[Federal Register Volume 89, Number 62 (Friday, March 29, 2024)]
[Rules and Regulations]
[Pages 22041-22060]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06101]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 89, No. 62 / Friday, March 29, 2024 / Rules
and Regulations
[[Page 22041]]
DEPARTMENT OF ENERGY
10 CFR Part 474
[EERE-2021-VT-0033]
RIN 1904-AF47
Petroleum-Equivalent Fuel Economy Calculation
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Final rule.
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SUMMARY: The U.S. Department of Energy (DOE) publishes a final rule
that revises the value for the petroleum-equivalency factor (PEF). This
final rule revises DOE's regulations regarding procedures for
calculating a value for the petroleum-equivalent fuel economy of
electric vehicles (EVs). The PEF is used by the Environmental
Protection Agency (EPA) in calculating light-duty vehicle
manufacturers' compliance with the Department of Transportation's (DOT)
Corporate Average Fuel Economy (CAFE) standards.
DATES: This rule is effective June 12, 2024.
ADDRESSES: The docket for this rulemaking, which includes Federal
Register notices, public meeting attendee lists and transcripts,
comments, and other supporting documents/materials, is available for
review at www.regulations.gov/docket/EERE-2021-VT-0033. All documents
in the docket are listed in the www.regulations.gov index. However, not
all documents listed in the index may be publicly available, such as
information that is exempt from public disclosure.
FOR FURTHER INFORMATION CONTACT:
Mr. Kevin Stork, U.S. Department of Energy, Vehicle Technologies
Office, EE-3V, 1000 Independence Avenue SW, Washington, DC 20585.
Telephone: (202) 586-8306. Email: [email protected].
Ms. Laura Zuber, U.S. Department of Energy, Office of the General
Counsel, Forrestal Building, GC-33, 1000 Independence Avenue SW,
Washington, DC 20585. Telephone: (240) 306-7651. Email:
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction and Background
II. Public Comments on the 2023 NOPR
III. Discussion of Final Rule
A. Statutory Factors
B. Current Methodology
C. Revised Methodology
1. Approximate Electrical Energy Efficiency of EVs
2. Gasoline-Equivalent Fuel Economy of Electricity
a. Average Electricity Generation and Transmission Efficiency
b. Petroleum Refining and Distribution Efficiency
c. Annual Gasoline-Equivalent Fuel Economy of Electricity
3. Cumulative Gasoline-Equivalent Fuel Economy of Electricity
4. Fuel Content Factor
5. Accessory Factor
6. Driving Pattern Factor
7. Revised PEF Value
8. Compliance Period
9. Annual Review
IV. Responses to Additional Comments
A. Revisions to Section 474.3
B. Consideration of All Forms of Energy Conservation
C. Need for Multiple PEF Values
D. Impact of Revised PEF on Plug-In Hybrid Electric Vehicles
E. Compliance With NHTSA and EPA Standards
F. Related Rulemakings
G. Miscellaneous
V. Revisions to 10 CFR P art 474
A. 10 CFR 474.3
B. Appendix to Part 474
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866, 13563 and 14094
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act of 1995
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act of 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Congressional Notification
VII. Approval of the Office of the Secretary
I. Introduction and Background
In an effort to conserve energy through improvements in the energy
efficiency of motor vehicles, in 1975, Congress passed the Energy
Policy and Conservation Act (EPCA), Public Law 94-163. Title III of
EPCA amended the Motor Vehicle Information and Cost Savings Act (15
U.S.C. 1901 et seq.) (the Motor Vehicle Act) by mandating fuel economy
standards for automobiles produced in, or imported into, the United
States. This legislation, as amended, requires every manufacturer to
meet applicable specified corporate average fuel economy (CAFE)
standards for their fleets of light-duty vehicles under 8,500 pounds
that the manufacturer manufactures in any model year.\1\ The Secretary
of Transportation (through the National Highway Traffic Safety
Administration (NHTSA)) is responsible for prescribing the CAFE
standards and enforcing the penalties for failure to meet these
standards. 49 U.S.C. 32902. The Administrator of the Environmental
Protection Agency (EPA) is responsible for calculating each
manufacturer's fleet CAFE value. 49 U.S.C. 32902 and 32904.
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\1\ The relevant provisions of the CAFE program, including DOE's
establishment of equivalent petroleum-based fuel economy values were
transferred to Title 49 of the U.S. Code by Public Law 103-272 (July
5, 1984). See 49 U.S.C. 32901 et seq. The authority for DOE's
establishment of equivalent petroleum-based fuel economy values was
transferred to 49 U.S.C. 32904(a)(2)(B).
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On January 7, 1980, President Carter signed the Chrysler
Corporation Loan Guarantee Act of 1979 (Pub. L. 96-185). Section 18 of
the Chrysler Corporation Loan Guarantee Act of 1979 added a new
paragraph (2) to section 13(c) of the Electric and Hybrid Vehicle
Research, Development, and Demonstration Act of 1976 (Pub. L. 94-413).
Part of the new section 13(c) added paragraph (a)(3) to section 503 of
the Motor Vehicle Act. That subsection provides:
If a manufacturer manufactures an electric vehicle, the
Administrator [of EPA] shall include in the calculation of average fuel
economy under paragraph (1) of this subsection equivalent petroleum
based fuel economy values determined by the Secretary of Energy for
various classes of electric vehicles. The Secretary shall review those
values each year and determine and propose necessary revisions based on
the following factors:
[[Page 22042]]
(i) The approximate electrical energy efficiency of the vehicle,
considering the kind of vehicle and the mission and weight of the
vehicle.
(ii) The national average electrical generation and transmission
efficiencies.
(iii) The need of the United States to conserve all forms of
energy and the relative scarcity and value to the United States of
all fuel used to generate electricity.
(iv) The specific patterns of use of electric vehicles compared
to petroleum-fueled vehicles.
49 U.S.C. 32904(a)(2)(B).
Section 18 of the Chrysler Corporation Loan Guarantee Act of 1979
further amended the Electric and Hybrid Vehicle Research, Development,
and Demonstration Act of 1976 by adding a new paragraph (3) to section
13(c), which directed the Secretary of Energy, in consultation with the
Secretary of Transportation and the Administrator of EPA, to conduct a
seven-year evaluation program of the inclusion of electric vehicles \2\
in the calculation of average fuel economy. As required by section
503(a)(3) of the Motor Vehicle Act, DOE proposed a method of
calculating the petroleum-equivalent fuel economy of electric vehicles
utilizing a PEF in a new 10 CFR part 474 on May 21, 1980. 45 FR 34008.
The rule was finalized on April 21, 1981, and became effective May 21,
1981. 46 FR 22747. The seven-year evaluation program was completed in
1987, and the calculation of the annual petroleum equivalency factors
was not extended past 1987.
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\2\ For purposes of paragraph (a)(2) of 49 U.S.C. 32904, EPCA
defines an ``electric vehicle'' as ``a vehicle powered primarily by
an electric motor drawing electrical current from a portable
source.''
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DOE published a proposed rule for a permanent PEF for use in
calculating petroleum-equivalent fuel economy values of electric
vehicles on February 4, 1994, and obtained comments from interested
parties. 59 FR 5336. Following consideration of comments, DOE's own
internal re-examination of the assumptions underlying the proposed
rule, and existing regulations for other classes of alternative fuel
vehicles, DOE decided to modify the PEF calculation approach proposed
in 1994. The 1994 proposed rule was later withdrawn, and DOE proposed a
modified approach in a July 14, 1999, notice of proposed rulemaking. 64
FR 37905 (1999 NOPR). DOE published a final rule with a PEF of 82,049
Watt-hours per gallon on June 12, 2000, that amended 10 CFR part 474.
65 FR 36985 (2000 Final Rule). DOE has not updated 10 CFR part 474
since the 2000 Final Rule.
On October 22, 2021, DOE received a petition for rulemaking from
the Natural Resources Defense Council (NRDC) and Sierra Club requesting
DOE to update its regulations at 10 CFR part 474. DOE published a
notice of receipt of the petition on December 29, 2021, and solicited
comment on the petition and whether DOE should proceed with a
rulemaking. 86 FR 73992.
In April 2023, DOE agreed that the inputs upon which the
calculations and PEF values are based were outdated and that the
technology and market penetration of EVs has significantly changed
since the 2000 Final Rule and granted the petition from NRDC and Sierra
Club. When granting the petition, DOE also published a notice of
proposed rulemaking. 88 FR 21525 (2023 NOPR).
In the 2023 NOPR, DOE proposed to update the PEF value and revise
the methodology used to calculate the PEF. Specifically, the 2023 NOPR
proposed the following revisions to the methodology:
Change the accessory factor, used to account for
petroleum-fueled on-board accessories, to 1.
Revise the generation and transmission efficiency factor
by using updated grid mix projection that account for policy changes
since June 2000 and more recent data.
Remove the fuel content factor.
In accordance with these proposed revisions, DOE proposed a revised
PEF value of 23,160 Watt-hours per gallon. 88 FR 21525, 21532. In
addition, DOE proposed that the revised PEF value would apply to model
year (MY) 2027 and later electric vehicles. 88 FR 21525, 21531. DOE
also proposed to delete 10 CFR 474.5, which requires DOE to review the
PEF value every five years. 88 FR 21525, 21533.
The public comment period for the 2023 NOPR closed on June 12,
2023. DOE received 20 comments on the proposed rule.\3\ Several
commenters, including the Alliance for Automotive Innovation
(Alliance), expressed concern that auto manufacturers would not have
sufficient lead time to incorporate changes into their plans for MY
2027 vehicles, given that the new PEF value would significantly impact
their CAFE compliance and given that manufacturing changes require
significant lead times. On September 14, 2023, DOE issued letters to
member companies of the Alliance that invited recipients to provide
data, documents, or analysis to clarify the Alliance's concerns in
relation to the proposed effective date. DOE also published a
Notification of Ex Parte Communication and Request for Comments in the
Federal Register, which stated that DOE sent the September 14, 2023,
letters and asked interested stakeholders to provide similar data,
documents, or analysis. 88 FR 67682 (Oct. 2, 2023).
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\3\ DOE received comments from an individual on October 1, 2023,
after the comment period closed. Doc. No. 36. Despite the fact that
these comments were filed late, DOE considered the issues raised in
these comments when reviewing the rule.
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DOE received data in response to the letters and the notification
and incorporated the data into its analysis. The letters and responses
to the letters and the notification are available in the docket.
DOE is finalizing revisions to 10 CFR part 474 and the methods to
calculate the PEF value in accordance with the statutory factors in 49
U.S.C. 32904(a)(2)(B). After considering comments, DOE is modifying the
methodology as initially proposed in the 2023 NOPR in the following
ways:
Updating the grid mix projection from the 2021 National
Renewable Energy Laboratory (NREL) ``95 by 2050'' Scenario to the more
current electricity generation forecast in the 2022 NREL ``Standard
Scenario Mid-Case,'' which accounts for the latest technology and
policies.
Changing the method of calculating the PEF value from
using an average of annual PEF values between MY 2027 to MY 2031 to
calculating a PEF value based on the survivability-weighted lifetime
mileage schedule of the fleet of vehicles sold during the regulatory
period.
Phasing-out the use of the fuel content factor between MY
2027 and MY 2030 rather than removing it from the PEF equation as of
the effective date of the rule, as proposed in the 2023 NOPR.
Each of these changes are discussed in detail in the following
sections.
II. Public Comments on the 2023 NOPR
DOE received comments in response to the 2023 NOPR from the
individuals and interested parties listed in Table 1. These comments
are available in the public docket for this rulemaking. The specific
issues relating to the final rule raised by the commenters are
addressed in section III of this document. A parenthetical reference at
the end of a comment quotation or paraphrase provides the location of
the item in the public record.\4\
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\4\ The parenthetical reference provides a reference for
information located in the docket for this rulemaking. (Docket No.
EERE-2021-VT-0033, which is maintained at www.regulations.gov). The
references are arranged as follows: commenter name, comment docket
ID number, page of that document.
[[Page 22043]]
Table 1--2023 NOPR Written Comments
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Commenter(s) Abbreviation Document No.
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Gilles DeBrouwer.............................. ................................................ 14
Vivat......................................... ................................................ 15
Anonymous 1................................... ................................................ 16
Transport Evolved............................. ................................................ 17
Tesla, Inc.................................... Tesla........................................... 18
International Council on Clean Transportation. ICCT............................................ 19
Natural Resources Defense Council and Sierra NRDC and Sierra Club............................ 20
Club.
Zero Emission Transportation Association...... ZETA............................................ 21
Ford Motor Company............................ Ford............................................ 22
National Automobile Dealers Association....... NADA............................................ 23
Porsche Cars.................................. Porsche......................................... 24
Alliance for Automotive Innovators............ Alliance........................................ 25
American Fuel & Petrochemical Manufacturers... AFPM............................................ 26
State of California et al..................... California et al................................ 27
Our Children's Trust.......................... ................................................ 28
American Council for an Energy Efficient ACEEE........................................... 29
Economy.
International Union, United Automobile, UAW............................................. 30
Aerospace & Agricultural Implement Workers of
America.
American Free Enterprise Chamber of Commerce AmFree et al.................................... 31
et al.
Clean Fuels Development Coalition et al....... Clean Fuels et al............................... 32
Omer Sevindir................................. ................................................ 36
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III. Discussion of Final Rule
A. Statutory Factors
In accordance with 49 U.S.C. 32904, DOE reviewed the equivalent
petroleum-based fuel economy values for EVs, including both the current
PEF value and the methodology used to calculate that value, which are
found in 10 CFR part 474. When reviewing the equivalent petroleum-based
fuel economy values for EVs, DOE must consider four factors:
(i) The approximate electrical energy efficiency of the vehicle,
considering the kind of vehicle and the mission and weight of the
vehicle.
(ii) The national average electrical generation and transmission
efficiencies.
(iii) The need of the United States to conserve all forms of energy
and the relative scarcity and value to the United States of all fuel
used to generate electricity.
(iv) The specific patterns of use of electric vehicles compared to
petroleum-fueled vehicles.
49 U.S.C. 32904(a)(2)(B).
Based on more recent data, changes to market conditions, and
comments received in response to the 2023 NOPR, DOE is revising the
methodology used to calculate PEF and the resulting PEF value in this
final rule. DOE discusses its consideration of the statutory factors
and its conclusions in the following sections.
B. Current Methodology
10 CFR 474.3 provides the current methodology for determining the
equivalent petroleum-based fuel economy values for EVs. First, DOE
determines the EVs' urban and highway energy consumption value in Watt-
hours (Wh) per mile. To do this, DOE uses the energy consumption values
provided by the Highway Fuel Economy Driving Schedule (HFEDS) and Urban
Dynamometer Driving Schedule (UDDS) test cycles established by EPA at
40 CFR parts 86 and 600. 10 CFR 474.3(a)(1). DOE then determines the
combined energy consumption value by averaging the urban and highway
energy consumption values using a weighting of 55 percent urban and 45
percent highway. 10 CFR 474.3(a)(2). Finally, DOE converts this
combined energy consumption value (expressed in Wh per mile) to a
petroleum-equivalent fuel economy value, which is measured in miles per
gallon (mpg), by dividing the PEF (measured in Wh per gallon) by the
combined energy consumption value.
The current PEF calculation procedure converts the measured
electrical energy consumption of an electric vehicle into a gasoline-
equivalent fuel economy of electricity (Eg). 65 FR 36986,
36987. Then, the methodology multiplies the Eg by the fuel
content factor (FCF), which is intended to represent the energy content
equivalent the alternative fuel to a gallon of gasoline; the accessory
factor (AF), which represents possible use of petroleum-powered
accessories, such as cabin heater/defroster systems; and the driving
pattern factor (DPF), which represents the potential for different uses
of EVs compared to internal combustion engine (ICE) vehicles. Id. The
general form of the PEF equation is:
PEF = Eg x FCF x AF x DPF
In the 2000 Final Rule, DOE used this equation to calculate the PEF
value and determined that the PEF for EVs that do not have any
petroleum-powered accessories is 82,049 Watt-hours per gallon (Wh/gal).
See 10 CFR 474.3(b)(1). For EVs that have petroleum-powered
accessories, DOE determined that the PEF is 73,844 Wh/gal. See 10 CFR
474.3(b)(2).
C. Revised Methodology
As stated previously, DOE concluded that the current PEF value and
methodology were based on outdated data and that the technology and
market penetration of EVs has significantly changed since the 2000
Final Rule. Accordingly, in the 2023 NOPR, DOE proposed a revised PEF
value and revisions to the methodology used to calculate the PEF.
Specifically, the 2023 NOPR proposed changing the accessory factor to
1.0, revising the generation and transmission efficiency factor by
using updated electrical grid mix projections, and removing the fuel
content factor. The 2023 NOPR also proposed maintaining the driving
pattern factor at 1.0.
1. Approximate Electrical Energy Efficiency of EVs
DOE considers the approximate electrical energy efficiency of EVs
in determining the PEF value pursuant to 49 U.S.C. 32904(a)(2)(B)(i).
As discussed, the current methodology converts the energy consumption
of an EV from Wh of electricity to gallons of gasoline based upon
energy consumption values provided by Highway Fuel Economy Driving
Schedule (HFEDS) and Urban Dynamometer Driving Schedule (UDDS) test
cycles established by EPA at 40 CFR parts 86 and 600. See 10 CFR 474.3
and
[[Page 22044]]
474.4. In the 2023 NOPR, DOE proposed to retain this methodology
because it provided an ``accurate measure of the electrical energy
efficiency of the relevant EV during typical use and is appropriately
utilized in the PEF equation.'' 88 FR 21525, 21527.
One commenter supported maintaining the current energy efficiency
regime. Tesla, Doc. No. 18, pg. 2. In addition, although NRDC and
Sierra Club did not oppose the current methodology expressly, they
urged DOE to ``clarify whether it will use unadjusted dynamometer
testing results or adjusted values'' when measuring energy consumption
of an EV. NRDC and Sierra Club, Doc. No. 20, pg. 5. NRDC and Sierra
Club observed that dynamometer testing overstates real-world
performance for vehicles by as much as 30 percent. NRDC and Sierra
Club, Doc. No. 20, pg. 5 (citing 87 FR 25710, 25720 (May 2, 2022)).
Thus, they recommended that DOE consider using adjusted dynamometer
values to better approximate the actual electrical efficiency of EVs
for use in determining the equivalent petroleum-based fuel economy
values for EVs. NRDC and Sierra Club, Doc. No. 20, pg. 5.
Other commenters opposed retaining the current methodology and
argued that both HFEDS and UDDS test cycles are unrepresentative of
typical use cases of EVs. AFPM, Doc. No. 26, pg. 5; Clean Fuels et al.,
Doc. No. 32, pg. 3; AmFree, Doc. No. 31, pg. 4. Specifically, these
commenters claimed that HFEDS fails to capture the most typical use
case of EVs, such as commuting to and from work. AFPM, Doc. No. 26, pg.
5; Clean Fuels et al., Doc. No. 32, pg. 3-4. In addition, they asserted
that UDDS fails to capture variations in climate or extended periods of
idling. AFPM, Doc. No. 26, pg. 6; Clean Fuels et al., Doc. No. 32, pg.
4. As a result of these and other failures, these commenters argued
that these test cycles overestimate the performance of EVs. AFPM, Doc.
No. 26, pg. 6; Clean Fuels et al., Doc. No. 32, pg. 4-5. These
commenters stated that ``DOE must revisit its chosen procedure and
apply more robust and accurate test methods,'' and that DOE's decision
to retain the current methodology is arbitrary and capricious. Clean
Fuels et al., Doc. No. 32, pg. 5; AFPM, Doc. No. 26, pg. 6. The
commenters noted there are other more representative tests currently
available, like EPA's 5-cycle formula, to calculate the fuel economy of
vehicles. AFPM, Doc. No. 26, pg. 6; Clean Fuels et al., Doc. No. 32,
pg. 5; AmFree, Doc. No. 31, pg. 4.
Both of these comments regarding adjusting the dynamometer readings
or using different test cycles were addressed in DOE's methodology for
calculating the energy consumption of an EV in terms of miles per
gallon. DOE notes that DOE's methodology is aligned with EPA's
methodology for calculating the compliance fuel economy values for ICE
vehicles in the CAFE program. The adjustment and the test cycles
recommended by commenters, however, are not used to calculate fuel
economy for purposes of CAFE compliance. Rather, the recommended
adjustment and test cycles are used to calculate fuel economy for the
EPA/DOT Fuel Economy and Environment Label (window sticker).\5\ DOE
notes that 49 U.S.C. 32904(c) requires EPA to use the ``same procedures
for passenger automobiles the Administrator used for model year 1975''
to measure the fuel economy of passenger vehicles for CAFE purposes.
Pursuant to this directive, EPA uses the HFEDS and UDDS test cycles to
calculate fuel economy for ICE vehicles and does not adjust the
dynamometer results. A consistent methodology applied to all auto
manufacturers for calculating the fuel economy of ICE vehicles helps to
ensure a level playing field. Because the purpose of the PEF is to
provide a fuel economy conversion factor for EVs (so that they may be
averaged with ICE vehicles for determining CAFE performance) it is
reasonable and appropriate to keep all else as equal as possible.
Because CAFE compliance for ICE vehicles is determined using the HFEDS
and UDDS test cycles, determining EV energy consumption values using
those two same test cycles is consistent and reasonable.
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\5\ Similarly, other commenters, such as Hyundai, suggested that
DOE harmonize the PEF with EPA's use of 33,705 Wh/gal used by EPA in
its fuel economy labeling. Hyundai, Doc. No. 39, pg. 2.
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In this final rule, as proposed in the 2023 NOPR, DOE retains its
current methodology to convert energy consumption of an EV into gallons
of gasoline based upon energy consumption values provided by the HFEDS
and UDDS test cycles established by EPA at 40 CFR parts 86 and 600. See
10 CFR 474.3 and 474.4. DOE determines that using unadjusted
dynamometer results from the HFEDs and UDDS to calculate energy
consumption for EVs provides a calculation of fuel economy for EVs most
comparable to the existing gasoline fuel economy that EPA calculates.
Because the PEF value provides a fuel economy conversion factor for EVs
(so that they may be averaged with ICE vehicles for determining CAFE
performance), it is reasonable and appropriate to adopt a consistent
methodology that helps ensure a level playing field.
2. Gasoline-Equivalent Fuel Economy of Electricity
When comparing ICE vehicles with EVs, it is essential to consider
the efficiency of the respective upstream processes in the two relevant
energy cycles.\6\ The critical difference between the processes is that
an ICE vehicle burns its fuel on-board, and an EV burns its fuel (the
majority of electricity in the U.S. is generated at fossil fuel burning
powerplants) off-board. In both cases, the burning of fuels to produce
work is the least efficient step of the respective energy cycles.
Therefore, the 2000 Final Rule included a term, gasoline-equivalent
energy content of electricity (Eg), to express the relative
energy efficiency of the full energy cycles of gasoline and
electricity. 65 FR 36986, 36987.
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\6\ In this context ``upstream'' means everything prior to
storage of energy on the vehicle, also commonly referred to as well-
to-tank.
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Under the current rule, the gasoline-equivalent energy content of
electricity, is calculated by multiplying the U.S. average electricity
generation efficiency (Tg), the U.S. average electricity
transmission efficiency (Tt), and the Watt-hours of energy
per gallon of gasoline conversion factor (C) \7\, and then dividing
that value by the petroleum refining and distribution efficiency
(Tp). 65 FR 36986, 36987. The equation calculating the
gasoline-equivalent energy content of electricity factor is written as
follows.\8\
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\7\ The Watt-hours of energy per gallon of gasoline conversion
factor is a standard value, 33705 Wh/gal.
\8\ The equation is revised from the form in the 2000 Final Rule
to correct a printing error in the 2000 Final Rule. The calculation
of Eg is correct in the 2000 Final Rule despite the
printing error.
[GRAPHIC] [TIFF OMITTED] TR29MR24.053
In the 2000 Final Rule, DOE calculated a gasoline-equivalent energy
content of electricity factor of 12,307 Wh/gal by using the following
inputs:
[[Page 22045]]
[GRAPHIC] [TIFF OMITTED] TR29MR24.054
65 FR 36986, 36987.
The gasoline-equivalent energy content of electricity factor
involves the consideration of the national average electrical
generation and transmission efficiencies and the need to conserve all
forms of energy and the relative scarcity and value to the United
States of all fuel used to generate electricity. 49 U.S.C.
32904(a)(2)(B)(ii) and (iii). In the analysis that follows, DOE updates
the electricity generation and transmission efficiency factor and the
petroleum refining and distribution efficiency factor used to calculate
the gasoline-equivalent fuel economy of electricity.
a. Average Electricity Generation and Transmission Efficiency
The calculation for electricity efficiency considers production of
the energy source, generation of electricity from that source, and
transmission of the electricity to the EV charging location. The
efficiency of the production of the energy source and the generation of
electricity from that source vary widely.
In the 2023 NOPR, DOE updated its calculations of the average
generation and transmission efficiency for all fuels based on the
latest data available. In the 2023 NOPR, DOE used the efficiency data
from Greenhouse Gases, Regulated Emissions, and Energy use in
Transportation (GREET).\9\ To calculate the well-to-tank efficiency for
electricity from specific energy sources, DOE multiplied the production
efficiency,\10\ generation efficiency,\11\ and transmission efficiency
\12\ for each source. The efficiencies of electricity generated from
specific sources used in this analysis are provided in Table 2. DOE
used the same efficiencies of electricity generated from specific
sources in this final rule.
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\9\ The GREET model is a life-cycle analysis tool, structured to
systematically examine the energy and environmental effects of a
wide variety of transportation fuels and vehicle technologies in
major transportation sectors (i.e., road, air, marine, and rail) and
other end-use sectors, and energy systems. Development of the GREET
model by Argonne National Laboratory has been supported by multiple
offices of DOE, DOT, and other agencies over the past 28 years. The
GREET model is available at greet.anl.gov/, doi:10.11578/GREET-Net-
2021/dc.20210903.1.
\10\ ``Production efficiency'' includes efficiencies related to
producing the raw material and transport to the electricity
generation facility.
\11\ ``Generation efficiency'' relates to the conversion of the
limited resources into electricity, e.g., by combustion, heating a
boiler, and turning a turbine.
\12\ Under GREET, electricity transmission has a national
average efficiency of 95.14 percent.
Table 2--Electricity Generation and Transmission Efficiency by Source
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Production Generation Transmission Calculated
Energy source efficiency (%) efficiency (%) efficiency (%) efficiency (%)
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Natural gas..................................... 91.81 47.34 95.14 41.35
Coal............................................ 97.90 34.55 95.14 32.18
Oil............................................. 88.41 31.92 95.14 26.85
Biomass......................................... 97.54 21.65 95.14 20.09
Nuclear......................................... 97.40 100 95.14 92.67
Solar........................................... 100 100 95.14 95.14
Wind............................................ 100 100 95.14 95.14
Hydroelectric................................... 100 100 95.14 95.14
Geothermal...................................... 100 100 95.14 95.14
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i. Efficiency of Renewable and Nuclear Electricity Generation
In the 2023 NOPR, due to the abundance of renewable energy sources
such as wind and solar, DOE proposed treating renewable energy sources
as effectively 100 percent efficient in their generation. 88 FR 21525,
21530. DOE also treated nuclear electricity generation as effectively
100 percent efficient because, like solar and wind, there is no
practical, aggregate resource-availability limitation for nuclear
materials. 88 FR 21525, 21530.
Some commenters disagreed with DOE's proposal to treat renewable
and nuclear energy generation as effectively 100 percent efficient.
AmFree, Doc. No. 31, pg. 4-5; AFPM, Doc. No. 26, pg. 9. These
commenters asserted that there is no basis for DOE to assume renewable
or nuclear energy generation is 100 percent efficient, and therefore
DOE must revise its generation efficiencies for such energy. AmFree,
Doc. No. 31, pg. 4-5; AFPM, Doc. No. 26, pg. 9.
In response to these concerns, DOE notes that the methodology
accounts for transmission losses from such electricity sources. The DOE
interpretation of energy scarcity relies on primary energy sources. As
such, with an effectively inexhaustible supply of primary energy--sun,
wind, fissile nuclear material--it is not appropriate to use a
conversion efficiency with these sources when calculating the PEF. By
contrast, fossil energy sources used to generate electricity are large
but finite. DOE considers the combustion efficiency of electric
generation as part of the full energy lifecycle. Renewable gaseous fuel
burned for electricity, though expected to be a small contributor to
renewable electricity overall, are treated similarly to fossil natural
gas with respect to combustion efficiency. DOE is retaining the 100
percent conversion efficiency assumption for nuclear and renewable
generation (other than for renewable natural gas) in this rule.
ii. U.S. Electrical Grid Projections
As discussed in section III.C.3, in this final rule, DOE adopts a
methodology that calculates a PEF value based on the expected
survivability-weighted lifetime mileage schedule of the fleet of
vehicles sold over the regulatory period. DOE recognizes that while the
average life of a vehicle is around 15 years, the influence of a fleet
of vehicles produced in a given model lasts much longer. To capture
this influence, DOE has adopted the survivability-weighted annual
vehicle miles traveled parameters from
[[Page 22046]]
the CAFE model that establishes values for a 40-year span. Beyond 40
years, only an insignificant population of vehicles from that given
model year will remain on the road.\13\ Thus, calculating a PEF value
based on the expected fleet of EVs requires calculating electricity
generation and transmission efficiency 40 years into the future. This
methodology provides a better representation of how vehicles sold
during the regulatory period will be used than did the methodology used
in the 2023 NOPR of averaging the calculated annual PEF based on the
grid characteristics at the time the vehicles were sold. When
calculating electricity generation and transmission efficiency, DOE
weights each of the generation source-specific total efficiencies based
on that source's share of the entire U.S. electricity grid. This mix of
energy sources changes over time and is likely to continue changing in
the future. Thus, the mix of electricity generation sources is a
critical variable impacting the value of the PEF, consistent with
Congressional direction at 49 U.S.C. 32904(a)(2)(B)(ii) and (iii) to
consider the national average electrical generation efficiency and the
need to conserve all forms of energy.
---------------------------------------------------------------------------
\13\ In its notice of proposed rulemaking that establishes CAFE
standards for passenger cars and light trucks for MY 2027-2032,
NHTSA estimates the average maximum lifespan of such vehicles to be
40 years. 88 FR 56128 (Aug. 17, 2023); Light Duty Central Analysis,
file LD_Central_Analysis.zip, spreadsheet: parameters_ref.xlsx, on
tab ``Vehicle Age Date''. Available at www.nhtsa.gov/file-downloads?p=nhtsa/downloads/CAFE/2023-NPRM-LD-2b3-2027-2035/Central-Analysis/.
---------------------------------------------------------------------------
In the 2023 NOPR, DOE considered numerous projections available in
2022 and selected the projection model 2021 Electrification 95 by 2050,
Standard Scenario, from NREL, in which the United States achieves 95
percent renewable generation of electricity by 2050 (NREL 2021 95 by
2050). 88 FR 21525, 21531. In selecting this grid projection, DOE
stated that NREL 2021 95 by 2050 is more representative of the likely
future grid mix after the effects of recent policy changes, such as
those in the Inflation Reduction Act of 2022 (IRA) and the
Infrastructure Investment and Jobs Act (IIJA), are fully realized,
particularly given that these policies will result in a substantial
addition of renewable resources onto the grid. In the 2023 NOPR, DOE
noted that it also considered EIA's Annual Energy Outlook (AEO)
Reference Case for 2022 (AEO 2022). DOE opted not to use AEO 2022
because it did not incorporate recent policy changes in the IRA. 88 FR
21525, 21531. While NREL 2021 95 by 2050 also did not incorporate IRA
impacts, the NREL forecast better represented expected renewable energy
growth through 2030 than the AEP 2022 forecast. However, DOE said that
for the final rule, it would consider using other projections, such as
EIA's AEO for 2023 (AEO 2023), which was not available when DOE
conducted its analysis for the 2023 NOPR.
Some commenters supported DOE's decision to use the 95 by 2050 grid
projections from NREL's 2021 forecast. Tesla, Doc. No. 18, pg. 3-4;
ICCT, Doc. No. 19, pg. 1. Other commenters believed that DOE should use
AEO 2023. NRDC and Sierra Club, Doc. No. 20, pg. 3; California et al.,
Doc. No. 27, pg. 4-5. These commenters noted that the grid projections
in AEO 2023 account for policy changes in IRA. They also observed that
NHTSA uses the EIA AEO model in the recent CAFE rulemaking. NRDC and
Sierra Club, Doc. No. 20, pg. 3. Another commenter stated that DOE
should use the ``relative scarcity'' scenario explored in the
spreadsheet that accompanied the 2023 NOPR. Alliance, Doc. No. 25, pg.
14.
For this final rule, DOE assessed the grid projections that have
become available since 2022. These include AEO 2023, which does account
for some impacts of the IRA and IIJA, and the ``relative scarcity''
scenario. After this consideration and analysis, in this final rule,
DOE continues to use the NREL model (updated for 2022 data) that it
used in the 2023 NOPR, but DOE selects the Standard Scenario Mid-Case
instead of the 95 by 2050 Scenario. Specifically, DOE is using the NREL
2022 Standard Scenario, ``Mid-case, nascent techs, current policies''
to forecast the grid mix for the final rule.
Among the factors the Secretary must consider when setting the PEF
is ``the need of the United States to conserve all forms of energy and
the relative scarcity and value to the United States of all fuel used
to generate electricity.'' 49 U.S.C. 32904(a)(2)(B)(iii). DOE believes
that Congress' directive to set a PEF and to consider the conservation
of all forms of energy, including the relative scarcity and value of
fuels used to generate electricity, are intended to ensure that average
fuel economy of a manufacturer's entire fleet recognize and account for
the full energy conservation benefits of EVs relative to ICE vehicles,
taking into account both energy conservation overall, and the relative
need for and supply constraints of different types of fuels. ``[T]he
relative scarcity and value to the United States of all fuel used to
generate electricity'' is anticipated by every forecast DOE considered
to change over time, largely in response to U.S. government policy
decisions regarding ``the need of the United States to conserve
energy.'' Renewable and other clean energy sources of electricity are
integral in addressing the need to conserve energy and improve energy
security, and so current policies are directed at increasing the
production of electricity from such energy sources. In this specific
statutory context, DOE believes it is particularly important to ensure
that the model used to estimate the future energy conservation benefit
of EVs focuses on projecting how the mix of renewable and other clean
energy generation in the grid will change over the long term. The NREL
model has this specific focus. In the 2023 NOPR, DOE selected the 2021
NREL 95 by 2050 scenario because DOE believed it was the closest
forecast to approximately capture the projected impacts of the IRA,
which had been adopted too recently to be fully incorporated into any
published projection.\14\ Since DOE published the 2023 NOPR, the NREL
2022 forecast has been published. To affect the purposes of this
statute, DOE believes the NREL 2022 Standard Mid-case scenario best
captures the impact of the IRA and IIJA on renewable and other clean
electricity generation over time. As described on NREL's website:
``[e]very year, the Standard Scenarios includes a scenario called the
Mid-case that serves as a baseline or middle-ground scenario to reflect
what might happen if current trends and conditions continue. The Mid-
case has central values for model inputs like technology and fuel costs
and how much electricity people use. In addition, the Mid-case
represents currently enacted electric sector policies.'' \15\ In
addition, the AEO scenarios have historically made relatively more
conservative assumptions regarding the growth of renewable generation,
relative to the NREL model. Because DOE believes that, for the reasons
described previously, the 2022 NREL 2022 Standard Scenario, ``Mid-case,
nascent techs, current policies'' best captures the impact of the IRA
and IIJA on renewable and other clean electricity generation on the
U.S. electrical grid for the specific purposes of this rule, DOE used
this projection in its calculation of the PEF value. DOE will annually
review forecasts for electricity generation and determine if a change
is necessary for this value for future model
[[Page 22047]]
years as required by 49 U.S.C. 32904(a)(2)(B).
---------------------------------------------------------------------------
\14\ The NREL 2021 forecast did include impacts of some
relatively recent policies, such as the IIJA.
\15\ See www.nrel.gov/news/program/2024/nrel-releases-the-2023-standard-scenarios.html.
---------------------------------------------------------------------------
b. Petroleum Refining and Distribution Efficiency
In the 2023 NOPR, DOE also updated its calculations of the
petroleum refining and distribution efficiency factor to reflect the
most recent GREET data. 88 FR 21525, 21527. In the 2023 NOPR, DOE used
GREET efficiency factors to determine that crude oil production and
transportation has an efficiency of 93.96 percent, gasoline refining
has an efficiency of 87.01 percent, and gasoline transportation and
distribution has an energy efficiency of 99.52 percent. Multiplying
these three terms provides an overall well-to-tank petroleum refining
and distribution efficiency of 81.36 percent.
NRDC and Sierra Club argued that petroleum refining and
distribution efficiency should not be considered when considering the
national average electrical generation and transmission efficiency.
NRDC and Sierra Club, Doc. No. 20, pg. 4. They asserted that section
32904(a)(2)(B)(ii) only directs DOE to consider ``electrical generation
and transmission efficiencies,'' and does not direct DOE to consider
petroleum refining and distribution efficiencies or compare them to
electric ones. NRDC and Sierra Club, Doc. No. 20, pg. 4. Furthermore,
these commenters stated that because nothing in the statute requires
DOE to consider petroleum refining and distribution efficiency, DOE
should remove the term from the methodology used to calculate PEF. NRDC
and Sierra Club, Doc. No. 20, pg. 4.
Comparing electricity and gasoline on an equivalent basis requires
consideration of the full energy-cycle energy efficiency from the point
of primary energy production through end-use to power a vehicle for
both gasoline and electricity. Assessing the full energy cycle of
electricity and conventional fuel requires a holistic approach to
address energy conservation when energy losses occur at different
stages of an energy cycle for different energy products and fuels, such
as electricity and gasoline. Moreover, DOE interprets the ``need of the
U.S. to conserve energy'' as applying broadly to all forms of energy,
which includes petroleum. 49 U.S.C. 32904(a)(2)(B)(iii). Therefore, it
is appropriate to assess the full energy cycle of both gasoline and
electricity the energy is converted to a useful form at different
stages--gasoline onboard the vehicle, electricity upstream--and a
reasonable comparison of the two systems requires taking into account
the same steps.
Another commenter opposed the calculations for petroleum refining
and distribution efficiency because they believed that the data
available from the fossil fuel industry is unreliable. Transport
Evolved, Doc. No. 17, pg. 2. In this final rule, as with the 2023 NOPR,
DOE used the best data available on refining and distribution
efficiency by using the efficiency numbers in the GREET model. It is a
widely used life-cycle analysis model for vehicle technologies and
transportation fuels and has been used in regulation development and
evaluation by DOE, EPA, and DOT. The data obtained from the GREET model
are reliable.
c. Annual Gasoline-Equivalent Fuel Economy of Electricity
As discussed previously, DOE uses the average electricity
generation and transmission efficiency and the petroleum refining and
distribution efficiency to determine the gasoline-equivalent fuel
economy of electricity (Eg). In order to calculate the
electricity generation and transmission efficiency, DOE uses the 2022
NREL Standard Scenario, ``Mid-case, nascent techs, current policies''
to forecast the U.S. electrical grid mix. The annual gasoline-
equivalent fuel economy of electricity values used in this analysis are
provided in Table 3. The modeling source only goes until 2050, so DOE
assumed an unchanging grid for subsequent years.
Table 3--Annual Gasoline-Equivalent Fuel Economy of Electricity
------------------------------------------------------------------------
Annual Eg (Wh/
Year gal)
------------------------------------------------------------------------
2023.................................................... 21,407
2024.................................................... 22,299
2025.................................................... 22,880
2026.................................................... 23,481
2027.................................................... 24,897
2028.................................................... 26,449
2029.................................................... 27,498
2030.................................................... 28,595
2031.................................................... 29,000
2032.................................................... 29,404
2033.................................................... 29,788
2034.................................................... 30,171
2035.................................................... 30,412
2036.................................................... 30,651
2037.................................................... 30,717
2038.................................................... 30,781
2039.................................................... 30,836
2040.................................................... 30,889
2041.................................................... 30,613
2042.................................................... 30,349
2043.................................................... 30,041
2044.................................................... 29,747
2045.................................................... 29,490
2046.................................................... 29,243
2047.................................................... 29,011
2048.................................................... 28,787
2049.................................................... 28,434
2050 and later.......................................... 28,097
------------------------------------------------------------------------
The Alliance argued that the 2000 Final Rule underestimates the
fuel economy of EVs because EVs do not use any petroleum (or only
minimal amounts through the grid) when operating in fully electric
mode. Alliance, Doc. No. 25, pg. 15. They note that the electrical grid
has only become more efficient since 2000. Therefore, they argue that
the 2027 PEF value should be higher than the 2000 PEF. This argument
both misunderstands the purpose of the PEF in the compliance
calculations and discounts the DOE's attempt to better align the PEF
with the statutory factors prescribed by Congress. The purpose of the
PEF is to convert the energy used by EVs to a miles per gallon-
equivalent in order to average EV and ICE vehicle fuel economy for
determining vehicle manufacturers' CAFE performance. Although DOE
agrees that the electrical grid has become more efficient since 2000,
in this rulemaking, DOE is holistically reviewing all of the factors
used to calculate the PEF, including the use of the fuel content
factor. The efficiency of the grid is only one input to these
calculations and does not solely determine the final result.
3. Cumulative Gasoline-Equivalent Fuel Economy of Electricity
In the 2023 NOPR, DOE explained that NHTSA's next CAFE regulation
was expected to cover MYs 2027-2031 and proposed that the proposed PEF
value would be the applicable PEF for calculating EV fuel economy when
enforcing the CAFE regulations those model years. 88 FR 21525, 21531.
To calculate a PEF value usable over the entire period covered by the
next revision of the CAFE regulations, DOE considered a forward-looking
approach based on projections for the electricity generation grid in
the future. In the 2023 NOPR, DOE only considered the annual calculated
PEF over the expected regulatory period and used an average of those
values. DOE explained that the average of the annually calculated value
of the PEF, based on calendar-year projections for the electric grid,
would be applied for MYs 2027 through 2031. 88 FR 21525, 21531.
Several commenters opposed this approach and noted that vehicles
are
[[Page 22048]]
driven for many years after their initial sale, not just the five years
considered in the 2023 NOPR. DeBrouwer, Doc. No. 14, pg. 1; ACEEE, Doc.
No. 29, pg. 1-2. On further analysis, and in response to these
comments, this final rule adopts a PEF value based on the expected
survivability-weighted lifetime mileage schedule of the fleet of
vehicles sold during the regulatory period. To determine this, DOE uses
the survivability-weighted lifetime mileage schedule derived from
NHTSA's CAFE rulemaking.\16\ The data that NHTSA used to develop the
average annual vehicle miles traveled (VMT) schedule used in its
analysis divided the light duty vehicle fleet \17\ into three
categories: passenger cars, pickup trucks, and Vans/SUVs. Each vehicle
category has different scrappage rates and annual driving patterns. For
this analysis DOE used a weighted average of 62.4 percent Vans/SUVs,
17.4 percent pickup trucks, and 20.2 percent passenger cars to generate
the average annual VMT shown in Table 4 below.\18\ DOE uses the same
average for the electric-fueled sub-fleet because DOE lacks accurate
information about individual automaker plans for electrifying their
product lines. Table 4 shows the average annual VMT expected for the
fleet of vehicles for the first forty years after initial sale.
---------------------------------------------------------------------------
\16\ See NHTSA NPRM Draft Technical Support Document, Chapter 4,
p. 4-41, Table 4-12, ``VMT Schedule by Body Style and Age'' for
vehicle type breakdown and Section 4.2.2.3.3, ``Estimating the
Scrappage Models'', beginning on p. 4-26. NHTSA TSD available at:
www.nhtsa.gov/document/cafe-2027-2032-hdpuv-2030-2035-draft-technical-support-document.
\17\ This rule considers all passenger cars and trucks up to
8,500 pounds to be light-duty vehicles. This aligns to those
vehicles that are subject to NHTSA's CAFE regulations for passenger
cars and light trucks.
\18\ The distribution was derived from the file:
LD_Central_Analysis.zip/output/LD_ref/reports_csv/
vehicles_report.csv available at: www.nhtsa.gov/file-downloads?p=nhtsa/downloads/CAFE/2023-NPRM-LD-2b3-2027-2035/Central-Analysis/.
Table 4--Annual VMT for Light Duty Vehicle Fleet
------------------------------------------------------------------------
Year after initial sale Annual VMT
------------------------------------------------------------------------
1....................................................... 16,647
2....................................................... 15,989
3....................................................... 15,336
4....................................................... 14,679
5....................................................... 14,012
6....................................................... 13,331
7....................................................... 12,627
8....................................................... 11,894
9....................................................... 11,131
10...................................................... 10,334
11...................................................... 9,504
12...................................................... 8,639
13...................................................... 7,755
14...................................................... 6,873
15...................................................... 6,008
16...................................................... 5,188
17...................................................... 4,439
18...................................................... 3,773
19...................................................... 3,196
20...................................................... 2,704
21...................................................... 2,293
22...................................................... 1,953
23...................................................... 1,674
24...................................................... 1,443
25...................................................... 1,253
26...................................................... 1,096
27...................................................... 965
28...................................................... 856
29...................................................... 764
30...................................................... 686
31...................................................... 564
32...................................................... 463
33...................................................... 380
34...................................................... 312
35...................................................... 256
36...................................................... 209
37...................................................... 171
38...................................................... 139
39...................................................... 114
40...................................................... 92
------------------------------------------------------------------------
The current methodology uses the annual gasoline-equivalent fuel
economy of electricity to calculate PEF. Thus, the current PEF
methodology must be revised to calculate a PEF value based on expected
operation of the vehicles sold. To represent the expected operation of
these vehicles, DOE calculates a cumulative gasoline-equivalent fuel
economy of electricity (CEg) in Table 5. The cumulative
gasoline-equivalent fuel economy of electricity is determined by
multiplying the annual gasoline-equivalent fuel economy of electricity
by the corresponding annual share of lifetime VMT based on the
survivability-weighted lifetime mileage schedule.
Table 5--Cumulative Gasoline-Equivalent Fuel Economy of Electricity for MY 2027 EVs
----------------------------------------------------------------------------------------------------------------
Annual share of Partial CEg
Calendar year Vehicle age Eg lifetime VMT (%)
----------------------------------------------------------------------------------------------------------------
2027.......................................... 1 24,898 7.94 1,976
2028.......................................... 2 26,450 7.62 2,016
2029.......................................... 3 27,498 7.31 2,011
2030.......................................... 4 28,596 7.00 2,001
2031.......................................... 5 29,000 6.68 1,937
2032.......................................... 6 29,405 6.36 1,869
2033.......................................... 7 29,789 6.02 1,793
2034.......................................... 8 30,171 5.67 1,711
2035.......................................... 9 30,413 5.31 1,614
2036.......................................... 10 30,651 4.93 1,510
2037.......................................... 11 30,717 4.53 1,392
2038.......................................... 12 30,782 4.12 1,268
2039.......................................... 13 30,836 3.70 1,140
2040.......................................... 14 30,889 3.28 1,012
2041.......................................... 15 30,613 2.86 877
2042.......................................... 16 30,349 2.47 751
2043.......................................... 17 30,042 2.12 636
2044.......................................... 18 29,747 1.80 535
2045.......................................... 19 29,490 1.52 449
2046.......................................... 20 29,243 1.29 377
2047.......................................... 21 29,011 1.09 317
2048.......................................... 22 28,788 0.93 268
2049.......................................... 23 28,434 0.80 227
[[Page 22049]]
2050.......................................... 24 28,097 0.69 193
2051.......................................... 25 28,097 0.60 168
2052.......................................... 26 28,097 0.52 147
2053.......................................... 27 28,097 0.46 129
2054.......................................... 28 28,097 0.41 115
2055.......................................... 29 28,097 0.36 102
2056.......................................... 30 28,097 0.33 92
2057.......................................... 31 28,097 0.27 76
2058.......................................... 32 28,097 0.22 62
2059.......................................... 33 28,097 0.18 51
2060.......................................... 34 28,097 0.15 42
2061.......................................... 35 28,097 0.12 34
2062.......................................... 36 28,097 0.10 28
2063.......................................... 37 28,097 0.08 23
2064.......................................... 38 28,097 0.07 19
2065.......................................... 39 28,097 0.05 15
2066.......................................... 40 28,097 0.04 12
-----------------------------------------------------------------
CEg....................................... .............. .............. ................ 28,996
----------------------------------------------------------------------------------------------------------------
DOE recognizes that the value of CEg is substantially
higher than the value of Eg used in the 2000 rule (12,307
Wh/gal). This change is due to a combination of: increased fossil
generation efficiency; increased renewable generation; the assumption
of resource inexhaustibility for nuclear and renewables; increases in
electric transmission efficiency; reduction in petroleum production,
refining and distribution efficiency; and the use of a forward-looking
grid mix. By far the largest impact is due to changes to electricity
generation since the 2000 Final Rule. The grid mix used in the 2000
Final Rule had almost no non-hydropower renewable generation, while
renewables are forecasted to grow to over half of total electricity
generation by 2030. As described previously, DOE treats nuclear, solar,
wind, and hydro power as 100 percent efficient based on the effective
inexhaustibility of the energy source. In addition, fossil generation
now includes a significant amount of combined cycle generation, which
has a much higher thermal efficiency than conventional combustion for
heat generation. Changes in efficiency due to petroleum production,
refining and distribution, and electricity transmission are smaller.
4. Fuel Content Factor
Pursuant to 49 U.S.C. 32904(a)(2)(B), among the factors the
Secretary must consider when setting the PEF is ``the need of the
United States to conserve all forms of energy and the relative scarcity
and value to the United States of all fuel used to generate
electricity.'' 49 U.S.C. 32904(a)(2)(B)(iii). In the 2000 Final Rule,
DOE added the current 1.0/0.15 fuel content factor to the PEF to reward
electric vehicles for their ``benefits to the Nation relative to
petroleum-fueled vehicles, in a manner consistent with the regulatory
treatment of other types of alternative fueled vehicles and the
authorizing legislation.'' 65 FR 36986, 36988. In the 2000 Final Rule,
DOE explained that it chose the 1.0/0.15 ratio for the fuel content
factor (1) for consistency with existing regulatory and statutory
procedures for alternative fuel vehicles under 49 U.S.C. 32905, (2) to
provide similar treatment of all types of alternative fueled vehicles,
and (3) for simplicity and ease of use in calculating the PEF. 65 FR
36986, 36988.
In the 2023 NOPR, DOE proposed removing the fuel content factor and
requested comment on its elimination. 88 FR 21525, 21528-21530. DOE
stated that it considered the need of the United States to conserve all
forms of energy and the relative scarcity and value to the United
States of all fuel used to generate electricity in proposing to
eliminate the factor. 88 FR 21525, 21528. As discussed in the 2023 NOPR
in more detail, in considering the need for energy conservation and the
relative scarcity and value of fuels used to generate electricity, in
particular DOE emphasized the need to conserve finite petroleum
resources. 88 FR 21525, 21529-215230. Conserving petroleum resources
can be achieved through increased production and sales of EVs and
through fuel economy improvements to ICE vehicles.
In the context of the statutory directive for the PEF and the need
to conserve finite petroleum resources, DOE identified in the 2023 NOPR
three key reasons supporting removal of the fuel content factor. 88 FR
21525, 21528-21530. First, DOE explained that the fuel content factor
does not accurately represent current EV technology or market
penetration. Second, DOE stated that applying the current fuel content
factor to EVs results in miles per gallon equivalent ratings
significantly higher than ICE vehicles. This overvaluing of EVs can
allow a few EV models to provide overall compliance with CAFE
standards, which in turn permits manufacturers to maintain less
efficient ICE vehicles and disincentivizes production of additional
EVs. 88 FR 21525, 21529-21530. Third, DOE proposed that the reasoning
offered in the 2000 Final Rule in support of the use of 1.0/0.15 as a
fuel content factor was not grounded in DOE's authority to set the PEF
in section 32904, although DOE also noted that a fuel content factor
could potentially be justified under the four factors of section 32904.
88 FR 21525, 21530.
Several commenters supported the elimination of the fuel content
factor. California et al., Doc. No. 27, pg. 5; NRDC and Sierra Club,
Doc. No. 20, pg. 1-2; Tesla, Doc. No. 18, pg. 3; ICCT, Doc. No. 19, pg.
1; AFPM, Doc. No. 26, pg. 2. Specifically, California et al. and AFPM
stated that the current fuel content factor is based on an inapplicable
statutory section. California et al., Doc. No. 27, pg. 5; AFPM, Doc.
No. 26, pg. 2. In addition, NRDC and Sierra Club asserted that the
current fuel content factor ``dwarfs the rest of the PEF calculation,
and has no factual, legal, or logical connection to electricity/
petroleum equivalence.'' NRDC and Sierra Club, Doc. No. 20, pg.
[[Page 22050]]
2. Commenters noted that the fuel content factor leads to the
overvaluation of EVs, which is counter to the need to conserve energy,
particularly petroleum.
Other commenters, however, opposed the elimination of the fuel
content factor. For example, the Alliance stated that DOE should focus
on the role of the PEF as an incentive for manufacturing EVs, which
would keep DOE's analysis more closely tied to the applicable statutory
factors. Alliance, Doc. No. 25, pg. 10. Similarly, UAW asserted that
the fuel content factor is needed to continue to incentivize the
production of EVs. UAW, Doc. No. 30, pg. 1-2. The Alliance and UAW
stated that the 2023 NOPR overstated the scale of the EV market and
encouraged DOE to ``incorporate a more realistic projection of EV
adoption and charging infrastructure build-out.'' Alliance, Doc. No.
25, pg. 7-8; UAW, Doc. No. 30, pg. 2. Furthermore, the Alliance and UAW
noted that federal investment and incentives would take time to reach
maturity. Alliance, Doc. No. 25, pg. 8; UAW, Doc. No. 30, pg. 2. The
Alliance argued that EV purchase incentive provisions in IRA are
evidence that Congress believes EVs are not sufficiently
commercialized. Alliance, Doc. No. 25, pg. 10. And finally, the
Alliance noted that supply constraints and investment limitations
impair manufacturers' ability to respond rapidly to changes in the PEF
value, arguing that research and production resources are effectively
zero-sum. Alliance, Doc. No. 25, pg. 17. The Alliance stated that the
proposal could cause manufacturers to divert scarce investment
resources to ICE vehicle lines and away from EV production, and noted
the difficulty with doing even that, citing a lack of opportunity for
engine redesigns, and arguing that engine design and development cycles
are typically much longer than three years. Id.
After careful consideration of the comments, DOE concludes that
removing the fuel content factor will, over the long term, further the
statutory goals of conserving all forms of energy while considering the
relative scarcity and value to the United States of all fuels used to
generate electricity. This is because, as explained in the 2023 NOPR
and in more detail below, by significantly overvaluing the fuel savings
effects of EVs in a mature EV market with CAFE standards in place, the
fuel content factor will disincentivize both increased production of
EVs and increased deployment of more efficient ICE vehicles. Hence, the
fuel content factor results in higher petroleum use than would
otherwise occur.
DOE recognizes, however, the persuasive points made by commenters
as to how the fuel content factor will continue to incentivize EV
production in the near term. As commenters note, while EV market
penetration has dramatically increased, EVs currently represent only
approximately 10 percent of new passenger car and light truck
sales.\19\ Moreover, while the recently adopted IIJA and IRA are in
effect, the critical incentives and support for EVs and charging
infrastructure that these laws provide are in the early stages of
implementation and will become more fully operative and effective over
time. DOE agrees with commenters that there is still an opportunity to
incentivize additional EV production, and the resulting greater
petroleum conservation, through a fuel content factor over the next
several years. Thus, as explained in more detail below, DOE is
retaining the current fuel content factor through MY 2026, under a
revised statutory basis, and then gradually phasing out the fuel
content factor by MY 2030.
---------------------------------------------------------------------------
\19\ DOE, Plug-in EV Sales in December of 2023 Rose to 9.8% of
All Light-Duty Vehicles Sales in the U.S., January 15, 2024.
Available at www.energy.gov/eere/vehicles/articles/fotw-1325-january-15-2024-plug-ev-sales-december-2023-rose-98-all-light-duty.
---------------------------------------------------------------------------
DOE begins with the statutory text. Congress directed DOE to set
the PEF based, in part, on ``the need of the United States to conserve
all forms of energy'' and ``the relative scarcity and value to the
United States of all fuel used to generate electricity.'' 49 U.S.C.
32904(a)(2)(B)(iii). First, DOE confirms that increased use of EVs,
relative to ICE vehicles, would help the United States meet its need to
conserve all forms of energy, taking into consideration the relative
scarcity and value of all fuel used to generate electricity. As
detailed in the 2023 NOPR, EVs are substantially more energy efficient
than ICE vehicles on an energy input required basis. In addition, when
comparing EVs to ICE vehicles on the basis of their use of scarce
fuels, EVs provide even greater fuel conservation benefits when
compared to gasoline used in ICE vehicles. See 88 FR 21525, 21536
(calculating a significantly higher PEF when using a methodology that
compares only vehicle-based petroleum use and electricity production
using scarce fossil energy resources). Accordingly, an increased use of
EVs, relative to ICE vehicles, would allow the United States to get
greater transportation value from relatively scarce fuels, including
those used to generate electricity.
These individual-vehicle measures understate the magnitude of the
fuel conservation benefits of substantially increasing EV production
and use in the near term. Accelerating adoption of EVs now can
significantly further accelerate and increase EV market penetration,
due to network effects related to expanded demand for and availability
of charging infrastructure. These network effects include rapid shifts
in consumer acceptance and increased access to immediate incentives,
the redeployment of capital and human resources at the firm and country
level, accelerated technology development with greater production of
vehicles in multiple segments at scale, and increases in domestic
battery manufacturing capacity in line with projected market demand.
This has been demonstrated based on the EV adoption experience of other
countries, which tends to follow an ``S-Curve''--a long period of
relatively slow adoption followed by a rapid increase in adoption as EV
sales grow.\20\ This implies that if EV adoption is accelerated in the
near term to reach the tipping point of growth sooner, significantly
more EV adoption could result in a shorter timeframe than would
otherwise occur. The energy conservation benefits would also accelerate
commensurately. Accordingly, DOE concludes that the nation's need to
conserve all forms of energy is best served not simply by EV adoption
generally, but specifically by accelerating EV adoption in the near
term.
---------------------------------------------------------------------------
\20\ See International Energy Agency, Global EV Outlook 2022,
(May 2022), available at www.iea.org/reports/global-ev-outlook-2022;
Energy and Power Group, Department of Engineering Science,
University of Oxford, Forecast of electric vehicle uptake across
counties in England: Dataset from S-curve analysis, (Dec. 2021),
available at www.sciencedirect.com/science/article/pii/S2352340921009379?via%3Dihub; European Commission, Joint Research
Centre, Analysis and testing of electric car incentive scenarios in
the Netherlands and Norway (2020), available at
www.sciencedirect.com/science/article/pii/S0040162519301210#fig0004.
---------------------------------------------------------------------------
Next, DOE evaluates the maturity of the EV market and the
sufficiency of the incentives, other than the fuel content factor, for
EV production and sales in the near term. As DOE stated in the 2023
NOPR, since the 2000 Final Rule, EV technology has matured and the
market share of EVs is growing. 88 FR 21525, 21528. Advances in
electrification technology have resulted in improved performance and
efficiency and reduced costs. 88 FR 21525, 21529. Commenters also noted
that technology development, infrastructure
[[Page 22051]]
deployment, and especially recent changes to Federal law, such as the
IRA and the IIJA, provide significant incentives for tremendous
investment in the entire EV ecosystem. These incentives are driving
investments in further technological development of EVs and charging
infrastructure, production (especially domestic production) of EVs,
components such as batteries and chargers, and production of supply
chain components, including critical minerals. These laws also provide
multiple substantial incentives for EV purchases and leases, private
purchases, and installation of charging infrastructure, and the build-
out of a nationwide public charging system.
It is critical to note, however, that the EV market is still small
relative to ICE vehicles, and while these incentives are already
driving massive industry investments, it will take some years for all
these investments to fully translate into production and sales.
Further, although consumer purchase incentives are currently available,
only a relatively limited number of vehicles qualify for a portion or
all of the available credits. Over the next six years, these incentives
will increasingly result in greater EV deployment on the roads, as
their effectiveness phases in over time. For example, as a result of
component sourcing requirements and developing supply chains in the EV
battery sector, DOE projected that an increasing share of electric
vehicles will benefit from IRA tax incentives between 2023 and 2032,
with a fleetwide average credit increasing from $3,900 per vehicle in
2023 to $6,000 in 2032 (nominal dollars).\21\ Similarly, DOE's IIJA-
enabled investments in enabling infrastructure, such as EV fast
charging and domestic EV component manufacturing, will scale over time
as projects are identified, permitted, and constructed. Considering the
timing over which the bulk of the IIJA and IRA EV incentives will
become fully effective, DOE concludes that there is still a fuel
conservation benefit from additional EV incentives in the near term. By
2030, DOE expects that the EV market will be sufficiently developed
that further support from the fuel content factor will be unnecessary.
---------------------------------------------------------------------------
\21\ See Department of Energy, ``Estimating Federal Tax
Incentives for Heavy Duty Electric Vehicle Infrastructure and for
Acquiring Electric Vehicles Weighing Less Than 14,000 Pounds,''
March 11, 2024. Available at https://www.regulations.gov/docket/EERE-2021-VT-0033.
---------------------------------------------------------------------------
As noted previously, commenters disagreed whether the fuel content
factor incentivizes or disincentivizes EV production. On the basis of
the record before it, DOE concludes that the answer is: it depends. In
other words, the effect of the fuel content factor on manufacturer EV
production will vary according to the maturity of the EV market and the
effectiveness of other available incentives at the time DOE applies the
fuel content factor and resulting PEF value. Vehicle manufacturers
indicate that the present fuel content factor is an important incentive
for current EV production. See Alliance, Doc. No. 25, pg. 7-8; Porsche,
Doc. No. 24, pg. 2. By significantly increasing the PEF, the fuel
content factor makes it relatively more cost-effective for
manufacturers to improve their fleets' average fuel economy by selling
more EVs. Where manufacturers are not yet adequately incentivized to
develop, manufacture, and market EVs, as is currently the case, an
inflated fuel content factor can increase EV adoption and the
accompanying petroleum conservation in the near term. In the context of
an emerging market for EVs, this additional near-term EV production is
disproportionately valuable in leveraging network effects and further
accelerating EV adoption and petroleum conservation. Because including
the fuel content factor when calculating the PEF value can increase EV
adoption, in the near term, which results in greater petroleum
conservation, retaining the fuel content factor in the near term is
consistent with ``the need of the United States to conserve all forms
of energy.'' See 49 U.S.C. 32904(a)(2)(B)(iii).
However, as explained in the 2023 NOPR, an ``artificially
inflate[d]'' fuel content factor may conversely allow manufacturers to
meet CAFE standards with fewer EVs and little improvement in their ICE
fleets. As also explained in the 2023 NOPR, the higher the PEF, the
greater the value of each EV for compliance purposes, and the fewer EVs
(or improvements in ICE fuel economy savings) are needed. DOE expects
this effect to predominate as the incentives for producing and selling
EVs, such as those included in IRA and IIJA, ramp up and as the EV
market grows. Once manufacturers are selling relatively large numbers
of EVs, giving each EV a higher effective fuel economy for CAFE
compliance purposes is less likely to incentivize greater EV production
and more likely simply to eliminate the need for ICE fuel economy
improvements, given the statutory structure of the CAFE program.
In the 2023 NOPR, DOE explained its view that ``current EV
technology and market penetration'' are sufficiently developed such
that further incentives for EVs through the PEF are unnecessary. 88 FR
21525, 21534. Based on DOE's review of comments and further analysis,
DOE concludes that incentives provided by IRA and IIJA, coupled with
the expansion of supporting infrastructure, such as public fast
chargers, and increasing consumer interest in EVs, will eventually
provide adequate incentives, and the anticipated network effects, to
achieve widespread EV adoption. DOE thus affirms the analysis in the
2023 NOPR that, at such time, a fuel content factor will reduce, and
eventually eliminate, the net energy conservation benefit of
incentivizing EV deployment through the fuel content factor.
Although the 2023 NOPR identified recent changes, such as IRA and
IIJA incentives, as reasons to remove the fuel content factor (88 FR
21525, 21534), because these incentives will not be fully available
when the PEF becomes effective, DOE concludes that EVs will remain
inadequately incentivized for purposes of energy conservation over the
next few years.\22\ Additionally, DOE expects a continued reduction in
battery prices from innovation and economies of scale, resulting in
lower purchase price and increased competitiveness of EVs by 2030.
Accordingly, DOE expects that incentivizing EVs through a fuel content
factor will reduce petroleum use in the near term. Based on DOE's
determination that EVs will be adequately incentivized for purposes of
energy conservation by 2030, DOE has determined that the fuel content
factor can be, and ought to be, phased out by 2030.
---------------------------------------------------------------------------
\22\ See, e.g., IRA, Section 50142 (provides $3 billion to DOE's
Advanced Technology Vehicle Manufacturing Loan Program through
September 30, 2028, for loans to manufacture clean vehicles and
their components in the United States); IRA, Section 50143 (provides
$2 billion to the U.S. Treasury through September 30, 2031, to
provide grants for the domestic production of EVs).
---------------------------------------------------------------------------
DOE concludes that, for a limited time, retaining a fuel content
factor in the PEF calculation is likely to incentivize manufacturers'
production of EVs in the near term. DOE determines that phasing out a
fuel content factor, as compared to removing it over a single model
year, will help manufacturers continue to invest in the EV transition
and serve as a near-term incentive for vehicle manufacturers to invest
in and sell EVs, thereby contributing to the reduced consumption of
petroleum by accelerating the widespread adoption of EVs in the United
States during this pivotal time. Moreover, given the industry's concern
that revising the PEF value over the course of a single model year
could actually slow EV adoption in the near term, due to the potential
need for industry to rapidly shift investment from EV development back
to interim
[[Page 22052]]
ICE based vehicle development, a phase in of the revised value would be
more consistent with the statute and better spur the technological
transition that will ultimately result in greater energy conservation.
In addition, by phasing in a new PEF value over several years, the risk
for manufacturers of expediting their investment in EV technology is
reduced, because they are able to spread product changes (and
associated research and production dollars) over more model years.
Alleviating this risk for manufacturers is likely to result in an
increase in EV development and adoption in the near term. For these
reasons, DOE determines that immediate and complete removal of the fuel
content factor from the PEF calculation would not serve the need of the
United States to conserve energy.
In addition, DOE finds that there is an adequate statutory basis
for retaining the fuel content factor for a limited time period. As
stated in the 2023 NOPR, DOE concludes that it need not rely upon 49
U.S.C. 32905 to apply a fuel content factor to EVs. 88 FR 21525, 21530.
That provision applies to the use of alternative fuels, not to EVs.
Section 32904(a)(2)(B), which requires the Secretary to consider, among
other things, ``the need of the United States to conserve all forms of
energy and the relative scarcity and value to the United States of all
fuel used to generate electricity,'' does, however, provide a basis to
apply a fuel content factor to the PEF calculation in the circumstances
where applying such a fuel content factor would in fact conserve
energy. As discussed previously, in this final rule DOE finds that for
the immediate near term the fuel content factor serves to incentivize
EV production, and hence to conserve energy, specifically petroleum.
Accordingly, currently the fuel content factor meets the statutory
directive to set the PEF taking into account the need ``to conserve all
forms of energy and the relative scarcity and value to the United
States of all fuel used to generate electricity.'' 49 U.S.C.
32904(a)(2)(B). DOE also finds in this rule, however, that as the EV
market matures and the incentives under the IRA and IIJA become more
powerful, the fuel content factor will rapidly shift from incentivizing
EV production and energy conservation to undercutting the effectiveness
of other requirements for energy conservation. These conclusions
support the current use, and eventual phase-out, of the fuel content
factor.
Therefore, to reflect its declining net conservation benefit, the
PEF calculation methodology in this final rule will gradually increase
the denominator of the fuel content factor, starting with the currently
applicable 1.0/0.15 factor in MY 2026 and increasing the denominator to
a value of 1.00 by MY 2030. Given the date of 2030 for full phase out,
DOE will reduce the impact of the fuel content factor by increasing the
denominator of the factor by 4four equal increments of 0.2125 over MYs
2027 through 2030. The annual increase in the fuel content factor
denominator value will decrease the factor's value until it is phased
out in MY 2030. The fuel content factor for MYs 2026 to 2030 is
represented in Table 6.
Table 6--Fuel Content Factor for MY 2026 to 2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
Model year 2026 2027 2028 2029 2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fuel content factor................................................ 1/0.15 1/0.3625 1/0.575 1/0.7875 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
5. Accessory Factor
The 2000 Final Rule added an accessory factor to the PEF
calculation to account for petroleum-fueled on-board accessories, such
as cabin heaters, defrosters, or air-conditioning, which were
envisioned as an approach to avoid low energy-density and/or low power-
density limitations of battery technology at the time.\23\ No EVs
currently produced include such accessories and it is unlikely that
future EVs will include them. Furthermore, plug-in hybrid electric
vehicles (PHEVs) petroleum-fueled on-board accessories are distinct
from gasoline consumption, with a fuel economy weighted according to
the expected percentage of driving attributed to charge-depleting and
charge-sustaining modes. Therefore, in the 2023 NOPR, DOE proposed to
set the accessory factor equal to 1.00 in its calculation. Two
commenters supported setting the accessory factor to 1. NRDC and Sierra
Club, Doc. No. 20, pg. 7; California et al., Doc. No. 27, pg. 3-4.
These commenters agreed with DOE's determination that no EVs in
production use petroleum powered accessories. No commenter opposed
setting the accessory factor equal to 1.00. Accordingly, as proposed in
the 2023 NOPR, DOE sets the accessory factor equal to 1.00 in its PEF
calculation.
---------------------------------------------------------------------------
\23\ For example, in the mid-1990s, the experimental Ford
Ecostar vehicle, a two-door, small van, included a diesel-powered
heater while being powered primarily by a sodium-sulfur battery with
notable power density limitations and a very high operating
temperature.
---------------------------------------------------------------------------
6. Driving Pattern Factor
In the 2000 Final Rule, DOE established a driving pattern factor to
account for the statutory criterion in 49 U.S.C. 32904(a)(2)(B)(iv).
The purpose of the driving pattern factor is to recognize the fact that
electric vehicles may be used differently than gasoline vehicles,
primarily due to their shorter range and longer ``refueling'' times.
Then-existing EPA regulations, however, did not make driving-pattern-
based adjustments to the fuel economy of various classes of gasoline
vehicles when calculating a manufacturer's CAFE value, even though
gasoline-powered vehicles are also used in many different ways. 64 FR
37907, 37908. Therefore, DOE set the driving pattern factor at 1.00
because it believed that EVs offer capabilities like those of
conventional gasoline-powered vehicles. 65 FR 36986, 36987. In the 2023
NOPR, DOE did not propose a change to the driving pattern factor and
proposed keeping the driving pattern factor at 1.00. 88 FR 21525,
21530. DOE stated that it continued to believe that EVs are
equivalently capable vehicles that are likely to be used similarly to
gasoline-powered or hybrid-electric vehicles. 88 FR 21525, 21530.
DOE received comments that supported the proposed driving pattern
factor. For example, NRDC, Sierra Club, the Alliance, and California et
al., supported a driving pattern factor of 1.0 and agreed that current
EVs are full utility vehicles. NRDC and Sierra Club, Doc. No. 20, pg.
7; Alliance, Doc. No. 25, pg. 27; California et al., Doc. No. 27, pg.
6.
By contrast, AFPM opposed the proposed driving pattern factor and
asserted that the driving patterns and use of ICE vehicles are
different from that of EVs, primarily due to range considerations for
EVs. AFPM, Doc. No. 26, pg. 16. AFPM asserted that DOE should analyze
specific patterns of use of EVs compared to ICE vehicles. AFPM, Doc.
No. 26, pg. 16. In its comments, AFPM claimed that EVs are more likely
to be driven shorter distances for purposes such as commuting or
running
[[Page 22053]]
errands, as compared to ICE vehicles, which are more associated with
longer trips and towing. AFPM, Doc. No. 26, pg. 17.
In addition, AFPM cited a study by iSeeCars.com that examined used-
vehicle listings showing that used-EVs had driven fewer miles than
used-ICE vehicles.\24\ However, a more recent study \25\ noted that the
iSeeCars.com study methodology is biased toward examining older
vehicles with lower EV ranges because it explored used-EV listings from
2016-2022 from the secondary market, and the more recent study
advocated for updating the iSeeCars.com study to reflect newer EVs. A
range of annual miles have been found in previous studies of BEV use
ranging from 6,300 miles per year to 12,522 miles per year.\26\ Another
study by University of California-Davis researchers found that long-
range BEVs are driven significantly more than short-range BEVs and more
than ICE vehicles.\27\ That same study uncovered other factors
influencing the number of miles that EVs are driven, such as how many
additional ICE vehicles are operated within a household. Many early EV
adopters owned several vehicles, thus reducing the miles operated by
each vehicle. While some EVs are currently driven less than comparable
conventional vehicles, the difference between them is clearly
shrinking. Moreover, current and growing EV ranges support DOE's
position that EVs are equivalently capable vehicles likely to be used
similarly to ICE vehicles or hybrid electric vehicles.
---------------------------------------------------------------------------
\24\ iSeeCars, The Most and Least Driven Electric Cars.
Available at www.iseecars.com/most-driven-evs-study.
\25\ Zhao et al., ``Quantifying electric vehicle mileage in the
United States'', Joule, Volume 7, Issue 11, 15 November 2023, pg.
2537-2551. Available at doi.org/10.1016/j.joule.2023.09.015.
\26\ Davis, L.W., How much are electric vehicles driven? Appl.
Econ. Lett. 26, 1497-1502 (2019), available at www.tandfonline.com/doi/full/10.1080/13504851.2019.1582847; Tal, G., Raghavan, S.S.,
Karanam, V.C., Favetti, M.P., Sutton, K.M., Ogunmayin, J.M., Lee,
J.H., Nitta, C., Kurani, K., Chakraborty, D. et al., advanced plug-
in electric vehicle travel and charging behavior final report
(2020), available at csiflabs.cs.ucdavis.edu/~cjnitta/pubs/
2020_03.pdf; Burlig, F., Bushnell, J., Rapson, D., and Wolfram, C.,
Low energy: estimating electric vehicle electricity use. AEA Pap.
Proc. 111, 430-435 (2021), available at www.aeaweb.org/articles?id=10.1257/pandp.20211088; Rush, L., Zhou, Y., and Gohlke,
D., Vehicle residual value analysis by powertrain type and impacts
on total cost of ownership (2022), available at www.osti.gov/biblio/1876197; Jia, W., and Chen, T.D., Beyond adoption: examining
electric vehicle miles traveled in households with zero-emission
vehicles. Transp. Res. Rec. 2676, 642-654 (2022), available at
journals.sagepub.com/doi/10.1177/03611981221082536; Chakraborty, D.,
Hardman, S., and Tal, G., Integrating plug-in electric vehicles
(PEVs) into household fleets-factors influencing miles traveled by
PEV owners in California. Travel Behaviour and Society 26, 67-83
(2022), available at doi.org/10.1016/j.tbs.2021.09.004.
\27\ UC Davis, Advanced Plug-in Electric Vehicle Travel and
Charging Behavior Final Report, April 10, 2020. Available at
csiflabs.cs.ucdavis.edu/~cjnitta/pubs/2020_03.pdf.
---------------------------------------------------------------------------
Accordingly, as proposed in the 2023 NOPR, DOE maintains the
driving pattern factor at 1.00 in this final rule. DOE continues to
believe that current EVs are equivalently capable vehicles that are
likely to be used similarly to gasoline-powered or hybrid-electric
vehicles. In addition, the deployment of a national charging network,
enabled by the DOT's National Electric Vehicle Infrastructure program
along with additional private investment, will help ensure EVs can
continue to match the utility and driving demands of ICE vehicles. DOE
maintains that current EVs are full-utility vehicles, capable of
comparable performance and range to conventional counterparts.
7. Revised PEF Value
As discussed in the preceding sections, DOE concluded that the
current PEF value and methodology were based on outdated data and that
the technology and market penetration of EVs has significantly changed
since the 2000 Final Rule. In this final rule, DOE uses the following
equation to calculate the PEF:
PEF = CEg x FCF x AF x DPF
Where CEg, or cumulative Eg, is the sum of
annual gasoline-equivalent energy content of electricity
(Eg) over the 40-year survivability-weighted lifetime
mileage schedule (in Wh/gal), FCF is the fuel content factor (unitless
and taking the value indicated in Table 6, above), AF is the accessory
factor (unitless and equal to 1), and DPF is the driving pattern factor
(unitless and equal to 1). In Sections III.C.3, III.C.4, III.C.5, and
III.C.6, DOE calculated the values for CEg, FCF, AF, and DPF
respectively. The CEg is 28,996 Wh/gal and AF and DPF are
each 1.0. In addition, the final rule gradually reduces the fuel
content factor, starting with the currently applicable 1.0/0.15 factor
in MY 2026 and phasing out to a factor of 1.0/1.00 by MY 2030, see
Section III.C.4 for a full discussion. Table 7 provides the inputs for
MY 2024 to MY 2030 EVs. The final rule adopts the PEF values for the
model years specified in Table 7.
Table 7--Revised PEF Values for MY 2024-MY 2030 EVs and Later
----------------------------------------------------------------------------------------------------------------
Model year CEg FCF AF DPF PEF
----------------------------------------------------------------------------------------------------------------
2024-2026....................... \a\ 12,307 1/0.15 \b\ 1.0 1.0 82,049
2027............................ 28,996 1/0.3625 1.0 1.0 79,989
2028............................ 28,996 1/0.575 1.0 1.0 50,427
2029............................ 28,996 1/0.7875 1.0 1.0 36,820
2030 and later.................. 28,996 1.0 1.0 1.0 28,996
----------------------------------------------------------------------------------------------------------------
\a\ 12,307 Wh/gal is the Eg for MY 2024-2026, not the CEg as the revised PEF methodology does not apply to MY
2024-2026 EVs.
\b\ Assumes no petroleum-powered accessories for MY 2024-2026 EVs.
Several commenters, mainly auto manufacturers and their
representatives, opposed the revised PEF value.\28\ Some commenters
argued that DOE should maintain the PEF established in the 2000 Final
Rule. Porsche, Doc. No. 24, pg. 1; NADA, Doc. No 23, pg. 2-3; UAW, Doc.
No. 30, pg. 1. They noted that the consistent PEF has provided
regulatory certainty to automakers and that the PEF is an important
planning tool and regulatory incentive in the context of CAFE
compliance strategies that rely on the existing PEF to improve
efficiency. Porsche, Doc. No. 24, pg.1; NADA, Doc. No. 23, pg. 2-3.
NADA claimed that unless CAFE standards are lowered, changing the PEF
as proposed will force automobile manufacturers to alter CAFE
compliance strategy by reverting to investing more in costly ICE
[[Page 22054]]
vehicle technology improvements or incur penalties. NADA, Doc. No 23,
pg. 2. Porsche stated that if PEF must change, then the change should
be phased in to reduce the effect on auto manufacturers. Porsche, Doc.
No. 24, pg. 6.
---------------------------------------------------------------------------
\28\ DOE notes that these commenters opposed the revised PEF
value proposed in the 2023 NOPR. In this final rule, the revised PEF
value differs from the PEF value proposed in the 2023 NOPR.
Specifically, the final rule retains the fuel content factor and
phases it out over MY 2027 to MY 2030. In addition, the final rule
uses an updated NREL projection of the electrical grid. Overall,
these differences result in a greater PEF value for MY 2027 to MY
2030 EVs than proposed in the 2023 NOPR.
---------------------------------------------------------------------------
DOE has a specific task of developing a PEF value that accounts for
EV efficiency, national electrical generation and transmission
efficiencies, conservation of all energy types and the relative
scarcity and value of all fuels used to generate electricity, and EV
driving patterns compared to petroleum-fueled vehicles. Although the
Department has not changed the PEF value for over 23 years, DOE has
statutory authority to review the PEF value on an annual basis. After
reviewing the current PEF value and inputs, DOE determined that it was
necessary to revise the PEF value consistent with the statutory factors
identified in section 32904(a)(2)(B) and described above in greater
detail. The revised PEF value reflects updated inputs upon which PEF
values are calculated and advancements in the technology and market
penetration of EVs since the 2000 Final Rule.
8. Compliance Period
As noted in the 2023 NOPR, DOE proposed that the new PEF value take
effect with MY 2027 vehicles. 88 FR 21525, 21531. DOE explained that
NHTSA's next CAFE regulation was expected to cover MYs 2027-2031 and
that the proposed PEF value would be the applicable PEF for calculating
EV fuel economy for those model years. 88 FR 21525, 21531. DOE stated
that having a fixed PEF value for the CAFE standard period improves
NHTSA's ability to set CAFE standards that are the maximum feasible
average fuel economy level and provides greater certainty to
stakeholders from year to year. 88 FR 21525, 21531. DOE requested
comment on this approach.
DOE received comments on this approach from numerous and diverse
stakeholder groups, including non-governmental organizations, auto
manufacturers and their representatives, energy and agricultural
interest groups, and members of the public. Some commenters, such as
NRDC and Sierra Club, supported the proposed effective date and agreed
that DOE should conduct its most in-depth reviews of the PEF to
coincide with anticipated CAFE rulemakings. NRDC and Sierra Club, Doc.
No. 20, pg. 6.
In contrast, most auto manufacturers and automotive industry
representatives opposed the proposed effective date and asserted that
incorporating PEF-driven changes into existing product plans for MY
2027 vehicles would be challenging. The Alliance explained that several
years of lead time is necessary to incorporate technologies into new
vehicles, electric or ICE. Alliance, Doc. No. 25, pg. 17. In
particular, the Alliance noted that by the time the PEF rule is
finalized, it is likely to be near the market introduction of MY 2025
vehicles and asserted that ``[e]ngine design and development cycles are
typically much longer than three years.'' Alliance, Doc. No. 25, pg.
17.
On September 14, 2023, DOE issued letters to member companies of
the Alliance that invited recipients to provide data, documents, or
analysis to clarify the concerns the Alliance expressed on behalf of
its member companies in its response to comments on the 2023 NOPR in
relation to the proposed effective date. DOE received responses from
several Alliance member companies that provided data on how the
proposed PEF value could affect their ability to comply with proposed
CAFE standards for MYs 2027 to MY 2031. Specifically, Hyundai, Toyota,
Stellantis, Mitsubishi, and the Alliance indicated that the proposed
PEF value could lead to challenges complying with the proposed CAFE
standards. Alliance, Doc. No. 25, pg. 6, 10, 11; Hyundai Doc. No. 38,
pg. 1; Toyota, Doc. No. 54, pg. 1; Stellantis, Doc. No. 53, pg. 6-7;
Mitsubishi, Doc. No. 50, pg. 1 Alliance, Doc. No. 25, pg. 6, 10, 11.
In response to this request for clarification on the lead-time
challenges expressed by the Alliance on behalf of its member companies,
several commenters opposed delaying the implementation date beyond what
was proposed in the 2023 NOPR. These commenters echoed comments from
AFPM and stated that DOE lacks authority to postpone the effective date
because DOE is required to review the PEF annually. See Tesla, Doc. No.
18, pg. 2; NRDC and Sierra Club, Doc. No. 20, pg. 2; AmFree et al.,
Doc. No. 31, pg. 3. Additionally, these commenters also observed that
lead time challenges are not included amongst the statutory factors DOE
must consider when reviewing the PEF. Tesla, Doc. 18, pg. 2; AmFree et
al., 31, pg. 2.
Although DOE is sensitive to the concerns of auto manufacturers, 49
U.S.C. 32904 clearly identifies the factors DOE must consider when
reviewing the PEF. DOE has a specific task of developing a PEF that
accounts for EV efficiency, national electrical generation and
transmission efficiencies, conservation of all energy types and the
relative scarcity and value of fuels used to generate electricity, and
EV driving patterns compared to petroleum-fueled vehicles. See 49
U.S.C. 32904(a)(2)(B). While NHTSA is required to provide 18 months of
lead time for new CAFE standards per 49 U.S.C. 32902, lead time is not
included in the factors that DOE must consider in its required annual
review of the PEF. DOE is not required to consider lead time. However,
DOE believes that applying the revised PEF beginning with MY 2027
vehicles is reasonable This will provide automotive manufacturers with
more time to incorporate a new PEF than is required under the mandate
that DOE review the PEF each year and determine if revisions to the PEF
are required. Moreover, as DOE explained in the 2023 NOPR, applying
revised PEF values to a predictable schedule provides greater certainty
to stakeholders from year to year. Accordingly, as proposed in the 2023
NOPR, the revised PEF value will apply beginning with MY 2027 EVs.
9. Annual Review
In the 2023 NOPR, DOE stated that the statutory directive for an
annual review is sufficient to require DOE to review the PEF.
Accordingly, DOE proposed to delete section 10 CFR 474.5, which
currently requires DOE to review 10 CFR part 474 every five years. 88
FR 21525, 21533. DOE stated that it would review the PEF value annually
and if DOE determined that the PEF value needed to be changed, DOE
would initiate a rulemaking to revise the value PEF appropriately. DOE
also noted its intention to seek stakeholder input for its annual
reviews through available methods (e.g., requests for information). 88
FR 21525, 21533.
Several commenters opposed the deletion of 10 CFR 474.5. NRDC and
Sierra Club, Doc. No. 20, pg. 6; California et al., Doc. No. 27, pg. 7-
8. These commenters acknowledged that DOE must review the PEF value on
an annual basis and supported DOE's intention to seek stakeholder input
during these annual reviews. However, they stated that Sec. 474.5
requirements for public participation and publication are warranted to
ensure DOE fulfills its statutory responsibilities to review the PEF.
NRDC and Sierra Club, Doc. No. 20, pg. 6; California et al., Doc. No.
27, pg. 7-8. Instead of deleting Sec. 474.5, NRDC and Sierra Club
suggested that DOE revise Sec. 474.5 to reflect the review process
described in the 2023 NOPR. NRDC and Sierra Club, Doc. No. 20, pg. 6.
DOE does not believe additional regulation regarding public review
is necessary for DOE to meet its statutory responsibilities. The public
is
[[Page 22055]]
authorized to petition DOE should DOE neglect its duties.\29\ In
addition, if DOE determines that it is necessary to change the PEF
value, this will require revisions to 10 CFR part 474, which would
require DOE to publish a notice of proposed rulemaking and request
comments. Thus, any revisions to the PEF value or changes to the
methodology will be published in the Federal Register and the public
may file comments, making the language in Sec. 474.5 requiring public
participation and publication unnecessary. Accordingly, in this final
rule, DOE deletes Sec. 474.5 as proposed in the 2023 NOPR.
---------------------------------------------------------------------------
\29\ AFPM stated that its comments to the 2023 NOPR are also a
petition for a rulemaking to update the PEF for 2024/25. DOE will
undertake an annual review process. Therefore, AFPM's petition is
premature at this time.
---------------------------------------------------------------------------
DOE also received comments that expressed concern that DOE would
only change the revised PEF value for MYs 2027-2031 if there is a
``compelling reason'' to change the PEF calculation. AFPM, Doc. No. 26,
pg. 4 (citing 88 FR 21525, 21533). However, AFPM noted that the statute
does not require a compelling reason to change the PEF value. AFPM,
Doc. No. 26, pg. 4. DOE agrees that 49 U.S.C. 32904 does not require a
``compelling reason'' to change the PEF calculation. However, DOE did
not intend to imply such a requirement exists. Rather, as explained
previously, in this final rule, DOE provides the PEF values for MYs
2024 EVs and later. The 2023 NOPR expressed DOE's view that it was
unlikely that over the near term, annual reviews will identify
sufficient changes in the inputs to warrant revising the PEF value.
Regardless, if DOE concludes during an annual review that grid mix
projections or any other changes result in a PEF value that
meaningfully differs from the revised PEF values set forth in this
final rule, DOE will take steps to revise the PEF accordingly.
IV. Responses to Additional Comments
A. Revisions to Section 474.3
One commenter noted that the 2023 NOPR proposed revisions to 10 CFR
474.3 that remove all description of the PEF value that applies to EVs
prior to MY 2027. Alliance, Doc. No. 25, pg. 27. It was not DOE's
intention to imply that there would be no PEF value from the effective
date of the final rule to MY 2027. Accordingly, DOE revises Sec. 474.3
to retain the current regulatory description relating to the PEF value
that applies to EVs prior to MY 2027. This clarification requires
revisions to the definition of the ``petroleum-equivalency factor'' in
10 CFR 474.2. DOE revises the definition of ``petroleum-equivalency
factor'' to reference the new paragraphs in Sec. 474.3 that provide
the revised PEF values applicable to MY 2027 EVs and later.
B. Consideration of All Forms of Energy Conservation
Commenters suggested that DOE needed to consider all forms of
energy conservation. AFPM, Doc. No. 26, pg. 12-16. For example, AFPM
asserted that DOE did not account for resource depletion associated
with transitioning to renewable electricity (e.g., constraints on
critical minerals for EV batteries and copper for transmission wiring),
energy used to develop and manufacture EVs and infrastructure, and
barriers to new renewable energy projects. AFPM suggested that DOE
consider lifecycle energy demand associated with production of
batteries, minerals, concrete, transition and storing, and charging
infrastructure.
DOE notes in response that energy use associated with production of
vehicles and components are incorporated in the lifecycle analysis
methodology within GREET, which does include energy use of all
associated vehicle materials. Charging infrastructure does not impact
vehicle fuel economy, with the exception of grid losses, which are
accounted for. Other factors, such as commodity pricing and supply, are
beyond the factors DOE is directed to consider.
In contrast, the Alliance asserted that DOE's rulemaking should
focus only on the lifetime petroleum consumption of passenger vehicles.
However, such a limited focus is not supported by the statute.
Developing ``equivalent petroleum based fuel economy values[,]'' as
required in 49 U.S.C. 32904, requires DOE to develop a way to equate EV
fuel economy in miles per kWh with a miles per gasoline gallon
equivalent. If Congress wanted DOE to only consider petroleum
consumption of EVs in calculating PEF, it would not have required DOE
to consider the national average electrical generation and transmission
efficiencies. 49 U.S.C. 32904(a)(2)(B)(ii). In addition, Congress would
not have identified four distinct factors for DOE to consider when
reviewing the equivalent petroleum-based fuel economy values of EVs. In
particular, the statutory language about ``the need of the United
States to conserve all forms of energy and the relative scarcity and
value to the United States of all fuel used to generate electricity''
would be superfluous. DOE must consider all of the factors presented by
Congress and it cannot isolate a single factor, such as petroleum
consumption, and use it exclusively when calculating the PEF value.
However, this final rule does give special consideration to the
capability of EVs to conserve scarce fuels like petroleum, including by
retaining a fuel content factor through 2030, as discussed in Section
III.C.4.
C. Need for Multiple PEF Values
AFPM also asserted that one PEF for all EVs of different types and
sizes is inappropriate, and instead, there should be PEF values that
reflect actual energy efficiency of various classes of EVs during real
world operation. However, the PEF is not designed to reflect the actual
energy efficiency of various classes of EVs. Rather, the PEF value is a
conversion factor between the forms of energy that are used in a
vehicle, specifically to convert a Watt-hour of electricity into a
gallon of gasoline for purposes of fuel economy regulation. The energy
efficiency of various classes of EVs are determined by calculating the
EV's combined electrical energy consumption value. An EV's combined
energy consumption value is not considered when calculating the PEF
value, but it is part of the equation to calculate the EV's petroleum-
equivalent fuel economy. 10 CFR 474.3(a). To determine an EV's
petroleum-equivalent fuel economy, one divides the appropriate PEF
value by the EV's combined energy consumption value. 10 CFR
474.3(a)(3).
Because the combined electrical energy consumption value already
accounts for the energy efficiency of different types and sizes of EVs,
DOE determines that having multiple PEF values is unnecessary here. DOE
agrees, however, that 49 U.S.C. 32904(a)(2)(B) would allow DOE to apply
various factors to the CEg when calculating the PEF value
for ``various classes of electric vehicles,'' if DOE determined that
such factors were necessary. For example, 49 U.S.C. 32904(a)(2)(B)(iv)
requires DOE to consider ``the specific patterns of use of electric
vehicles compared to petroleum-fueled vehicles.'' In this final rule,
DOE determines that current classes of EVs are equivalently capable
vehicles that are likely to be used similarly to ICE vehicles.
Accordingly, DOE maintains a driving pattern factor as 1.0. However, if
there were a class of EVs that are used differently than ICE vehicles,
then DOE could include a different driving pattern factor to reflect
this different use when calculating the PEF value for such vehicles.
DOE will monitor the field and consider whether including different
driving pattern
[[Page 22056]]
factors for different classes of EVs is appropriate during its annual
reviews.
D. Impact of Revised PEF on Plug-In Hybrid Electric Vehicles
Some stakeholders commented on the application of the PEF to Plug-
in Hybrid EVs (PHEVs) and argued that PHEVs were disproportionately
advantaged by the new PEF. Tesla, Doc. No. 18, pg. 4; ZETA, Doc. No.
21, pg. 2. Specifically, they asserted that revised PEF value would
decrease the fuel economy of PHEVs to approximately 60 to 75 percent of
their current levels. However, according to these commenters, the
revised PEF value would decrease the fuel economy of battery EVs (BEVs)
to approximately 30 percent of their current levels. These commenters
stated that DOE should address this ``skewed incentive'' because the
revised PEF value would favor the inefficient PHEVs over more efficient
BEVs. Tesla, Doc. No. 18, pg. 4; ZETA, Doc. No. 21, pg. 2.
The PEF value is used to convert the measured electrical energy
consumption of an EV into a gasoline-equivalent fuel economy of
electricity. For PHEVs, which consume both electricity and petroleum,
PEF only applies to the measured electrical energy consumption and does
not apply to the energy consumption of petroleum. Accordingly, the
impact of a decreased PEF value on the fuel economy of a PHEV is less
than the impact of a decreased PEF value on the fuel economy of a BEV,
which consumes only electricity. In addition, the fuel economy of a BEV
is still significantly greater than that of a PHEV. Accordingly, under
the revised PEV value, auto manufacturers are still incentivized to
invest in the more efficient BEVs.
E. Compliance With NHTSA and EPA Standards
Several commenters expressed concerns that the revised PEF value
would negatively affect auto manufacturers' ability to comply with
NHTSA's CAFE standards and EPA's standards related to greenhouse gas
(GHG) emissions. Ford and the Alliance asserted that the proposed PEF
value would cause the NHTSA and EPA compliance programs to become
misaligned. Alliance, Doc. No. 25, pg. 21; Ford, Doc. No. 22, pg. 2.
Several commenters stated that the revised PEF would expose auto
manufacturers to additional penalties associated with noncompliance
with the NHTSA and or EPA compliance programs. Ford, Doc. No. 22, pg.
2; Alliance Doc. No. 25, pg. 6, 10, 11.
DOE has carefully considered the impact of the revised PEF value
under the factors in section 32904. The imposition of any penalties
associated with noncompliance with the CAFE and GHG programs is not
within the considerations required by section 32904(a)(2)(B) and is
therefore outside the scope of this rulemaking. Because NHTSA and EPA
are responsible for the CAFE and GHG compliance programs, those
agencies are in the best position to consider any such concerns from
commenters.
F. Related Rulemakings
Several commenters expressed concerns with the timing of the DOE's
rulemaking and noted that EPA and NHTSA were considering their GHG and
CAFE standards. For example, the Alliance asserted that DOE should
defer action on the 2023 NOPR to allow NHTSA and EPA to finalize their
pending rulemakings first.\30\ Porsche also objected to the publication
of 2023 NOPR prior to the release of the proposed CAFE rule.
Specifically, Porsche argued that DOE is prejudging the relevancy of
the PEF value to future CAFE standards that had not been proposed at
the time of the 2023 NOPR. Porsche, Doc. No. 24, pg. 5.
---------------------------------------------------------------------------
\30\ Alliance, Doc. No. 25, pg. 24. DOE notes that several auto
manufacturers and their representatives made similar arguments in
their letters responded to the September 14, 2023, letters.
---------------------------------------------------------------------------
DOE is obligated to complete the PEF rulemaking without further
delay, given that an assessment of the PEF value is several years past
due. In the 2023 NOPR, DOE acknowledged that the inputs upon which the
calculations and PEF values in current 10 CFR part 474 are based are
outdated, and the technology and market penetration of electric
vehicles has significantly changed since the 2000 Final Rule. 88 FR
21525, 21526. DOE is statutorily mandated to review the PEF annually
and to revise it as necessary. Such review is neither contingent upon
nor tied to NHTSA and EPA rulemakings, and any impact of the PEF value
on other programs is not part of the factors DOE must consider.
Accordingly, DOE is not deferring this statutorily required action to
update the PEF.
G. Miscellaneous
DOE received a number of comments that are outside the scope of its
authority or outside the scope of this rulemaking. For example,
Transport Evolved argued that automakers should not be permitted to
transfer CAFE credits from year-to-year or with other automakers.
Transport Evolved, Doc. No. 17, pg. 2. In addition, Transport Evolved
stated that CAFE calculations should account for the size of vehicles,
specifically by reducing the benefit for ``larger, heavier, more
inefficient vehicles.'' Transport Evolved, Doc. No. 17, pg. 2. However,
these comments from Transport Evolved relate to standards or programs
administered by other federal agencies, NHTSA's CAFE program and the
greenhouse gas and fuel economy calculations of EPA and NHTSA, and are,
therefore, outside the scope of this rulemaking.
Our Children's Trust stated that the revised PEF value would
authorize a level of GHG emissions that exceed levels safe for
children. Our Children's Trust, Doc. No. 28, pg. 1. The PEF value does
not authorize (or limit) GHG emissions. In this final rule DOE
addresses the statutorily mandated factors for consideration in
establishing the PEF value. The comments expressed concerns outside the
scope of the PEF or the statutory factors.
UAW suggested that DOE incorporate a more realistic projection of
EV adoption and charging infrastructure in the considerations, with an
eye towards ensuring domestic manufacturing and the relevant supply
chain. UAW, Doc. No. 30, pg. 2. In section III.3, DOE explained its
methodology for deriving the PEF value.
Omer Sevindir asserted that the change to the PEF will hinder the
ability of individuals who prefer ICE vehicles to acquire them. Doc.
No. 36, pg. 1. The PEF value does not dictate market strategy for
automakers. Each automaker selects its own manufacturer-specific CAFE
compliance strategy and determines the vehicle models it will offer for
sale.
An anonymous commenter suggested that DOE nationalize the oil and
gas industry. This comment is not relevant to the scope of this
rulemaking.
V. Revisions to 10 CFR Part 474
A. 10 CFR 474.3
In the 2023 NOPR, DOE proposed revising Sec. 474.3 by revising
paragraph (b) and adding paragraph (c). Proposed paragraph (b) stated
that the PEF value is 23,160 Watt-hours per gallon. 88 FR 21525, 21539.
Proposed paragraph (c) provided that the PEF value applies to MY 2027
and later EVs. 88 FR 21525, 21539. As previously discussed, DOE
received comments that stated the proposed revisions to Sec. 474.3
would remove all description of the PEF value that applies to EVs prior
to MY 2027. Alliance, Doc. No. 25, pg. 27. It was not DOE's intention
to imply that there would be no PEF value from the effective date of
the final rule to MY
[[Page 22057]]
2027. Accordingly, DOE revises Sec. 474.3 to retain the current
regulatory description relating to the PEF value that applies to EVs
prior to MY 2027. Specifically, DOE revises paragraph (b) to clarify
that the current PEF value applies to pre-MY 2027 EVs. DOE also adds
paragraph (c)-(f) to provide PEF values for MY2027 to MY 2030 and later
vehicles. These revised PEF values reflect the decreasing fuel content
factor that applies to MY 2027 to MY 2030 EVs.
The revisions to Sec. 474.3 also necessitate revisions to the
definition for ``petroleum equivalency factor'' in Sec. 474.2 to
include references to new paragraphs (c)-(f).
B. Appendix to Part 474
In the 2023 NOPR, DOE also proposed revisions to the appendix to
part 474. The proposed revisions to the sample petroleum-equivalent
fuel economy calculations reflected the proposed revised PEF. In the
final rule, DOE amends the appendix to part 474 to reflect the
revisions to the PEF methodology and PEF value adopted in the final
rule. For example, the sample calculation reflects the revised PEF
value for MY 2029, which includes a fuel content factor of 1/0.7875. In
addition, the DOE revises the appendix to clarify that the fuel content
factor is part of the calculation of PEF, not the calculation of
petroleum-equivalent fuel economy. Instead, to calculate the petroleum-
equivalent fuel economy, one divides the PEF by the combined electrical
energy consumption value.
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866, 13563 and 14094
Executive Order (``E.O.'') 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (Oct. 4, 1993), as supplemented and reaffirmed by
E.O. 13563, ``Improving Regulation and Regulatory Review,'' 76 FR 3821
(Jan. 21, 2011) and amended by E.O. 14094, ``Modernizing Regulatory
Review,'' 88 FR 21879 (April 11, 2023), requires agencies, to the
extent permitted by law, to (1) propose or adopt a regulation only upon
a reasoned determination that its benefits justify its costs
(recognizing that some benefits and costs are difficult to quantify);
(2) tailor regulations to impose the least burden on society,
consistent with obtaining regulatory objectives, taking into account,
among other things, and to the extent practicable, the costs of
cumulative regulations; (3) select, in choosing among alternative
regulatory approaches, those approaches that maximize net benefits
(including potential economic, environmental, public health and safety,
and other advantages; distributive impacts; and equity); (4) to the
extent feasible, specify performance objectives, rather than specifying
the behavior or manner of compliance that regulated entities must
adopt; and (5) identify and assess available alternatives to direct
regulation, including providing economic incentives to encourage the
desired behavior, such as user fees or marketable permits, or providing
information upon which choices can be made by the public. DOE
emphasizes as well that E.O. 13563 requires agencies to use the best
available techniques to quantify anticipated present and future
benefits and costs as accurately as possible. In its guidance, the
Office of Information and Regulatory Affairs (``OIRA'') within the
Office of Management and Budget (OMB) has emphasized that such
techniques may include identifying changing future compliance costs
that might result from technological innovation or anticipated
behavioral changes.
For the reasons stated in this preamble, this regulatory action is
consistent with these principles. As a preliminary matter, we note that
the PEF is a numeric value determined through a highly technical
analysis, which bounds DOE's discretion in deriving the value. Once
calculated, the PEF has no independent effects, but serves as an input
to calculations that other agencies perform. Thus, the general costs
and benefits that could be attributed to these revisions are somewhat
removed from this action, and DOE has not attempted to quantify them
here. From a qualitative perspective, however, as discussed in section
III.C, DOE expects the decision to retain a fuel content factor over
the next several years, when combined with the revised PEF value and
methodology to result in greater petroleum conservation by
incentivizing EV production and adoption. On the other hand, the
phaseout of the fuel content factor and the use of the revised PEF
value may lead some manufacturers to incur additional costs, because of
the potential effects of the revised PEF value on the average fuel
economy of their fleets. The fact that the fuel content factor is
phased out over four years, however, should have the effect of
mitigating any such costs.
Section 6(a) of E.O. 12866 also requires agencies to submit
``significant regulatory actions'' to the OIRA for review. OIRA has
determined that this action constitutes a significant regulatory action
within the scope of section 3(f) of E.O. 12866. Accordingly, this
action was subject to review by OIRA.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires the
preparation of an initial regulatory flexibility analysis (IRFA) for
any rule that by law must be proposed for public comment, unless the
agency certifies that the rule, if promulgated, will not have a
significant economic impact on a substantial number of small entities.
As required by E.O. 13272, Proper Consideration of Small Entities in
Agency Rulemaking, 67 FR 53461 (Aug. 16, 2002), DOE published
procedures and policies on February 19, 2003, to ensure that the
potential impacts of its rules on small entities are properly
considered during the rulemaking process. 68 FR 7990. The Department
has made its procedures and policies available on the Office of General
Counsel's website: www.energy.gov/gc/office-general-counsel.
The final rule revises DOE's regulations on electric vehicles
regarding procedures for calculating a value for the petroleum-
equivalent fuel economy of EVs for use in the CAFE program administered
by DOT. Once calculated, the PEF has no independent effects, but serves
as an input to calculations that other agencies perform. Because this
final rule does not directly regulate small entities but instead only
amends a factor used to calculate the average fuel economy of a
manufacturer's entire fleet, DOE certifies that this final rule will
not have a significant economic impact on a substantial number of small
entities, and, therefore, no regulatory flexibility analysis is
required.\31\ Mid-Tex Elec. Co-Op, Inc. v. F.E.R.C., 773 F.2d 327
(1985). Accordingly, DOE certifies that this rule would not have a
significant economic impact on a substantial number of small entities,
and, therefore, no regulatory flexibility analysis is required. DOE
transmitted a certification and supporting statement of factual basis
to the Chief Counsel for Advocacy of the Small Business Administration
for review under 5 U.S.C. 605(b).
---------------------------------------------------------------------------
\31\ DOE notes that passenger vehicle manufacturers that
manufacture fewer than 10,000 vehicles per year can petition NHTSA
to have alternative CAFE standards. See 49 U.S.C. 32902(d).
---------------------------------------------------------------------------
C. Review Under the Paperwork Reduction Act of 1995
The final rule does not impose new information or record keeping
requirements. Accordingly, OMB
[[Page 22058]]
clearance is not required under the Paperwork Reduction Act. (44 U.S.C.
3501 et seq.).
D. Review Under the National Environmental Policy Act of 1969
DOE analyzed this regulation in accordance with the National
Environmental Policy Act of 1969 (``NEPA'') and DOE's NEPA implementing
regulations (10 CFR part 1021). DOE's regulations include a categorical
exclusion for amending an existing rule or regulation that does not
change the environmental effect of the rule or regulation being
amended. 10 CFR part 1021, subpart D, appendix A5. This rulemaking
qualifies for categorical exclusion A5 because this final rule, which
amends an existing rule or regulation does not change the environmental
effect of the rule or regulation being amended, no extraordinary
circumstances exist that require further environmental analysis, and it
otherwise meets the requirements for application of a categorical
exclusion. See 10 CFR 1021.410. Because this rule revises and updates
the PEF value to ensure that it continues to serve the statutory
purpose of conserving energy and conserving petroleum, given changes in
circumstances that would diminish the effectiveness of the prior PEF
value over time, this rule does not change the environmental effect of
the prior rule. Thus, DOE concludes that this rulemaking to amend 10
CFR part 474 does not change the environmental effect of 10 CFR part
474. In addition, no extraordinary circumstances exist that would
require further environmental analysis and the final rule otherwise
meets the requirements for application of categorical exclusion A5.
E. Review Under Executive Order 13132
Executive Order 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999),
imposes certain requirements on agencies formulating and implementing
policies or regulations that preempt State law or that have federalism
implications. The E.O. requires agencies to examine the constitutional
and statutory authority supporting any action that would limit the
policymaking discretion of the States and to carefully assess the
necessity for such actions. The E.O. also requires agencies to have an
accountable process to ensure meaningful and timely input by State and
local officials in the development of regulatory policies that have
federalism implications. On March 14, 2000, DOE published a statement
of policy describing the intergovernmental consultation process it will
follow in the development of such regulations. See 65 FR 13735. DOE
examined this final rule and determined that it will not preempt State
law and will not have a substantial direct effect on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
Government. No further action is required by E.O. 13132.
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of E.O. 12988, ``Civil
Justice Reform,'' 61 FR 4729 (Feb. 7, 1996), imposes on Federal
agencies the general duty to adhere to the following requirements: (1)
eliminate drafting errors and ambiguity; (2) write regulations to
minimize litigation; and (3) provide a clear legal standard for
affected conduct, rather than a general standard and promote
simplification and burden reduction. Section 3(b) of E.O. 12988
specifically requires that executive agencies make every reasonable
effort to ensure that the regulation: (1) clearly specifies its
preemptive effect, if any; (2) clearly specifies any effect on existing
Federal law or regulation; (3) provides a clear legal standard for
affected conduct, while promoting simplification and burden reduction;
(4) specifies its retroactive effect, if any; (5) adequately defines
key terms; and (6) addresses other important issues affecting clarity
and general draftsmanship under any guidelines issued by the Attorney
General. Section 3(c) of E.O. 12988 requires executive agencies to
review regulations in light of applicable standards in section 3(a) and
section 3(b) to determine whether they are met, or it is unreasonable
to meet one or more of them. DOE has completed the required review and
determined that, to the extent permitted by law, the final rule does
meet the relevant standards of E.O. 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub.
L. 104-4) requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and tribal governments and the
private sector. For a proposed regulatory action likely to result in a
rule that may cause the expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector of $100 million
or more in any one year (adjusted annually for inflation), section 202
of UMRA requires a Federal agency to publish a written statement that
estimates the resulting costs, benefits, and other effects on the
national economy. (2 U.S.C. 1532(a) and (b)). The section of UMRA also
requires a Federal agency to develop an effective process to permit
timely input by elected officers of State, local, and tribal
governments on a proposed ``significant intergovernmental mandate'' and
requires an agency plan for giving notice and opportunity for timely
input to potentially affected small governments before establishing any
requirements that might significantly or uniquely affect small
governments. On March 18, 1997, DOE published a statement of policy on
its process for intergovernmental consultation under UMRA (62 FR 12820)
(also available at www.energy.gov/gc/office-general-counsel). This
final rule contains neither an intergovernmental mandate nor a mandate
that may result in the expenditure of $100 million or more in any year
by State, local, and tribal governments, in the aggregate, or by the
private sector, so these requirements under the Unfunded Mandates
Reform Act do not apply.
H. Review Under the Treasury and General Government Appropriations Act
of 1999
Section 654 of the Treasury and General Government Appropriations
Act of 1999 (Pub. L. 105-277) requires Federal agencies to issue a
Family Policymaking Assessment for any rule that may affect family
well-being. This final rule would not have any impact on the autonomy
or integrity of the family as an institution. Accordingly, DOE
concludes that it is not necessary to prepare a Family Policymaking
Assessment.
I. Review Under Executive Order 12630
DOE has determined, under E.O. 12630, ``Governmental Actions and
Interference with Constitutionally Protected Property Rights,'' 53 FR
8859 (Mar. 18, 1988), that this final rule will not result in any
takings which might require compensation under the Fifth Amendment to
the United States Constitution.
J. Review Under the Treasury and General Government Appropriations Act,
2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516, note) provides for agencies to review most
disseminations of information to the public under guidelines
established by each agency pursuant to general guidelines issued by
OMB. OMB's guidelines were published at 67 FR
[[Page 22059]]
8452 (February 22, 2002), and DOE's guidelines were published at 67 FR
62446 (October 7, 2002). DOE has reviewed the final rule under the OMB
and DOE guidelines and concludes that it is consistent with applicable
policies in those guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355
(May 22, 2001), requires Federal agencies to prepare and submit to
OIRA, a Statement of Energy Effects for any proposed significant energy
action. A ``significant energy action'' is defined as any action by an
agency that promulgated or is expected to lead to promulgation of a
final rule, and that: (1) is a significant regulatory action under E.O.
12866, or any successor order; and (2) is likely to have a significant
adverse effect on the supply, distribution, or use of energy, or (3) is
designated by the Administrator of OIRA as a significant energy action.
For any proposed significant energy action, the agency must give a
detailed statement of any adverse effects on energy supply,
distribution, or use should the proposal be implemented, and of
reasonable alternatives to the action and their expected benefits on
energy supply, distribution, and use. The final rule amends a factor
used to calculate CAFE compliance and is not expected to have a
significant adverse effect on the supply, distribution, or use of
energy. Additionally, OIRA has not designated this rule as a
significant energy action. Accordingly, the requirements of E.O. 13211
do not apply.
L. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of this rule prior to its effective date. The report will
state that the Office of Information and Regulatory Affairs has
determined that this rule meets the criteria set forth in 5 U.S.C.
804(2).
VII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this final
rule.
List of Subjects in 10 CFR Part 474
Electric power, Energy conservation, Motor vehicles, Research.
Signing Authority
This document of the Department of Energy was signed on March 18,
2024, by Jeffrey Marootian, Principal Deputy Assistant Secretary for
Energy Efficiency and Renewable Energy, pursuant to delegated authority
from the Secretary of Energy. That document with the original signature
and date is maintained by DOE. For administrative purposes only, and in
compliance with requirements of the Office of the Federal Register, the
undersigned DOE Federal Register Liaison Officer has been authorized to
sign and submit the document in electronic format for publication, as
an official document of the Department of Energy. This administrative
process in no way alters the legal effect of this document upon
publication in the Federal Register.
Signed in Washington, DC, on March 19, 2024.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
For the reasons stated in the preamble, DOE amends part 474 of
Chapter II of Title 10 of the Code of Federal Regulations as set forth
below:
PART 474--ELECTRIC AND HYBRID VEHICLE RESEARCH, DEVELOPMENT, AND
DEMONSTRATION PROGRAM; PETROLEUM-EQUIVALENT FUEL ECONOMY
CALCULATION
0
1. The authority citation for part 474 continues to read as follows:
Authority: 49 U.S.C. 32901 et seq.
0
2. Amend Sec. 474.2 by revising definition for ``Petroleum-equivalency
factor'' to read as follows:
Sec. 474.2 Definitions.
* * * * *
Petroleum equivalency factor means the values specified in Sec.
474.3, paragraphs (b) through (f) of this part, which incorporate the
parameters listed in 49 U.S.C. 32904(a)(2)(B) and are used to calculate
petroleum-equivalent fuel economy.
* * * * *
0
3. Amend Sec. 474.3 by revising the introductory text of paragraph (b)
and adding paragraphs (c), (d), (e), and (f) to read as follows:
Sec. 474.3 Petroleum-equivalent fuel economy calculation.
* * * * *
(b) For model year (MY) 2024, MY 2025, and MY 2026 electric
vehicles, the petroleum-equivalency factors are as follows:
* * * * *
(c) For MY 2027 electric vehicles, the petroleum-equivalency factor
is 79,989 Watt-hours per gallon.
(d) For MY 2028 electric vehicles, the petroleum-equivalency factor
is 50,427 Watt-hours per gallon.
(e) For MY 2029 electric vehicles, the petroleum-equivalency factor
is 36,820 Watt-hours per gallon.
(f) For MY 2030 and later electric vehicles, the petroleum-
equivalency factor is 28,996 Watt-hours per gallon.
Sec. 474.5 [Removed and Reserved]
0
4. Remove and reserve Sec. 474.5.
0
5. Revise appendix A to to 474 to read as follows:
Appendix A to Part 474--Sample Petroleum-Equivalent Fuel Economy
Calculations
Example 1: Battery Electric Vehicle (BEV)
A battery electric vehicle is tested in accordance with
Environmental Protection Agency procedures and is found to have an
Urban Dynamometer Driving Schedule energy consumption value of 265
Watt-hours per mile and a Highway Fuel Economy Driving Schedule
energy consumption value of 220 Watt-hours per mile. The vehicle is
not equipped with any petroleum-powered accessories. The combined
electrical energy consumption value is determined by averaging the
Urban Dynamometer Driving Schedule energy consumption value and the
Highway Fuel Economy Driving Schedule energy consumption value using
weighting factors of 55 percent urban, and 45 percent highway:
combined electrical energy consumption value = (0.55 * urban) +
(0.45 * highway) = (0.55 * 265) + (0.45 * 220) = 244.75 Wh/mile
The petroleum-equivalent fuel economy is:
PEF / combined electrical energy consumption value
Thus, fuel economy for the example vehicle in MY 2030 would be:
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where MPGe is miles per gallon equivalent.
Example 2: Plug-In Hybrid Electric Vehicle
A plug-in hybrid electric vehicle is tested in accordance with
Environmental Protection Agency procedures and is found to have an
Urban Dynamometer Driving Schedule energy consumption value of 265
Watt-hours per mile and a Highway Fuel Economy Driving Schedule
energy consumption value of 220 Watt-hours per mile in charge
depleting mode, a combined gasoline fuel economy of 50.0 miles per
gallon in charge sustaining mode, and an all-electric range
corresponding to a percentage utilization of 60 percent travel on
electricity and 40 percent travel on gasoline.
The combined electrical energy consumption value is determined
by averaging the Urban Dynamometer Driving Schedule energy
consumption value and the Highway Fuel Economy Driving Schedule
energy consumption value using weighting factors of 55 percent
urban, and 45 percent highway to be 244.75 Wh/mile, which
corresponds to 118.47 miles/gal equivalent as shown above for a BEV
(using the MY 2030-and-beyond PEF value of 28,997 Wh/gal).
The PHEV fuel economy is calculated by dividing one by the sum
of the percentage utilization for petroleum and electricity divided
by their respective fuel economy.
In this case:
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[FR Doc. 2024-06101 Filed 3-28-24; 8:45 am]
BILLING CODE 6450-01-P