed Transmissions
Manufacturers can also choose to replace 4- 5- and 6-speed automatic transmissions with 8-speed automatic transmissions.  Additional ratios allow for further optimization of engine operation over a wider range of conditions, but this is subject to diminishing returns as the number of speeds increases.  As additional planetary gear sets are added (which may be necessary in some cases to achieve the higher number of ratios), additional weight and friction are introduced.  Also, the additional shifting of such a transmission can be perceived as bothersome or busy to some consumers, so manufacturers need to develop strategies for smooth shifts.  Some manufacturers are replacing 4- and 5-speed automatics with 6-speed automatics already, and 7- and 8-speed automatics have entered production in light-duty vehicles, albeit in lower-volume applications in luxury and performance oriented cars.
As discussed in the  light-duty final GHG rule, confidential manufacturer data projected that 6-speed transmissions could incrementally reduce fuel consumption by 0 to 5 percent from a 4-speed automatic transmission, while an 8-speed transmission could incrementally reduce fuel consumption by up to 6 percent from a 4-speed automatic transmission.  GM has publicly claimed a fuel economy improvement of up to 4 percent for its new 6-speed automatic transmissions.

NHTSA and EPA reviewed and revised these effectiveness estimates based on actual usage statistics and testing methods for these vehicles along with confidential business information.  When combined with improved automatic transmission control, the agencies estimate the effectiveness for a conversion from a 4 to a 6-speed transmission to be 5.3% and a conversion from a 6 to 8-speed transmission to be 1.7%.  While 8-speed transmissions were not considered in the 2012-2016 light-duty final rule, they are considered as a technology of choice for this analysis in that manufacturers are expected to upgrade the 6-speed automatic transmissions being implemented today with 8-speed automatic transmissions in the 2014-2018 timeframe.  We are estimating the cost of an 8-speed automatic transmission at $281 (2009$) relative to a 6-speed automatic transmission in the 2014 model year.  This estimate is based from the 2010 NAS Report and we have applied a low complexity ICM of 1.24 and flat-portion of the curve learning.  This technology applies to both gasoline and diesel trucks and vans.
Electrification/Accessory Technologies
Electrical Power Steering or Electrohydraulic Power Steering
Electric power steering (EPS) or Electrohydraulic power steering (EHPS) provides a potential reduction in CO2 emissions and fuel consumption over hydraulic power steering because of reduced overall accessory loads.  This eliminates the parasitic losses associated with belt-driven power steering pumps which consistently draw load from the engine to pump hydraulic fluid through the steering actuation systems even when the wheels are not being turned.  EPS is an enabler for all vehicle hybridization technologies since it provides power steering when the engine is off.  EPS may be implemented on most vehicles with a standard 12V system.  Some heavier vehicles may require a higher voltage system which may add cost and complexity.
The 2012-2016 light-duty final rule estimated a 1 to 2 percent effectiveness based on the 2002 NAS report for light-duty vehicle technologies, a Sierra Research report, and confidential manufacturer data.  NHTSA and EPA reviewed these effectiveness estimates and found them to be accurate, thus they have been retained for purposes of this NPRM.
NHTSA and EPA adjusted the EPS cost for the current rulemaking based on a review of the specification of the system.  Adjustments were made to include potentially higher voltage or heavier duty system operation for HD pickups and vans.  Accordingly, higher costs were estimated for systems with higher capability.  After accounting for the differences in system capability and applying the ICM markup of low complexity technology of 1.24, the estimated costs are $115 for a MY 2014 truck or van (2009$).  As EPS systems are in widespread usage today, flat-portion of the curve learning is deemed applicable.  EHPS systems are considered to be of equal cost and both are considered applicable to gasoline and diesel engines.
Improved Accessories
The accessories on an engine, including the alternator, coolant and oil pumps are traditionally mechanically-driven.  A reduction in CO2 emissions and fuel consumption can be realized by driving the pumping accessories electrically, and only when needed ("on-demand").  Alternator improvements include internal changes resulting in lower mechanical and electrical losses combined with control logic that charges the battery at more efficient voltage levels and during conditions of available kinetic energy from the vehicle which would normally be wasted energy such as braking during vehicle decelerations.
Electric water pumps and electric fans can provide better control of engine cooling.  For example, coolant flow from an electric water pump can be reduced and the radiator fan can be shut off during engine warm-up or cold ambient temperature conditions which will reduce warm-up time, reduce warm-up fuel enrichment, and reduce parasitic losses.
Indirect benefit may be obtained by reducing the flow from the water pump electrically during the engine warm-up period, allowing the engine to heat more rapidly and thereby reducing the fuel enrichment needed during cold starting of the engine.  Further benefit may be obtained when electrification is combined with an improved, higher efficiency engine alternator.  Intelligent cooling can more easily be applied to vehicles that do not typically carry heavy payloads, so larger vehicles with towing capacity present a challenge, as these vehicles have high cooling fan loads.

The agencies considered whether to include electric oil pump technology for the rulemaking.  Because it is necessary to operate the oil pump any time the engine is running, electric oil pump technology has insignificant effect on efficiency.  Therefore, the agencies decided to not include electric oil pump technology.
NHTSA and EPA jointly reviewed the estimates of 1 to 2 percent effectiveness estimates used in the 2012-2016 light-duty final rule and found them to be accurate for Improved Electrical Accessories.  Consistent with the 2012-2016 light-duty final rule, the agencies have estimated the cost of this technology at $93 (2009$) including a low complexity ICM of 1.24.  This cost is applicable in the 2014 model year.  Improved accessory systems are in production currently and thus flat-portion of the curve learning is applied.  This technology was considered for diesel trucks and vans only.
Vehicle Technologies
Mass Reduction
Reducing a vehicle's mass, or down-weighting the vehicle, decreases fuel consumption by reducing the energy demand needed to overcome forces resisting motion, and rolling resistance.  Manufacturers employ a systematic approach to mass reduction, where the net mass reduction is the addition of a direct component or system mass reduction plus the additional mass reduction taken from indirect ancillary systems and components, as a result of full vehicle optimization, effectively compounding or obtaining a secondary mass reduction from a primary mass reduction.  For example, use of a smaller, lighter engine with lower torque-output subsequently allows the use of a smaller, lighter-weight transmission and drive line components.  Likewise, the compounded weight reductions of the body, engine and drivetrain reduce stresses on the suspension components, steering components, wheels, tires and brakes, allowing further reductions in the mass of these subsystems.  The reductions in unsprung masses such as brakes, control arms, wheels and tires further reduce stresses in the suspension mounting points. This produces a compounding effect of mass reductions.
Estimates of the synergistic effects of mass reduction and the compounding effect that occurs along with it can vary significantly from one report to another.  For example, in discussing its estimate, an Auto-Steel Partnership report states that "These secondary mass changes can be considerable -- estimated at an additional 0.7 to 1.8 times the initial mass change." This means for each one pound reduction in a primary component, up to 1.8 pounds can be reduced from other structures in the vehicle (i.e., a 180 percent factor).  The report also discusses that a primary variable in the realized secondary weight reduction is whether or not the powertrain components can be included in the mass reduction effort, with the lower end estimates being applicable when powertrain elements are unavailable for mass reduction.  However, another report by the Aluminum Association, which primarily focuses on the use of aluminum as an alternative material for steel, estimated a factor of 64 percent for secondary mass reduction even though some powertrain elements were considered in the analysis.  That report also notes that typical values for this factor vary from 50 to 100 percent.  Although there is a wide variation in stated estimates, synergistic mass reductions do exist, and the effects result in tangible mass reductions.  Mass reductions in a single vehicle component, for example a door side impact/intrusion system, may actually result in a significantly higher weight savings in the total vehicle, depending on how well the manufacturer integrates the modification into the overall vehicle design.  Accordingly, care must be taken when reviewing reports on weight reduction methods and practices to ascertain if compounding effects have been considered or not.
     Mass reduction is broadly applicable across all vehicle subsystems including the engine, exhaust system, transmission, chassis, suspension, brakes, body, closure panels, glazing, seats and other interior components, engine cooling systems and HVAC systems.  It is estimated that up to 1.25 kilograms of secondary weight savings can be achieved for every kilogram of weight saved on a vehicle when all subsystems are redesigned to take into account the initial primary weight savings.[,]
     Mass reduction can be accomplished by proven methods such as:
      *      Smart Design:  Computer aided engineering (CAE) tools can be used to better optimize load paths within structures by reducing stresses and bending moments applied to structures.  This allows better optimization of the sectional thicknesses of structural components to reduce mass while maintaining or improving the function of the component.  Smart designs also integrate separate parts in a manner that reduces mass by combining functions or the reduced use of separate fasteners. In addition, some "body on frame" vehicles are redesigned with a lighter "unibody" construction.
      *      Material Substitution:  Substitution of lower density and/or higher strength materials into a design in a manner that preserves or improves the function of the component.  This includes substitution of high-strength steels, aluminum, magnesium or composite materials for components currently fabricated from mild steel.
      *      Reduced Powertrain Requirements: Reducing vehicle weight sufficiently allows for the use of a smaller, lighter and more efficient engine while maintaining or increasing performance. Approximately half of the reduction is due to these reduced powertrain output requirements from reduced engine power output and/or displacement, changes to transmission and final drive gear ratios. The subsequent reduced rotating mass (e.g., transmission, driveshafts/halfshafts, wheels and tires) via weight and/or size reduction of components are made possible by reduced torque output requirements.
    * Automotive companies have largely used weight savings in some vehicle subsystems to offset or mitigate weight gains in other subsystems from increased feature content (sound insulation, entertainment systems, improved climate control, panoramic roof, etc.).
    * Lightweight designs have also been used to improve vehicle performance parameters by increased acceleration performance or superior vehicle handling and braking.
Many manufacturers have already announced final future products plans reducing the weight of a vehicle body through the use of high strength steel body-in-white, composite body panels, magnesium alloy front and rear energy absorbing structures reducing vehicle weight sufficiently to allow a smaller, lighter and more efficient engine.   Nissan will be reducing average vehicle curb weight by 15% by 2015.  Ford has identified weight reductions of 250 to 750 lb per vehicle as part of its implementation of known technology within its sustainability strategy between 2011 and 2020. Mazda plans to reduce vehicle weight by 220 pounds per vehicle or more as models are redesigned.[,]  Ducker International estimates that the average curb weight of light-duty vehicle fleet will decrease approximately 2.8% from 2009 to 2015 and approximately 6.5% from 2009 to 2020 via changes in automotive materials and increased change-over from previously used body-on-frame automobile and light-truck designs to newer unibody designs.[230] While the opportunity for mass reductions available to the light-duty fleet may not in all cases be applied directly to the heavy-duty fleet due to the different designs for the expected duty cycles of a "work" vehicle, mass reductions are still available particularly to areas unrelated to the components necessary for the work vehicle aspects.
Due to the payload and towing requirements of these heavy-duty vehicles, engine downsizing was not considered in the estimates for CO2 reduction in the area of mass reduction/material substitution.  NHTSA and EPA estimate that a 3 percent mass reduction with no engine downsizing results in a 1 percent reduction in fuel consumption.  In addition, a 5 and 10 percent mass reduction with no engine downsizing result in an estimated CO2 reduction of 1.6 and 3.2 percent respectively.  These effectiveness values are 50% of the 2012-2016 light-duty final rule values due to the elimination of engine downsizing for this class of vehicle.
Consistent with the 2012-2016 light-duty final rule, the agencies have estimated the cost of mass reduction at $1.32 per pound (2008$).  For this analysis, the agencies are estimating a 5% mass reduction or, given the baseline weight of current trucks and vans, are estimating costs of $497, $585, $552, and $620 for Class 2b gasoline, 2b diesel, 3 gasoline, 3 diesel trucks and vans, respectively.  All values are in 2009 dollars, are applicable in the 2014 model year and include a low complexity ICM of 1.24.  Flat-portion of the curve learning is considered applicable to mass reduction technologies.
The agencies have recently completed work on an Interim Joint Technical Assessment Report that considers light-duty GHG and fuel economy standards for the years 2017 through 2025.  In that report, the agencies used updated cost estimates for mass reduction which were not available in time for use in the proposal so they were not used.  Since publication of that report, much work has been conducted to update the cost estimates and that work is ongoing and expected to be part of the upcoming joint light-duty proposed rule for 2017 MY and later.  Since that work is ongoing, it is not considered ready for use in this analysis and, therefore, we have chosen to use the same cost estimates as used in the proposal for this action.
Low Rolling Resistance Tires
Tire rolling resistance is the frictional loss associated mainly with the energy dissipated in the deformation of the tires under load and thus influences fuel efficiency and CO2 emissions.  Other tire design characteristics (e.g., materials, construction, and tread design) influence durability, traction (both wet and dry grip), vehicle handling, and ride comfort in addition to rolling resistance.  A typical LRR tire's attributes would include: increased tire inflation pressure, material changes, and tire construction with less hysteresis, geometry changes (e.g., reduced aspect ratios), and reduction in sidewall and tread deflection.  These changes would generally be accompanied with additional changes to suspension tuning and/or suspension design.

EPA and NHTSA estimated a 1 to 2 percent increase in effectiveness with a 10 percent reduction in rolling resistance, which was based on the 2010 NAS Report findings and consistent with the 2012-2016 light-duty final rule.
Based on the 2012-2016 light-duty final rule and the 2010 NAS Report, the agencies have estimated the cost for LRR tires to be $7 per Class 2b truck or van, and $10 per Class 3 truck or van (both values in 2009$ and inclusive of a 1.24 low complexity markup).  The higher cost for the Class 3 trucks and vans is due to the predominant use of dual rear tires and, thus, 6 tires per truck.  Due to the commodity-based nature of this technology, cost reductions due to learning are not applied.  This technology is considered applicable to both gasoline and diesel.
Aerodynamic Drag Reduction
Many factors affect a vehicle's aerodynamic drag and the resulting power required to move it through the air.  While these factors change with air density and the square and cube of vehicle speed, respectively, the overall drag effect is determined by the product of its frontal area and drag coefficient, Cd.  Reductions in these quantities can therefore reduce fuel consumption and CO2 emissions.  Although frontal areas tend to be relatively similar within a vehicle class (mostly due to market-competitive size requirements), significant variations in drag coefficient can be observed.  Significant changes to a vehicle's aerodynamic performance may need to be implemented during a redesign (e.g., changes in vehicle shape).  However, shorter-term aerodynamic reductions, with a somewhat lower effectiveness, may be achieved through the use of revised exterior components (typically at a model refresh in mid-cycle) and add-on devices that currently being applied.  The latter list would include revised front and rear fascias, modified front air dams and rear valances, addition of rear deck lips and underbody panels, and lower aerodynamic drag exterior mirrors.
The 2012-2016 light-duty final rule estimated that a fleet average of 10 to 20 percent total aerodynamic drag reduction is attainable which equates to incremental reductions in fuel consumption and CO2 emissions of 2 to 3 percent for both cars and trucks.  These numbers are generally supported by confidential manufacturer data and public technical literature.  For the heavy-duty truck category, a 5 to 10 percent total aerodynamic drag reduction was considered due to the different structure and use of these vehicles equating to incremental reductions in fuel consumption and CO2 emissions of 1 to 2 percent.
Consistent with the 2012-2016 light-duty final rule, the agencies have estimated the cost for this technology at $58 (2009$) including a low complexity ICM of 1.24.  This cost is applicable in the 2014 model year to both gasoline and diesel trucks and vans.
What Are the Projected Technology Packages' Effectiveness and Cost?
The assessment of the final technology effectiveness was developed through the use of the EPA Lumped Parameter model developed for the light-duty rule.  Many of the technologies were common with the light-duty assessment but the effectiveness of individual technologies was appropriately adjusted to match the expected effectiveness when implemented in a heavy-duty application. The model then uses the individual technology effectiveness levels but then takes into account technology synergies. The model is also designed to prevent double counting from technologies that may directly or indirectly impact the same physical attribute (e.g., pumping loss reductions).
To achieve the levels of the final standards for gasoline and diesel powered heavy-duty vehicles, the technology packages were determined to generally require the technologies previously discussed respective to unique gasoline and  diesel technologies. Although some of the technologies may already be implemented in a portion of heavy-duty vehicles, none of the technologies discussed are considered ubiquitous in the heavy-duty fleet.  Also, as would be expected, the available test data shows that some vehicle models will not need the full complement of available technologies to achieve the final standards.  Furthermore, many technologies can be further improved (e.g., aerodynamic improvements) from today's best levels, and so allow for compliance without needing to apply a technology that a manufacturer might deem less desirable.
Technology costs for HD pickup trucks and vans are shown in Table III-11.
Table III-11 Technology Costs for HD Pickup Trucks & Vans Inclusive of Indirect Cost Markups for the 2014MY (2009$)
Technology
Class 2b Gasoline
Class 2b Diesel
Class 3 Gasoline
Class 3 Diesel
Low friction lubes
$4
$4
$4
$4
Engine friction reduction
$116
N/A
$116
N/A
Stoichiometric gasoline direct injection
$481
N/A
$481
N/A
Engine improvements
N/A
$184
N/A
$184
8s automatic transmission (increment to 6s automatic transmission)
$281
$281
$281
$281
Improved accessories
N/A
$93
N/A
$93
Low rolling resistance tires
$7
$7
$10
$10
Aerodynamic improvements
$58
$58
$58
$58
Electric (or electro/hydraulic) power steering
$115
$115
$115
$115
Aftertreatment improvements
N/A
$119
N/A
$119
Mass reduction (5%)
$497
$585
$552
$620
Air conditioning
$21
$21
$21
$21
Total
$1,558
$1,446
$1,617
$1,484
At 15% phase-in in 2014
$234
$217
$234
$223

Reasonableness of the Final Standards
The final standards are based on the application of the control technologies described in this section.  These technologies are available within the lead time provided, as discussed in RIA Chapter 2.3.  These controls are estimated to add costs of approximately $$1,473 for MY 2018 heavy-duty pickups and vans.  Reductions associated with these costs and technologies are considerable, estimated at a 12 percent reduction of CO2eq emissions from the MY 2010 baseline for gasoline engine-equipped vehicles and 17 percent for diesel engine equipped vehicles, estimated  to result in reductions of  18 MMT of CO2eq emissions over the lifetimes of 2014 through 2018 MY vehicles.  The reductions are cost effective, estimated at $120 per ton of CO2eq removed in 2030.  This cost is consistent with the light-duty rule which was estimated at $100 per ton of CO2eq removed in 2020 excluding fuel savings.  Moreover, taking into account the fuel savings associated with the program, the cost becomes -$190 per ton of CO2eq in 2030.  The cost of controls is fully recovered due to the associated fuel savings, with a payback period within the fifth and sixth year of ownership, as shown in Table VIII-6 below.  Given the large, cost effective emission reductions based on use of feasible technologies which are available in the lead time provided, plus the lack of adverse impacts on vehicle safety or utility, EPA and NHTSA regard these final standards as appropriate and consistent with our respective statutory authorities under CAA section 202 (a) and NHTSA's EISA authority under 49 U.S.C. 32902(k)(2).
Class 2b-8 Vocational Vehicles
Vocational vehicles cover a wide variety of applications which influence both the body style and usage patterns.  They also are built using a complex process, which includes additional parties such as body builders.  These factors create special sensitivity to concerns of needed lead time, as well as developing standards that do not interfere with vehicles' utility.  The agencies are adopting  a vehicle standard for vocational vehicles for the first phase of the program that relies on less extensive addition of technology than for the other regulatory categories as well as focusing on the chassis manufacturer as the manufacturer subject to the standard.  We believe that future rulemakings will consider increased stringency and possibly more application-specific standards. The agencies are also finalizing standards for the diesel and gasoline engines used in vocational vehicles, similar to those discussed above for Class 7 and 8 tractors.
What Technologies Did the Agencies Consider to Reduce the CO2 Emissions and Fuel Consumption of Vocational Vehicles?
Similar to the approach taken with tractors, the agencies evaluated aerodynamic, tire, idle reduction, weight reduction, hybrid powertrain, and engine technologies and their impact on reducing fuel consumption and GHG emissions.  The engines used in vocational vehicles include both gasoline and diesel engines, thus, each type is discussed separately below.  As explained in Section II.D.1.b, the final regulatory structure for heavy-duty engines separates the compression ignition (or "diesel") engines into three regulatory subcategories -  light heavy, medium heavy, and heavy heavy diesel engines --  while spark ignition (or "gasoline") engines are a single regulatory subcategory (an approach for which there was consensus in the public comments).  Therefore, the subsequent discussion will assess each type of engine separately.
Vehicle Technologies
Vocational vehicles typically travel fewer miles than combination tractors.  They also tend to be used in more urban locations (with consequent stop and start drive cycles).  Therefore the average speed of vocational vehicles is significantly lower than tractors.    This has a significant effect on the types of technologies that are appropriate to consider for reducing CO2 emissions and fuel consumption.
The agencies considered the type of technologies for vocational vehicles based on the energy losses of a typical vocational vehicle.  The technologies are similar to the ones considered for tractors.  Argonne National Lab conducted an energy audit using simulation tools to evaluate the energy losses of vocational vehicles, such as a Class 6 pickup and delivery truck.  Argonne found that 74 percent of the energy losses are attributed to the engine, 13 percent to tires, 9 percent to aerodynamics, two percent to transmission losses, and the remaining four percent of losses to axles and accessories for a medium-duty truck traveling at 30 mph.
Low Rolling Resistance Tires:  Tires are the second largest contributor to energy losses of vocational vehicles, as found in the energy audit conducted by Argonne National Lab (as just mentioned).  The range of rolling resistance of tires used on vocational vehicles today is large.  This is in part due to the fact that the competitive pressure to improve rolling resistance of vocational vehicle tires has been less than that found in the line haul tire market.  In addition, the drive cycles typical for these applications often lead truck buyers to value tire traction and durability more heavily than rolling resistance.  Therefore, the agencies concluded that a regulatory program that seeks to optimize tire rolling resistance in addition to traction and durability can bring about fuel consumption and CO2 emission reductions from this segment.  The 2010 NAS report states that rolling resistance impact on fuel consumption reduces with mass of the vehicle and with drive cycles with more frequent starts and stops.  The report found that the fuel consumption reduction opportunity for reduced rolling resistance ranged between one and three percent in the 2010 through 2020 timeframe.  The agencies estimate that average rolling resistance from tires in 2010 model year can be reduced by 10 percent by 2014 model year based on the tire development achievements over the last several years in the line haul truck market which would lead to a 2 percent reduction in fuel consumption based on GEM.
Aerodynamics:  The Argonne National lab work shows that aerodynamics have less of an impact on vocational vehicle energy losses than do engines or tires.  In addition, the aerodynamic performance of a complete vehicle is significantly influenced by the body of the truck.  The agencies are not finalizing to regulate body builders in this phase of regulations for the reasons discussed in Section II.  Therefore, we are not basing any of the final standards for vocational vehicles on aerodynamic improvements.  Nor would aerodynamic performance be input into GEM to demonstrate compliance.
Weight Reduction:  NHTSA and EPA are also not basing any of the final standards on use of vehicle weight reduction.  Thus, vehicle mass reductions would not be input into GEM.  The vocational vehicle models are not designed to be application-specific.  Therefore weight reductions are difficult to quantify.
Drivetrain:  Optimization of vehicle gearing to engine performance through selection of transmission gear ratios, final drive gear ratios and tire size can play a significant role in reducing fuel consumption and GHGs.  Optimization of gear selection versus vehicle and engine speed accomplished through driver training or automated transmission gear selection can provide additional reductions.  The 2010 NAS report found that the opportunities to reduce fuel consumption in heavy-duty vehicles due to transmission and driveline technologies in the 2015 timeframe ranged between 2 and 8 percent.  Initially, the agencies considered reflecting transmission choices and technology in our standard setting process for both tractors and vocational vehicles (see previous discussion above on automated manual and automatic transmissions for tractors).  We have however decided not to do so for the following reasons.
The primary factors that determine optimum gear selection are vehicle weight, vehicle aerodynamics, vehicle speed, and engine performance typically considered on a two dimensional map of engine speed and torque.  For a given power demand (determined by speed, aerodynamics and vehicle mass) an optimum transmission and gearing setup will keep the engine power delivery operating at the best speed and torque points for highest engine efficiency.  Since power delivery from the engine is the product of speed and torque a wide range of torque and speed points can be found that deliver adequate power, but only a smaller subset will provide power with peak efficiency.  Said more generally, the design goal is for the transmission to deliver the needed power to the vehicle while maintaining engine operation within the engine's "sweet spot" for most efficient operation.  Absent information about vehicle mass and aerodynamics (which determines road load at highway speeds) it is not possible to optimize the selection of gear ratios for lowest fuel consumption.  Truck and chassis manufacturers today offer a wide range of tire sizes, final gear ratios and transmission choices so that final bodybuilders can select an optimal combination given the finished vehicle weight, general aerodynamic characteristics and expected average speed.  In order to set fuel efficiency and GHG standards that would reflect these optimizations, the agencies would need to regulate a wide range of small entities that are final bodybuilders, would need to set a large number of uniquely different standards to reflect the specific weight and aerodynamic differences and finally would need test procedures to evaluate these differences that would not themselves be excessively burdensome.  Finally, the agencies would need the underlying data regarding effectively all of the vocational trucks produced today in order to determine the appropriate standards.  Because the market is already motivated to reach these optimizations themselves today, because we have insufficient data to determine appropriate standards, and finally, because we believe the testing burden would be unjustifiably high, we are not finalizing to reflect transmission and gear ratio optimization in our GEM model or in our standard setting.
Idle Reduction:  Episodic idling by vocational vehicles occurs during the workday, unlike the overnight idling of combination tractors (see discussion in Section III.A.2.a).  Vocational vehicle idling can be divided into two typical types.  The first type is idling while waiting  -  such as during a pickup or delivery.  This type of idling can be reduced through automatic engine shut-offs.  The second type of idling is to accomplish PTO operation, such as compacting garbage or operating a bucket.  The agencies have found only one study that quantifies the emissions due to idling conducted by Argonne National Lab based on 2002 VIUS data.  EPA conducted a work assignment to assist in characterizing PTO operations.  The study of a utility truck used in two different environments (rural and urban) and a refuse hauler found that the PTO operated on average 28 percent of time relative to the total time spent driving and idling.  The use of hybrid powertrains to reduce idling is discussed below.
Hybrid Powertrains:  Several types of vocational vehicles are well suited for hybrid powertrains.  Vehicles such as utility or bucket trucks, delivery vehicles, refuse haulers, and buses have operational usage patterns with either a significant amount of stop-and-go activity or spend a large portion of their operating hours idling the main engine to operate a PTO unit.  The industry is currently developing three types of hybrid powertrain systems  -  hydraulic, electric, and plug-in electric.  The hybrids developed to date have seen fuel consumption and CO2 emissions reductions between 20 and 50 percent in the field.  However, there are still some key issues that are restricting the penetration of hybrids, including overall system cost, battery technology, and lack of cost-effective electrified accessories.  We have not predicated the standards based on the use of hybrids reflecting the still nascent level of technology development and the very small fraction of vehicle sales they would be expected to account for in this timeframe -- on the order of only a percent or two.  Were we to overestimate the number of hybrids that could be produced, we would set a standard that is not feasible.  We believe that it is more appropriate given the status of technology development and our high hopes for future advancements in hybrid technologies to encourage their production through incentives.  However, to create an incentive for early introduction of hybrid powertrains into the vocational vehicle fleet, the agencies are adopting the proposed advanced technology credits if hybrid powertrains are used as a technology to meet the vocational vehicle standard, as described in Section IV.
Gasoline Engine Technologies
The gasoline (or spark ignited) engines certified and sold as loose engines into the heavy-duty truck market are typically large V8 and V10 engines produced by General Motors and Ford.  The basic engine architecture of these engines is the same as the versions used in the heavy-duty pickup trucks and vans.  Therefore, the technologies analyzed by the agencies mirror the gasoline engine technologies used in the heavy-duty pickup truck analysis in Section III.B above.
Building on the technical analysis underlying the 2012-2016 MY light-duty vehicle rule, the agencies took a fresh look at technology effectiveness values for purposes of this analysis using a starting point the estimates from that rule.  The agencies then considered the impact of test procedures (such as higher test weight of HD pickup trucks and vans) on the effectiveness estimates.  The agencies also considered other sources such as the 2010 NAS Report, recent CAFE compliance data, and confidential manufacturer estimates of technology effectiveness.  NHTSA and EPA engineers reviewed effectiveness information from the multiple sources for each technology and ensured that such effectiveness estimates were based on technology hardware consistent with the BOM components used to estimate costs.
The agencies note that the effectiveness values estimated for the technologies may represent average values, and do not reflect the potentially-limitless spectrum of possible values that could result from adding the technology to different vehicles.  For example, while the agencies have estimated an effectiveness of 0.5 percent for low friction lubricants, each vehicle could have a unique effectiveness estimate depending on the baseline vehicle's oil viscosity rating.  For purposes of this final rulemaking, NHTSA and EPA believe that employing average values for technology effectiveness estimates is an appropriate way of recognizing the potential variation in the specific benefits that individual manufacturers (and individual engines) might obtain from adding a fuel-saving technology.

Baseline Engine:  Similar to the gasoline engine used as the baseline in the light-duty GHG rule, the agencies assumed the baseline engine in this segment to be a naturally aspirated, overhead valve V8 engine.  The agencies did not receive any comments regarding the baseline engine assumptions in the proposal.  The following discussion of effectiveness is generally in comparison to 2010 baseline engine performance.
For the final rulemaking, the agencies considered the same set of technologies for loose gasoline engines as the proposal.  The agencies did not receive any significant comments suggesting the consideration of other technologies to reduce the fuel consumption and CO2 emissions from heavy-duty gasoline engines.  The technologies the agencies considered include the following:
Engine Friction Reduction:  In addition to low friction lubricants, manufacturers can also reduce friction and improve fuel consumption by improving the design of engine components and subsystems. Examples include improvements in low-tension piston rings, piston skirt design, roller cam followers, improved crankshaft design and bearings, material coatings, material substitution, more optimal thermal management, and piston and cylinder surface treatments. The 2010 NAS, NESCCAF and EEA reports as well as confidential manufacturer data used in the light-duty vehicle rulemaking suggested a range of effectiveness for engine friction reduction to be between 1 to 3 percent.  NHTSA and EPA continue to believe that this range is accurate.
Coupled Cam Phasing:  Valvetrains with coupled (or coordinated) cam phasing can modify the timing of both the inlet valves and the exhaust valves an equal amount by phasing the camshaft of a single overhead cam engine or an overhead valve engine.  Based on the 2012-2016 MY light-duty vehicle rule, previously-received confidential manufacturer data, and the NESCCAF report, NHTSA and EPA estimated the effectiveness of couple cam phasing CCP to be between 1 and 4 percent.  NHTSA and EPA reviewed this estimate for purposes of the NPRM, and continue to find it accurate.
Cylinder Deactivation:  In conventional spark-ignited engines throttling the airflow controls engine torque output. At partial loads, efficiency can be improved by using cylinder deactivation instead of throttling. Cylinder deactivation can improve engine efficiency by disabling or deactivating (usually) half of the cylinders when the load is less than half of the engine's total torque capability  -  the valves are kept closed, and no fuel is injected  -  as a result, the trapped air within the deactivated cylinders is simply compressed and expanded as an air spring, with reduced friction and heat losses. The active cylinders combust at almost double the load required if all of the cylinders were operating. Pumping losses are significantly reduced as long as the engine is operated in this "part cylinder" mode.  Effectiveness improvements scale roughly with engine displacement-to-vehicle weight ratio - the higher displacement-to-weight vehicles, operating at lower relative loads for normal driving, have the potential to operate in part-cylinder mode more frequently.  Therefore, the agencies reduced the effectiveness assumed from this technology for trucks because of the lower displacement-to-weight ratio relative to light-duty vehicles.  NHTSA and EPA adjusted the 2010 light-duty vehicle final rule estimates using updated power to weight ratings of heavy-duty trucks and confidential business information and confirmed a range of 3 to 4 percent for these vehicles.
Stoichiometric gasoline direct injection:  SGDI (also known as spark-ignition direct injection engines) inject fuel at high pressure directly into the combustion chamber (rather than the intake port in port fuel injection). Direct injection of the fuel into the cylinder improves cooling of the air/fuel charge within the cylinder, which allows for higher compression ratios and increased thermodynamic efficiency without the onset of combustion knock. Recent injector design advances, improved electronic engine management systems and the introduction of multiple injection events per cylinder firing cycle promote better mixing of the air and fuel, enhance combustion rates, increase residual exhaust gas tolerance and improve cold start emissions. SGDI engines achieve higher power density and match well with other technologies, such as boosting and variable valvetrain designs.  The 2012-2016 MY  light-duty vehicle final rule estimated the effectiveness of SGDI to be between 2 and 3 percent.  NHTSA and EPA revised these estimated accounting for the use and testing methods for these vehicles along with confidential business information estimates received from manufacturers while developing the program. Based on these revisions, NHTSA and EPA estimate the range of 1 to 2 percent for SGDI.
Diesel Engine Technologies
Different types of diesel engines are used in vocational vehicles, depending on the application.  They fall into the categories of Light, Medium, and Heavy Heavy-duty Diesel engines.  The Light Heavy-duty Diesel engines typically range between 4.7 and 6.7 liters displacement.  The Medium Heavy-duty Diesel engines typically have some overlap in displacement with the Light Heavy-duty Diesel engines and range between 6.7 and 9.3 liters.  The Heavy Heavy-duty Diesel engines typically are represented by engines between 10.8 and 16 liters.
Baseline Engine:  There are three baseline diesel engines, a Light, Medium, and a Heavy Heavy-duty Diesel engine.  The agencies developed the baseline diesel engine as a 2010 model year engine with an aftertreatment system which meets EPA's 0.2 grams of NOX/bhp-hr standard with an SCR system along with EGR and meets the PM emissions standard with a diesel particulate filter with active regeneration.  The engine is turbocharged with a variable geometry turbocharger.  The following discussion of technologies describes improvements over the 2010 model year baseline engine performance, unless otherwise noted.  Further discussion of the baseline engine and its performance can be found in Section III.C.2.(c)(i) below.  The following discussion of effectiveness is generally in comparison to 2010 baseline engine performance, and is in reference to performance in terms of the Heavy-duty FTP that would be used for compliance for these engine standards.  This is in comparison to the steady state SET procedure that would be used for compliance purposes for the engines used in Class 7 and 8 tractors.  See Section II.B.2.(i) above.
Turbochargers:  Improved efficiency of a turbocharger compressor or turbine could reduce fuel consumption by approximately 1 to 2 percent over today's variable geometry turbochargers in the market today.  The 2010 NAS report identified technologies such as higher pressure ratio radial compressors, axial compressors, and dual stage turbochargers as design paths to improve turbocharger efficiency.
Low Temperature Exhaust Gas Recirculation: Most LHDD, MHDD, and HHDD engines sold in the U.S. market today use cooled EGR, in which part of the exhaust gas is routed through a cooler (rejecting energy to the engine coolant) before being returned to the engine intake manifold. EGR is a technology employed to reduce peak combustion temperatures and thus NOX. Low-temperature EGR uses a larger or secondary EGR cooler to achieve lower intake charge temperatures, which tend to further reduce NOX formation. If the NOX requirement is unchanged, low-temperature EGR can allow changes such as more advanced injection timing that will increase engine efficiency slightly more than one percent.  Because low-temperature EGR reduces the engine's exhaust temperature, it may not be compatible with exhaust energy recovery systems such as turbocompound or a bottoming cycle.
Engine Friction Reduction:  Reduced friction in bearings, valve trains, and the piston-to-liner interface will improve efficiency. Any friction reduction must be carefully developed to avoid issues with durability or performance capability.  Estimates of fuel consumption improvements due to reduced friction range from 0.5 to 1.5 percent.
Selective catalytic reduction:  This technology is common on 2010 heavy-duty diesel engines.  Because SCR is a highly effective NOX aftertreatment approach, it enables engines to be optimized to maximize fuel efficiency, rather than minimize engine-out NOX.  2010 SCR systems are estimated to result in improved engine efficiency of approximately 4 to 5 percent compared to a 2007 in-cylinder EGR-based emissions system and by an even greater percentage compared to 2010 in-cylinder approaches.  As more effective low-temperature catalysts are developed, the NOX conversion efficiency of the SCR system will increase. Next-generation SCR systems could then enable still further efficiency improvements; alternatively, these advances could be used to maintain efficiency while down-sizing the aftertreatment. We estimate that continued optimization of the catalyst could offer 1 to 2 percent reduction in fuel use over 2010 model year systems in the 2014 model year. The agencies also estimate that continued refinement and optimization of the SCR systems could provide an additional 2 percent reduction in the 2017 model year.
Improved Combustion Process:  Fuel consumption reductions in the range of 1 to 4 percent are identified in the 2010 NAS report through improved combustion chamber design, higher fuel injection pressure, improved injection shaping and timing, and higher peak cylinder pressures.
Reduced Parasitic Loads:  Accessories that are traditionally gear or belt driven by a vehicle's engine can be optimized and/or converted to electric power. Examples include the engine water pump, oil pump, fuel injection pump, air compressor, power-steering pump, cooling fans, and the vehicle's air-conditioning system. Optimization and improved pressure regulation may significantly reduce the parasitic load of the water, air and fuel pumps.  Electrification may result in a reduction in power demand, because electrically powered accessories (such as the air compressor or power steering) operate only when needed if they are electrically powered, but they impose a parasitic demand all the time if they are engine driven. In other cases, such as cooling fans or an engine's water pump, electric power allows the accessory to run at speeds independent of engine speed, which can reduce power consumption. The TIAX study used 2 to 4 percent fuel consumption improvement for accessory electrification, with the understanding that electrification of accessories will have more effect in short-haul/urban applications and less benefit in line-haul applications.
What Is the Projected Technology Package's Effectiveness and Cost?
Vocational Vehicles
Baseline Vocational Vehicle Performance
The baseline vocational vehicle model is defined in GEM, as described in RIA Chapter 4.4.6.  The agencies used a baseline rolling resistance coefficient for today's vocational vehicle fleet of 9 kg/metric ton.  Further vehicle technology is not included in this baseline, as discussed below in the discussion of the baseline vocational vehicle.  The baseline engine fuel consumption represents a 2010 model year diesel engine, as described in RIA Chapter 4.  Using these values, the baseline performance of these vehicles is included in Table III-12.
Table III-12: Baseline Vocational Vehicle Performance

                              Vocational Vehicle

                               Light Heavy-Duty
                               Medium Heavy-Duty
                               Heavy Heavy-Duty
Fuel Consumption Baseline (gallon/1,000 ton-mile)
                                     40.9
                                     24.9
                                     23.7
CO2 Baseline (grams CO2/ton-mile)
                                      417
                                      253
                                      241

Vocational Vehicle Technology Package
The final program for vocational vehicles for this phase of regulatory standards is based on the performance of tire and engine technologies.  Aerodynamics technology, weight reduction, drive train improvement, and hybrid power trains are not included for the reasons discussed above in Section III.C (1).
The assessment of the final technology effectiveness was developed through the use of the GEM.  To account for the two final engine standards, EPA is finalizing the use of a 2014 model year fuel consumption map in GEM to derive the 2014 model year truck standard and a 2017 model year fuel consumption map to derive the 2017 model year truck standard.  (These fuel consumption maps reflect the main standards for HD diesel engines, not the alternative engine standards.)  EPA estimates that the rolling resistance of tires can be reduced by 10 percent in the 2014 model year.  The vocational vehicle standards for all three regulatory categories were determined using a tire rolling resistance coefficient of 7.7 kg/metric ton with a 100 percent application rate by the 2014 model year.  The set of input parameters which are modeled in GEM are shown in Table III-13.
Table III-13: GEM Inputs for Final Vocational Vehicle Standards

                                    2014 MY
                                    2017 MY
Engine
                2014 MY 7L for LHD/MHD and 15L for HHD Trucks
                 2017 MY 7L for LHD/MHD and 15L for HHD Trucks
Tire Rolling Resistance (kg/metric ton)
                                      7.7
                                      7.7
The agencies developed the final standards by using the engine and tire rolling resistance inputs in the GEM, as shown in Table III-13.  The percent reductions shown in Table III-14 reflect improvements over the 2010 model year baseline vehicle with a 2010 model year baseline engine.
Table III-14: Final Vocational Vehicle Standards and Percent Reductions

                              Vocational Vehicle

                               Light Heavy-Duty
                               Medium Heavy-Duty
                               Heavy Heavy-Duty
2016 MY Fuel Consumption Standard (gallon/1,000 ton-mile)
                                     38.0
                                     23.0
                                     22.2
2017 MY Fuel Consumption Standard (gallon/1,000 ton-mile)
                                     36.6
                                     22.1
                                     21.8
2014 MY CO2 Standard (grams CO2/ton-mile)
                                      387
                                      234
                                      226
2017 MY CO2 Standard (grams CO2/ton-mile)
                                      373
                                      225
                                      222
Percent Reduction from 2010 baseline in 2014 MY
                                      7%
                                      8%
                                      6%
Percent Reduction from 2010 baseline in 2017 MY
                                      11%
                                      11%
                                      8%

Technology Package Cost
The agencies did not receive any substantial comments on the engine costs proposed.  Thus the agencies are projecting the costs of these final standards based on the costs used in the proposal, but revised to reflect 2009$ and new ICMs.  EPA and NHTSA developed the costs of LRR tires based on the ICF report.  The estimated cost per truck is $162 (2009$) for LHD and MHD trucks and $194 (2009$) for HHD trucks.  These costs include a low complexity ICM of 1.18 and are applicable in the 2014 model year.
Reasonableness of the Final Standards
The final standards would not only add only a small amount to the vehicle cost, but are highly cost effective, an estimated $20 ton of CO2eq per vehicle in 2030. This is even less than the estimated cost effectiveness for CO2eq removal under the light-duty vehicle rule, already considered by the agencies to be a highly cost effective reduction.  Moreover, the modest cost of controls is recovered almost immediately due to the associated fuel savings, as shown in the payback analysis included in Table VIII-7.  Given that the standards are technically feasible within the lead time afforded by the 2014 model year, are inexpensive and highly cost effective, and do not have other adverse potential impacts (e.g., there are no projected negative impacts on safety or vehicle utility), the final standards represent a reasonable choice under section 202(a) of the CAA and NHTSA's EISA authority under 49 U.S.C. 32902(k)(2), and the agencies believe that the standards are consistent with their respective authorities.
Alternative Vehicle Standards Considered
The agencies are not finalizing vehicle standards less stringent than the final standards because the agencies believe these standards are highly cost effective, as just explained.
The agencies considered finalizing truck standards which are more stringent reflecting the inclusion of hybrid powertrains in those vocational vehicles where use of hybrid powertrains is appropriate.  The agencies estimate that a 25 percent utilization rate of hybrid powertrains in MY 2017 vocational vehicles would add, on average, $30,000 to the cost of each vehicle and more than double the cost of the rule for this sector.  See the RIA at Chapter 6.1.8.  The emission reductions associated with these very high costs appear to be modest.  See the RIA Table 6-14.  In addition, the agencies are finalizing flexibilities in the form of generally applicable credit opportunities for advanced technologies, to encourage use of hybrid powertrains.  See Section IV.C. 2 below.  For these reasons, the agencies are not adopting more stringent standards for vocational vehicles.
Gasoline Engines
Baseline Gasoline Engine Performance
EPA and NHTSA developed the reference heavy-duty gasoline engines to represent a 2010 model year engine compliant with the 0.20 g/bhp-hr NOX standard for on-highway heavy-duty engines.
NHTSA and EPA developed the baseline fuel consumption and CO2 emissions for the gasoline engines from manufacturer reported CO2 values used in the certification of non-GHG pollutants.  The baseline engine for the analysis was developed to represent a 2011 model year engine, because this is the most current information available.  The average CO2 performance of the heavy-duty gasoline engines was 660 g/bhp-hour, which will be used as a baseline.  The baseline gasoline engines are all stoichiometric port fuel injected V-8 engines without cam phasers or other variable valve timing technologies.  While they may reflect some degree of static valve timing optimization for fuel efficiency they do not reflect the potential to adjust timing with engine speed.
Gasoline Engine Technology Package Effectiveness
The gasoline engine technology package includes engine friction reduction, coupled cam phasing, and SGDI to produce an overall five percent reduction from the reference engine based on the Heavy-duty Lumped Parameter model.  The agencies are projecting a 100 percent application rate of this technology package to the heavy-duty gasoline engines, which results in a CO2 standard of 627 g/bhp-hr and a fuel consumption standard of 7.05 gallon/100 bhp-hr.  As discussed in Section II.D.b.ii, the agencies are adopting gasoline engine standards that begin in the 2016 model year based on the agencies' projection of the engine redesign schedules of the small number of engines in this category.
Gasoline Engine Technology Package Cost
For the proposed costs, the agencies considered both the direct or "piece" costs and indirect costs of individual components of technologies.  For the direct costs, the agencies followed a BOM approach employed by NHTSA and EPA in the 2012-2016 LD rule. In the final rule, the agencies are using marked up gasoline engine technology costs developed for the HD Pickup Truck and Van segment because these engines are made by the same manufacturers (primarily by Ford and GM) and are simply, sold as loose engines rather than as complete vehicles.  Hence the engine cost estimates are fundamentally the same.  The agencies did not receive any comments recommending adjustments to the proposed gasoline engine technology costs.  The costs summarized in Table III-15 are consistent with the proposed values, but updated to reflect 2009$ and new ICMs.  The costs shown in Table III-15 include a low complexity ICM of 1.24 and are applicable in the 2016 model year.  No learning effects are applied to engine friction reduction costs, while flat-portion of the curve learning is considered applicable to both coupled cam phasing and SGDI.
Table III-15: Heavy-duty Gasoline Engine Technology Costs inclusive of Indirect Cost Markups (2009$)

                                    2016MY
Engine Friction Reduction
                                      $95
Coupled Cam Phasing
                                      $46
Stoichiometric Gas Direct Injection
                                     $452
Total
                                     $594

Reasonableness of the Final Standard
The final engine standards appear to be reasonable and consistent with the agencies' respective authorities.  With respect to the 2016 MY standard, all of the technologies on which the standards are predicated have been demonstrated and their effectiveness is well documented.  The final standards reflect a 100 percent application rate for these technologies.  The costs of adding these technologies remain modest across the various engine classes as shown in Table III-15.  Use of these technologies would add only a small amount to the cost of the vehicle, and the associated reductions are highly cost effective, an estimated $20 per ton of CO2eq per vehicle.  This is even more cost effective than the estimated cost effectiveness for CO2eq removal and fuel economy improvement under the light-duty vehicle rule, already considered by the agencies to be a highly cost effective reduction.  Accordingly, EPA and NHTSA view these standards as reflecting an appropriate balance of the various statutory factors under section 202(a) of the CAA and under NHTSA's EISA authority at 49 U.S.C. 32902(k)(2).
Alternative Gasoline Engine Standards Considered
The agencies are not finalizing gasoline standards less stringent than the final standards because the agencies believe these standards are feasible in the lead time provided, inexpensive, and highly cost effective.
The final rule reflects 100 percent penetration of the technology package on whose performance the standard is based, so some additional technology would need to be added to obtain further improvements.  The agencies considered finalizing gasoline engine standards which are more stringent reflecting the inclusion of cylinder deactivation and other advanced technologies.  However, the agencies are not finalizing this level of stringency because our assessment is that these technologies would not be available for production by the 2017 model year.
Diesel Engines
Baseline Diesel Engine Performance
EPA and NHTSA developed the baseline heavy-duty diesel engines to represent a 2010 model year engine compliant with the 0.20 g/bhp-hr NOX standard for on-highway heavy-duty engines.
The agencies utilized 2007 through 2011 model year CO2 certification levels from the Heavy-duty FTP cycle as the basis for the baseline engine CO2 performance.  The pre-2010 data are subsequently adjusted to represent 2010 model year engine maps by using predefined technologies including SCR and other systems that are being used in current 2010 production.  The engine CO2 results were then sales weighted within each regulatory subcategory to develop an industry average 2010 model year reference engine, as shown in Table III-16.  The level of CO2 emissions and fuel consumption of these engines varies significantly, where the engine with the highest CO2 emissions is estimated to be 20 percent greater than the sales weighted average.  Details of this analysis are included in RIA Chapter 2.
Table III-16: 2010 Model Year Reference Diesel Engine Performance Over the Heavy-duty FTP Cycle

CO2 Emissions (g/bhp-hr)
Fuel Consumption (gallon/100 bhp-hr)
LHD Diesel
630
6.19
MHD Diesel
630
6.19
HHD Diesel
584
5.74
Diesel Engine Packages
The diesel engine technology packages for the 2014 model year include engine friction reduction, improved aftertreatment effectiveness, improved combustion processes, and low temperature EGR system optimization.  The improvements in parasitic and friction losses come through piston designs to reduce friction, improved lubrication, and improved water pump and oil pump designs to reduce parasitic losses.  The aftertreatment improvements are available through lower backpressure of the systems and optimization of the engine-out NOX levels.  Improvements to the EGR system and air flow through the intake and exhaust systems, along with turbochargers can also produce engine efficiency improvements. It should be pointed out that individual technology improvements are not additive to each other due to the interaction of technologies.  The agencies assessed the impact of each technology over the Heavy-duty FTP and project an overall cycle improvement in the 2014 model year of 3 percent for HHD diesel engines and 5 percent for LHD and MHD diesel engines, as detailed in RIA Chapter <IP_ADDRESS> and <IP_ADDRESS>.  EPA used a 100 percent application rate of this technology package to determine the level of the final 2014 MY standards
Recently, EPA's heavy-duty highway engine program for criteria pollutants provided new emissions standards for the industry in three year increments.  The heavy-duty engine manufacturer product plans have fallen into three year cycles to reflect this environment.  EPA is finalizing set CO2 emission standards recognizing the opportunity for technology improvements over this timeframe while reflecting the typical heavy-duty engine manufacturer product plan cycles.  Thus, the agencies are finalizing to establish initial standards for the 2014 model year and a more stringent standard for heavy-duty engines beginning in the 2017 model year.