ICCT Statement at the January 17, 2012, Hearing on EPA/NHTSA NPRM on 201725 Vehicle CAFE/GHG Standards Introduction My name

is John German and I am a Senior Fellow and Program Director at the International Council on Clean Transportation. I am happy to present comments on the proposed vehicle standards on behalf of ICCT. ICCT has broad expertise in all transportation areas and our primary mission is to help regulatory agencies worldwide reduce air quality pollutants and greenhouse gas emissions. Overview While the US has consistently been the worlds leader in reducing CO, HC, NOx and PM from all categories of vehicles, U.S. policies on transportation fuel efficiency and greenhouse emissions have been far less effective. Our fuel taxes are amongst the lowest in the world and we greatly lagged Europe and Japan in setting effective efficiency standards. The 2012-16 rule took a giant step towards catching up and the proposed 2017-25 rule will extend the progress and set longer-term requirements. The consistent, long-term signals will help manufacturers plan for on-going technology development. We applaud EPA and NHTSA, along with California, the Administration, and the vehicle manufacturers, for taking another large step along the road to a sustainable transportation system. My comments today will focus on the conservative nature of the technology benefit and cost analyses in the rule. I will also touch upon the safety benefits of the rule and suggested improvements in program design and off-cycle credits. Alan Lloyds testimony next week on behalf of ICCT will focus on the tremendous importance of this program in addressing climate change, the partnership between CARB, EPA, NHSTA, OEMs, and UAW, and suggestions for improvement on some of the credits. ICCT will provide much more detailed written comments to the docket. Technology The opportunities to reduce fuel consumption and climate change emissions in the near term are far larger than most people realize. The internal combustion engine is widely perceived as being a century-old technology that is at the end of its development, but the reality is exactly the opposite. Rapid improvements in computer-based tools are opening up technology gains that were never possible before. Computer simulations and computer-aided-design are enabling vastly improved designs and technologies. On-board computers controls provide unprecedented integration of engine, transmission, and hybrid operation. Instead of slowing down, the pace of technology development just keeps accelerating. The sophistication of assessing technology efficiency improvements has been increasing as well. The 2001 National Research Council report applied technologies stepwise to estimate fuel economy improvement possible through regulations. Some manufacturers criticized this method,

Statement on 201725 NPRM, Vehicle CAFE/GHG Standards January 17, 2012

claiming it could overestimate fuel economy benefits because it does not account for synergies between technologies. This is especially important as more technologies are added to the vehicle. The next step in sophistication is the use of lumped-parameter models that can account for first-order interactions between technologies. These models can assess the effects of technology in a broad array of vehicle types and for a class of vehicles. However, this method is generally limited to proven technologies. This was fine as long as standards were set only a few years in advance, but it is not adequate for setting standards with longer leadtimes. Full-system simulation modeling is needed to capture the physics of the vehicle and powertrain system and assess interactions of the various components. It can also assess new technologies or combinations of technologies when experimental data are sparse. To support development of 2025 standards, EPA contracted with Ricardo to conduct such simulations. Ricardo is a highly respected engineering organization that does the vast majority of its work for OEMs and suppliers. ICCT was involved with this simulation modeling from the beginning, including providing the initial contract for Ricardo to start work, hiring independent experts to review Ricardos hybrid control simulations, and participating along with CARB on an advisory committee. After intensive involvement in the simulation process for the last two years, it is clear to us that the technologies being assessed by Ricardo are on the conservative side. In fact, this is unavoidable due to the restriction to currently available data and engine maps. Engine technology is improving much faster than we can keep up with and engines better than those modeled by Ricardo are already in development. For example, the diesel maps used by Ricardo for the US simulations are already out of date and ICCT has contracted with Ricardo to rerun the diesel simulations for Europe using maps representative of the latest diesel technology. Another example is the engine map for the gasoline engine with boosted-EGR. The map used by Ricardo in the simulations is shown in Appendix A, below. Appendix B shows a boosted-EGR engine map provided by the HEDGE consortium in February 2010. The brake-specific fuel consumption (BSFC) for the HEDGE engine is almost 5% lower than the map used by Ricardo in the simulations. Further, the HEDGE map in Appendix B is for a single stage turbocharger. The HEDGE consortium is already working on a two-stage turbocharger system that will enable larger amounts of EGR, higher compression ratio, and lower fuel consumption. This rapid technology improvement can also be seen by looking at historical data. For example, the 2001 National Research Council report found that turbocharging and downsizing would improve fuel economy by 5 to 7 percent. The most recent estimates in the draft RIA found that turbocharging and downsizing alone will provide a 12 to 15 percent improvement with 33 percent downsizing and16 to 20 percent for higher-pressure turbos with 50 percent downsizing. This is a 2 to 3 times increase in the efficiency benefit of turbocharging and it is not due to the older estimates being wrong, but rather to rapid improvements in combustion and turbocharging technology over the last 10 years. The 2025 rules are 13 years away. It would be completely irrational to assume that there will be no further technology improvements beyond what is known today. The efficiency estimates in the draft rule are actually quite conservative and there should not be any consideration of rolling them back.

International Council on Clean Transportation

Statement on 201725 NPRM, Vehicle CAFE/GHG Standards January 17, 2012

Computer simulations will especially impact lightweight material design. In the past, interactions between the thousands of parts on the vehicles and their impacts on safety, ride, noise, and vibration were impossible to predict. Optimization of materials was a long, slow process of gradually changing a few parts at a time to avoid unanticipated problems. Secondary weight reductions were similarly difficult to achieve. The recent development of sophisticated and accurate vehicle simulations is opening up a new world. The initial use of these models was to improve safety design. The simulations are so effective that 5-star crash ratings became almost universal and NHTSA had to revise their rating criteria for the 2011 model year. The simulations are continuing to rapidly improve, to the point where they are starting to be used to simultaneously optimize the material composition, shape, and thickness of every individual part, including secondary weight reductions. This shift in material design capabilities also impacts the cost to reduce vehicle weight. Previous lightweight material cost studies did not assess part interactions and secondary weight reductions. While they may have accurately reflected historical costs for lightweight materials, they all overstate the cost of future vehicle weight reduction. Studies in progress by Lotus and FEV are using highly sophisticated simulation models to optimize part materials and design. The results of these studies will be far more accurate of future designs and must be used to assess weight reduction costs for the final rule. ICCT is also paying FEV to do additional teardown cost assessments in connection with our work in Europe. These include updating the P2 hybrid costs and new cost assessments for advanced diesel engines, basic stop-start systems, manual transmissions, and cooled EGR systems. These results will be shared with EPA and NHTSA as they become available. ICCT will address the impacts of technology benefit and cost on consumer welfare in our written comments. Safety ICCT will address the safety issues in more detail in our written comments, including the results from DRIs latest safety analyses. I will just make two quick observations here. First, every time Kahane reanalyzes the impact of mass reduction on fatalities, the fatality increase goes down. In Kahanes latest study, he concluded, potential combinations of mass reductions that maintain footprint and are proportionately somewhat higher for the heavier vehicles may be safety- neutral or better as point estimates and, in any case, unlikely to significantly increase fatalities. Second, and more importantly, the coefficients in Kahanes modeling reflect the material composition in historical vehicles, which is dominated by conventional steel. Thus, the modeling results implicitly assume that lighter vehicles do not change material composition. However, future weight reduction will be accomplished primarily with the use of high strength steel and aluminum and with better vehicle design. High strength steel and aluminum both have better crash properties than standard steel. Reducing weight of small cars using these better materials will improve their crash performance and reduce fatalities. In fact, Honda has moved aggressively towards the use of HSS in small cars in part due to the safety benefits.

International Council on Clean Transportation

Statement on 201725 NPRM, Vehicle CAFE/GHG Standards January 17, 2012

Program Structure Suggested Improvements The overall stringency of the proposed rules is potentially adequate and ICCT strongly supports the proposed program stringency. However, ICCT is concerned that some cost effective reductions may not be achieved due to certain elements found in the proposed rule. One of ICCTs guiding principles is that standards should be technology neutral. The proposed provisions to assign zero carbon emissions to electric-only operation and for artificial credits for certain pickup truck technology distort the compliance system and reduce the overall benefits of the program. The separate footprint curves for cars and light trucks also distort the requirements by making it easier for vehicle classified as light trucks to comply. This means that manufacturers have very strong incentives to reclassify cars as light trucks, which makes it easier for manufacturers to comply while simultaneously increasing overall fuel consumption and emissions. A single footprint function would still give larger trucks a less stringent target to meet, while avoiding vehicle classification games. Another guiding principle is that the requirements should properly represent in-use emissions. Our concerns here center on the off-cycle credits and the failure to include non-CO2 climate forcing agents, such as black carbon. ICCT supports the concept of off-cycle credits, as they can reduce overall compliance costs and increase overall reductions. However, the credits must avoid double counting and must be valid and verifiable. ICCT will provide detailed written suggestions on how to improve the off-cycle credits so that they are valid and do not inadvertently weaken the overall stringency of the standards. ICCT will also provide suggestions for the interim review in our written comments. Closing In closing, the ultimate goal is to create a sustainable transportation system, for clean air, for energy and for global warming. Although this will take decades to accomplish, NHTSA and EPA have taken another major first step in addressing the latter two concerns. ICCT looks forward to working with everyone involved, including federal and state agencies and vehicle manufacturers, to help shape the best policies and programs to meet our clean air, energy security and climate change objectives.

International Council on Clean Transportation

Statement on 201725 NPRM, Vehicle CAFE/GHG Standards January 17, 2012

EGR-boosted direct-injection (EBDI) engine map. Section 4.2.6.1 of: Project Report: Computer Simulation of Light-Duty Vehicle Technologies for Greenhouse Gas Emission Reduction in the 2020-2025 Timeframe Prepared by Ricardo Inc. for the U.S. EPA, EPA Contract No. EP-C-11-007

International Council on Clean Transportation

LD HEDGE Application

Statement on 201725 NPRM, Vehicle CAFE/GHG Standards January 17, 2012

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International Council on Clean Transportation