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Comments on: Revisions and Additions to Motor Vehicle Fuel Economy Label Proposed Rule National Highway Traffic Safety

Administration and the Environmental Protection Agency Docket No. NHTSA–2010-0087 Docket ID No. EPA–HQ–OAR–2009–0865 Submitted November 22, 2010 by the International Council on Clean Transportation For further information contact John German: John@theicct.org, 734-355-1055 These comments are submitted by the International Council on Clean Transportation (hereafter, “ICCT”). The ICCT is made up of leading government officials and experts from major countries and regions around the world that participate as individuals based on their experience with air quality and transportation issues. The ICCT promotes best practices and comprehensive solutions to improve vehicle emissions and efficiency, increase fuel quality and sustainability of alternative fuels, reduce pollution from the in-use fleet, and curtail emissions of local air pollutants and greenhouse gases (GHG) from international goods movement. Overall ICCT appreciates the extensive work done by the agencies to improve the labeling system and encourage customers to use the numbers. We only have a few suggestions and comments. Our primary suggestion is to use the same 5-cycle label adjustment requirements for electric vehicles as is currently used for conventional vehicles. Range is an extremely important factor in consumer purchase decisions for electric vehicles and there are sound reasons why in-use adjustments are larger for low consumption vehicles in general. Electric vehicles also require additional energy consumption to heat the cabin during cold weather operation. Other suggestions are to avoid rating cars and trucks separately, add gas-guzzler and other incentive information to the label, use separate ratings for GHG and other pollutants, evaluate recent European reports on label effectiveness, add a linear fuel consumption metric to the label, require car-selling websites to include links to electronic labels, and not include air conditioning credits for greenhouse gas emissions. More detailed information on our comments is provided, below.

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1) Fuel Economy Label Information and Format The proposed rulemaking proposes to add additional information to the label, as well as ratings to help the reader interpret the information. The additional information is potentially useful, but will it just serve to confuse most customers? Past efforts by the agencies have focused on trying to simplify the label information, so that customers can more easily understand the label values and what they mean. Overall, ICCT does not believe we have the expertise to know whether customers will find the additional information useful or confusing. In general, our sense is to try to keep the label as simple and easy to understand as possible, but additional information may be useful. Our primary recommendation is that the agencies should invest in studies of consumer response to different information and label formats, using expert contractors. Some specific suggestions on a few issues are: • The agencies should not “rate” cars separately from light trucks unless the system moves to a footprint-based adjustment. Vehicles need to be rated either against all other vehicles or against vehicles in the same class. Either approach can be useful to customers. However, just rating cars and light trucks separately accomplishes neither. It would also be misleading and confusing to customers comparing similar vehicles classified separately as cars and light trucks, such as 2wd and 4wd SUVs. • ICCT supports the agencies’ proposal to place the gas-guzzler tax information on the label. The agencies should also consider including other incentive information, such as the federal tax credits for hybrids and other advanced vehicles. • ICCT believes that separate ratings for GHG and other pollutants are better than a single, combined rating. We appreciate and support the agencies’ desire for simplicity, but in this case we believe a single rating would be more confusing than useful. Consumers would not be able to tell if the vehicle is efficient or is clean without referring to additional information. Another concern is that a single rating could lead consumers to believe there is no difference between GHG emissions and pollutants that directly affect local air quality. Separate ratings would also facilitate the introduction of incentive programs linked to emissions in the future. For example, Japan has a dual-ratting system on their labels that determines the tax incentive amount for efficient and clean vehicles. Finally, separate ratings would be consistent with the labeling program already implemented in California. There are two recent studies in Europe on consumer label effectiveness that should be considered by the agencies in development of the final rule. One was a June 2010 study for the Low Carbon

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Fuel Partnership in the UK, “LowCVP Car Buyer Survey: Improved environmental information for consumers”.1 The second was a 2010 report on behalf of the European Parliament, “Study on consumer information on fuel economy and CO2 emissions of new passenger cars”.2 While ICCT does not endorse the specific findings and the situation in the U.S. may be different than in Europe, the reports contain useful information. For example, the studies show that a color-coded label more easily draws attention of customers and tends to have more of an impact on purchase decisions than a black and white label. The studies also found that it is important to limit the number of grades and regularly adjust the requirements for each grade.

2) Downward 5-Cycle Adjustment for BEVs and PHEVs The more important aspect of the proposed rule is that plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs) will be included in the labeling system for the first time. It is extremely important that this be done properly, even more important than the fuel economy adjustments for conventional vehicles. This is because range is one of the primary considerations for customers considering PHEV and BEV purchases and is more important than the fuel economy ratings for conventional vehicle purchasers. If the label does not properly reflect realworld range, this will lead to customer dissatisfaction both with the vehicle and with the fuel economy labeling system. Range is also an important input into the California ZEV mandate and, for PHEVs, into the CAFE standards. Longer-range vehicles will generate more credits under the ZEV mandate and the range determines the proportion of electric driving for determining overall CAFE ratings for PHEVs. While these programs currently use the range calculated from the test results, it would be more accurate to base the calculations on the real-world range. If this improvement were made to either or both of these programs in the future, it would make it even more important to have realistic real-world range adjustments. Instead of emphasizing the importance of the label adjustments for PHEVs and BEVs, less accurate provisions were proposed. Conventional vehicles are required to conduct 5-cycle testing and may only use the MPG-based equations if the 5-cycle testing falls within certain criteria. PHEVs and BEVs are granted two additional options. One is to provide vehicle-specific real world range data collected from in-use vehicles. The second is to use the MPG-based

http://www.lowcvp.org.uk/assets/reports/LowCVP-Car-Buyer-Survey-2010-Final-Report-0306-10-vFINAL.pdf 2 http://www.europarl.europa.eu/activities/committees/studies/download.do?language=fr&file=31 259

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equations without validation from 5-cycle testing. Worse, the MPG-based equation would be capped at a 30% adjustment for the FTP, again without any validation from 5-cycle testing. Given the importance of the real-world range, the exemption from 5-cycle testing is inexplicable. The cost of conducting 5-cycle testing is small compared to the need for accurate range calculations. In addition, both the exemption from 5-cycle testing and the cap on the MPG-based adjustment are inappropriate for PHEVs and BEVs, for three reasons: (1) Most loads not captured on the FTP and highway tests are relatively constant across a range of vehicles: • Aerodynamic loads go up with vehicle speed on all vehicles • Aggressive driving is not difficult for high-power vehicles and has a larger impact on lower-performance, higher efficiency vehicles • Cold temperatures generate higher engine friction, higher air density, more fuel enrichment, longer engine warmup times, and defroster use • The initial cooling requirements for air conditioning are similar across all vehicles • Short trips increase the relative amount of fuel used for engine warmup and A/C cooldown These relatively constant off-cycle loads mean that the lower the baseline fuel consumption, the larger the percentage impact on in-use fuel economy. The shape of the MPG-based equation simply reflects this reality and generates larger adjustments for lower fuel consumption vehicles. It has nothing to do with the technology on the vehicle, just the nature of vehicle and accessory loads. (2) There is good reason to believe that the off-cycle loads will be much larger on BEVs than on conventional vehicles with the same fuel consumption. This is because of cabin heating at cold ambient temperatures. On vehicles with internal combustion engines, the cabin is heated using waste heat from the engine that is otherwise lost to the cooling system. No additional energy is used to provide cabin heat, beyond that needed to run the fan inside the cabin. This situation does not exist for BEVs, which will need to supply power from the battery pack to heat the cabin. There are ways to mitigate the energy used to heat the cabin, but unless BEVs are required to conduct 5-cycle testing the label values – and range – will not reflect such strategies. (3) All testing is conducted with almost new batteries. However, there is normal degradation in battery energy capacity over time. This will reduce the range of the vehicle over time, which is not captured in the fuel economy testing. The proper solution is to require 5-cycle testing with batteries representative of 5-year old batteries. While ICCT understands that testing with 5-year old batteries would be very difficult and may not be feasible, it is important that the overstatement of range at least is limited to this factor and is not multiplied by further range overstatements. Given the solid reasons why labeling shortfall increases as baseline fuel consumption goes down and the high value associated with the range calculation, PHEVs and BEVs should be treated

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identically to conventional vehicles and should not be given additional options to comply, especially the options to use the MPG-based equation without validation with 5-cycle testing and capping the adjustment on the MPG-based equation. The proposed option for allowing adjustments based on vehicle-specific real world range data collected from in-use vehicles is reasonable in concept. However, it would be unfair to allow it only for PHEVs and BEVs. More importantly, it is very difficult to collect data that properly represents year-around operation throughout the nation. Any provision to allow real-world data collection should be promulgated through rulemaking, in order to allow for comments and consideration of the many difficult issues in designing such a program. 3) Fuel Consumption ICCT supports the inclusion of a fuel consumption metric on the label. The distortion with MPG will only get worse as vehicle fuel economy improves, potentially confusing customers and leading them to make less than optimum purchase decisions. While it is not feasible to move away from MPG today, including fuel consumption on the label will help some customers understand the real difference between vehicles. More importantly, it will start the process of familiarizing customers with a linear metric, with the eventual goal of replacing MPG. A fuel consumption metric will also make it easier for consumers to calculate their individual fuel costs. Few customers use the annual fuel cost estimate currently on the label because their actual mileage and fuel cost can be very different from the estimates embedded in the annual fuel cost. A fuel consumption metric would allow consumers to easily use customized mileage and fuel price assumptions. Canada started including a linear metric (liters per 100 km) about 25 years ago, so there is a successful precedent. ICCT urges EPA to include a fuel consumption metric.

4) Website Links to Electronic Labels The new vehicle purchase process is very different that it was when fuel economy labels were first implemented more than three decades ago. Many potential buyers conduct research and compare vehicle features, including fuel economy, through commercial websites, such as Edmunds.com. Thus, in many cases they will have made their initial purchase decisions before they see the labels at the dealership.

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It is necessary to change with the times and require websites designed to help sell vehicles to include electronic label images, or prominent links to such images, as part of the broader information shown for each model. In China, a website established by the Ministry of Industry and Information Technology to provide buyer fuel consumption information already includes electronic labels with broader information for each model. Electronic labels will be increasingly important in the future and provisions should be implemented as quickly as possible. 5) Air Conditioning Credits for Greenhouse Gas Emissions Greenhouse gas credits should not be include on the label for air conditioning. Air conditioning systems will move to systems with virtually no greenhouse gas emissions in the next 3 to 7 years, so the credits will become meaningless in a short period of time. Further, the contribution of air conditioning to overall greenhouse gas emissions is much smaller than the greenhouse gas emissions from production and disposal of the vehicle, which are also not included.