Post on 27-Sep-2020
mn.gov/cleancars
Minnesota Pollution Control Agency | cleancarsmn.pca@state.mn.us June 2020
Agenda: Clean Cars Minnesota technical webinar Update on SAFE rule and MPCA regulatory analysis Monday, June 8, 2020, 10:30 a.m. – 12:00 p.m. Central
We encourage participants to log on 10 minutes prior to the start of the meeting to allow time to troubleshoot any technical issues.
To access the meeting online via webinar: click here Meeting number (access code): 9968 628 356 Meeting password: RXp7W3PpiB2
To access the meeting via telephone (we recommend joining by webinar if you can): Phone number: 415-655-0003 Access code: 968 628 356
Meeting goals
Learn about the final Safer Affordable Fuel Efficient (SAFE) Vehicles rule and regulatory analysis and how they aredifferent from the proposal.
Learn how MPCA is approaching the regulatory analysis associated with the Clean Cars Minnesota rulemaking.
Stakeholders have their questions answered and are prepared to provide informal comments to the MPCA.
MPCA and stakeholders learn from each other.
Agenda
10:30 a.m. Welcome Frank Kohlasch, Climate Director, MPCA
10:35 a.m. Clean Cars Minnesota rulemaking updates Amanda Jarrett Smith, Climate and Energy Policy Planner, MPCA Presentation and Q&A
10:50 a.m. Final federal Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule and regulatory analysis Chet France, independent consultant and former division director of the U.S. EPA’s Office of Transportation and Air Quality (retired) Presentation and Q&A
11:20 a.m. Clean Cars Minnesota regulatory analysis updates David Bael, Economic Policy Analyst, MPCA Hannah Scout Field, Data Specialist, MPCA Presentation and Q&A
11:55 a.m. Wrap up Amanda Jarrett Smith, MPCA
12:00 p.m. Adjourn
NOTE: The MPCA will accept informal comments on our regulatory analysis methods through June 22, 2020.
aq-rule4-10s
Adopting clean car standards
Amanda Jarrett Smith | Climate and Energy Policy Planner
Stakeholder meeting #5June 8, 2020
Agenda
• Where we are in the process today
• Final Safer Affordable Fuel Efficient (SAFE) Vehicles rule and analysis
• Chet France, Independent consultant and former Division Director, EPA, Office of Transportation and Air Quality (retired)
• Update on MPCA’s regulatory analysis
• David Bael, MPCA Economic Policy Analyst
• Hannah Scout Field, MPCA Data Specialist
June 2020 2
What is Clean Cars Minnesota?
Two standards for passenger vehicles:
• Low-Emission Vehicle (LEV) standard
• Zero-Emission Vehicle (ZEV) standard
To address two major challenges: climate change and air pollution.
June 2020 3
Rulemaking process
• Proposing under MPCA’s statutory authority to regulate air pollution (Minn. Stat. 116.07)
• Process involves:
• Opportunities for public input
• Analysis of need and reasonableness
• Administrative Law Judge must approve the rule before the agency can adopt it.
June 2020 4
Timeline
Request for comment and public meetings
(Oct. 7 – Dec. 6, 2019)
Draft rule and regulatory analysis
Notice of intent to adopt rules
Comment period and public info
sessions
Hearings
MPCA revises rules and analysis and responds to
comments
Administrative processes and
reviews
Final rule published
June 2020 5
Where we’ve been
• Request for Comment (1,000+ written comments; 1,000+ survey responses)
• Seven public meetings around the state (300+ attendees)
• Five technical meetings
• Introduction to the proposed rules and regulatory analysis
• State experiences with implementation and stakeholder presentations
• Methods of establishing an initial ZEV credit bank
• MPCA initial ZEV credit bank proposal
• SAFE rule and update on MPCA’s regulatory analysis
June 2020 6
Updates since our last meeting
• SAFE rule finalized April 30, 2020
• Delay to update our analysis to consider:
• SAFE rule and related analysis
• Potential economic impacts of COVID-19
• Updated proposed mechanism for establishing an initial ZEV credit bank based on comments received:
• Early-action credits starting model year 2022
• One-time allotment equivalent to the credits each manufacturer needs to comply in the first model year of implementation
• Targeting adoption of final rule in early 2021
June 2020 7
Informal comment period
• Taking informal comments through June 22 on regulatory analysis methods
• NOT part of the formal rulemaking record, so these comments should be submitted directly to the MPCA
• Formal commenting on all aspects of the rulemaking will be open once the Notice of Intent to Adopt is published
• Email cleancarsmn.pca@state.mn.us
June 2020 8
What questions do you have?
Web: mn.gov/cleancars
Email: cleancarsmn.pca@state.mn.us
June 2020 9
Thank you
Amanda Jarrett Smith
amanda.smith@state.mn.us
651-757-2486
June 2020 10
Overview of the SAFE Final Rule
Presentation for MPCA Stakeholder MeetingJune 8, 2020
Chet France, ConsultantFormer Division Director, EPA, Office of Transportation and Air Quality (Retired)
What I Will Cover
• Historical context• Mid-Term Evaluation and SAFE NPRM review• Overview of the SAFE final rules• Summary and conclusions
GHG/FE Standards for Light-Duty Vehicles• EPA and NHTSA finalized joint rules in April 2010 and in August 2012 that
created ”one national program” – supported by auto companies, labor, suppliers, NGOs, and states/local governments
• By 2025, average fleet-wide CO2 emission levels projected to be 163 g/mile which is equivalent to 54.5 mpg – rules allow autos to respond to changing market demand and provides numerous compliance flexibilities
• Average price increase for 2025 vehicle projected to be about $1800; the net lifetime savings is estimated to be $5000 per vehicle
• Combined program reduces CO2 emissions by 6 billion metric tons• August 2012 rule included a commitment by EPA and NHTSA to conduct a
“mid-term evaluation” (MTE) of the MY2022-2025 standards
A Win-Win-Win for the Environment, Industry, and Consumers
• Leads to significant CO2 reductions • Established national CO2/FE standards• Provided autos with regulatory stability
and certainty• Delivers substantial net life-time savings
for consumers
-
200
400
600
800
1,000
1,200
1,400
1,600
2020 2025 2030 2035 2040 2045 2050Business as Usual (no rule) 2012-2016 LD Rule 2017-2025 LD rule
No Rule
Phase 1 Rule
Derived from EPA’s ICBT Model normalized to AEO 2020
Phase 2 Rule
Midterm Evaluations of the MY2022-2025 Standards
• In January 2017, EPA made a Final Determination (FD) that the MY2022-2025 standards remain appropriate
• California’s midterm evaluation (MTE) completed on March 2017 also concluded that the MY2022-2025 standards remain appropriate
• On March 22, 2017, EPA published its intention to reconsider the FD, and on August 23, 2017, EPA issued a notice requesting comment on its reconsideration of the FD along with the MY2021 standards.
• In April 2018, EPA withdrew the previous FD and concluded that the standards should be revised
6
The Safer Affordable Fuel-Efficient (SAFE) Rule
• Proposal was issued on August 24, 2018
• The NPRM proposed:• to rollback the existing MY2021-2026 GHG standards to current MY2020 levels• to withdraw the previously approved CAA waiver provided to CA for the State’s GHG and ZEV programs• that NHTSA’s CAFE statutory authority preempts CA and other states from setting their own GHG standards
• Wide spectrum of stakeholders have thoroughly documented errors, flaws, and biases in comments
• On September 27, 2019, EPA and NHTSA finalized action on state preemption and the CA waiver (SAFE Rule - Part 1)
• On March 31, 2020:• EPA finalized action to rollback its GHG standards from ~5% to ~1.5% year-over-year improvement for MY2021-2026• NHTSA finalized action to rollback its MY2021 fuel economy standards (consistent with EPA) and set new fuel
economy standards for MY2022-2026 (SAFE Rule – Part 2)
SAFE Final Rule – Part 1 Overview• EPA announced withdrawal of CA’s waiver and NHTSA finalized
rules that preempt states from adopting their own GHG rules• 23 states (including California), 11 NGOs, transportation industry
leaders, and a coalition of air quality districts have filed lawsuits over revocation of the CA waiver and preemption
• A group of autos, led by GM and Toyota, intervened in the litigation on behalf of the Administration
• In July 2019, 4 autos (representing 30% of the market) agree with CA on an alternative national framework – commit to supporting CA authority under the CAA and respect other states ability to adopt CA programs – additional auto companies may join agreement
• In September 2019, DOJ launched anti-trust investigation of the 4 auto companies – DOJ dropped its investigation recently
SAFE Final Rule – Part 2 Overview• NHTSA fundamentally changed its modeling approach in the
SAFE NPRM – the analytics supporting the FRM are a major departure from the NPRM
• Many of the final rule’s key metrics are closer to those in EPA/NHTSA TAR and EPA FD - there is not a compelling case for the 1.5% rollback
• EPA relied exclusively on NHTSA’s analysis• EPA career staff did not participate in the development of both
NPRM and FRM - its own modeling and data were ignored
How do SAFE Standards Compare to Previous EPA Standards
Change is due to revised car/truck fleet mix projections
Change due to relaxation of standards
From Final Rule Preamble, page 24186
Comparison of SAFE Final GHG Standards to EPA 2012 Final Rule and SAFE Proposal
150
160
170
180
190
200
210
220
230
240
250
2020 2021 2022 2023 2024 2025 2026
2012 Final Rule SAFE Proposal SAFE Final Rule
SAFE Proposal
SAFE Final Rule
2012 Final Rule
GHG
Sta
ndar
ds (g
/mile
)
Key Metrics in Final Rule(For CO2 standards at 3% discount rate)
Issue/Output EPA 2017 FD NHTSA 2018 NPRM NHTSA Final RuleFinal Standard Alternative
Annual Stringency5% for 2022-2025
~36 mpg real world0% for 2021-2026
~28 mpg real world1.5% for 2021-2026~31 mpg real world
0% for 2021-2026~28 mpg real world
Net Societal Benefits +$98 billion +$201 billion -$22 billion -$31 billion
Vehicle Tech Cost +$875 -$2,260 -$977 -$1,219
Vehicle Fuel Cost +$2,800 -$1,830 -$1,461 -$1,934
Baseline Assumption Flat Tech w/30-month payback Tech w/30-month payback Tech w/30-monthpayback
GHG Emissions -540 MMT +872 MMT +867 MMT +1,074 MMTOil Consumption -50 billion gallons +79 billion gallons +78 billion gallons +97 billion gallons
Non-rebound VMT No change -894 billion miles No change No changeRebound Effect 10% 20% 20% 20%
Non-rebound Fatalities 0 -8,340 -685 -829
Rebound Fatalities Did not address -7,340 -2,584 -3,191Accident Fatalities No adverse impact -15,700 -3,269 -4,020
Extra Oil Production Did not address 95% imports 95% imports 95% imports
Extra Gasoline Refining Did not address 50% imports 50% imports 50% imports
Air Pollution Fatalities Did not address Did not address +444 to +1,000 +468 to +1,049
Annual Vehicle Sales No change ~+100,000 ~+280,000 ~+320,000
Congestion Cost Small -$63 billion -$60 billion -$75 billion
Note: EPA 2017 FD column relative to MY 2020 standards, all other columns relative to Obama MY 2021 standards
Rollback is a Net Loss to Consumers and Society
Final Rule
Change in New Car Purchase Price -$977
Discounted Lifetime Vehicle Fuel Cost +$1,461
Net consumer Impact +$678
Net Societal Benefits (3% discount rate) -$22 billion
Direct Employment Impacts 10,000 to 20,000 job loss
Rollback Will Increase Fuel Consumption,GHG Emissions, and Air Pollution-Related Deaths
Final Rule
Fleet-Wide Fuel Consumption +78 billion gallons
GHG Emissions Impact +867 MMT
Fatalities (Excluding Rebound) -685
Air Pollution-Related Deaths +444 to +1,000
Comparison of Net Benefit ProjectionsOver Time ($ Billions)
($300)
($200)
($100)
$0
$100
$200
$300
$400
$500
$600
2012 FinalRule - NHTSA
2012 FinalRule - EPA
2016 DraftTAR - NHTSA
2016 DraftTAR - EPA
2017 FD - EPA SAFE NPRM SAFE FRM
Comparison of MY 2025 Vehicle Technology Cost Projections Over Time
$0
$500
$1,000
$1,500
$2,000
$2,500
2012 FinalRule
2016 DraftTAR
2017 FD 2017 ICCT SAFE NPRMEPA
SAFE NPRMNHTSA
SAFE FRM
Comparison of NHTSA and EPA Tech Costs Using Common Baseline ($2018 per vehicle)
(Used FY2017 baseline fleet, corrected to 2018 dollars, excluded A/C costs and eliminated NHTSA FR over-compliance)
EPA Final Determination EPA NPRM NHTSA FRM
FRM over Flat MY2020 Standards $388 $295 $425
Obama over FRM Standards $853 $938 $1032
Final Rule Rollback Analysis Relies onCounter-Intuitive Outcomes
• Consumers will go back to buying more cars than trucks which lowers GHG emissions
• Congestion costs disproportionately affect total costs• OEMs will over-comply with the standards – adds more
technology than required by standards• Concludes that US is net petroleum exporter, but assumes
increase in oil consumption due to rollback will come from imports → most upstream emissions will occur in other countries and are not counted
Summary• NHTSA’s new modeling is a significant departure
from its NPRM analysis• Rollback is $223 billion more costly than projected in NPRM• “Phantom” VMT of 849 billion mile is eliminated• Vehicle technology cost is 58% lower than projected in NPRM• Total accident fatalities are 79% lower and non-rebound accident
fatalities are 92% lower
• NHTSA’s own modeling shows that the final rule is a net loss to consumers and society
• Net consumer impact is -$678 over the lifetime of the vehicle• Net societal benefits of -$22 billion for MY analysis or -$62 billion for
CY analysis• Rollback will cause 444 to 1000 air pollution-related deaths• Automakers’ and suppliers’ employment will decrease by up to 20,000
jobs
Regulatory analysis methods
David Bael | Economic Policy Analyst
Hannah Scout Field | Data Specialist
June 8, 2020
General approach
2
Reference scenarioFederal Safer Affordable Fuel-Efficient (SAFE) Vehicle rule in
place
Clean Cars scenarioLEV/ZEV rules implemented
starting model year (MY) 2025
VS.
2025-2034
6/8/2020
• 1.5% annual reduction in CO2 emissions through MY2026
• “Business-as-usual” EV sales
• 5% annual reduction in CO2 emissions through MY2025
• EV sales required for ZEV compliance
Scope of analysis
36/8/2020
Emissions benefits
Economic impactsHealth, equity, + climate impacts
What are the estimated avoided
emissions as a result of adopting the rule?
What are the health, equity, and climate
benefits of the emissions reductions?
What are the costs and benefits to
Minnesota consumers and businesses
related to vehicle purchase, fuel and maintenance and
what are the overall effects on Minnesota’s
economy?
Establishing an initial ZEV credit bank
How will different mechanisms for
establishing initial credit banks aid in
compliance with the ZEV rule and ensure the effectiveness of
the rule?
General inputs
46/8/2020
Input Assumption, source/considerations
Total light-dutyvehicle (LDV) sales in MN, 2025-2034
For primary results, MPCA will project 2019 total LDV sales through 2034 using annual % changes used in MNDOT’s “Pathways to Decarbonization” analysis.Sensitivity analysis: downturn in sales from economic effects of COVID-19 based on AEO Low economic growth scenario.
Car vs. truck production share
Primary results will assume 25% cars, 75% trucks.Sensitivity analysis: 20% cars, 80% trucks.
Reference Scenario EV sales
Linear projections of BEV and PHEV sales based on 2013-2019 annual sales in Minnesota.Sensitivity analysis: downturn in sales from economic effects of COVID-19 (AEO Low economic growth scenario).
Clean Cars Scenario EV Sales
Outputs from California Air Resources Board’s (CARB) ZEV Calculator, modified for Minnesota.Sensitivity analysis: downturn in sales from economic effects of COVID-19 (AEO Low economic growth scenario).
Annual vehicle miles traveled (VMT)
Will use values from EPA MOVES2014 model (accounts for annual mileage differences between cars and trucks over their lifetime).
Emissions benefits inputs
56/8/2020
Input Source/considerations
Upstream emission rates (for gasoline production and electricity generation)
Data from Argonne National Laboratory’s Greenhouse gases, Regulated Emissions, and Energy use in Transportation (GREET) model.
Annual electricity generation mix
Primary results will use average mix that considers planned future coal-plant shut downs.Sensitivity analysis: worst-case marginal mix (50% natural gas, 50% coal).
Presentation of results
6/8/2020 6
Emissions benefits
Effects of economic slow-down from COVID-19: downturn in total light-duty
vehicle and EV sales and gas prices:Annual Energy Outlook Low economic
growth scenario; consideration of vehicle sales trends after 2008 recession
Sensitivity analyses:
Marginal electricity mix
20% cars, 80% trucks
Primary results:
Health, equity, + climate impacts
Economic impacts
Establishing an initial ZEV credit bank
Estimating emissions benefits
7
Reference scenario Clean Cars scenario
Annual tailpipe and upstream emissions, 2025-2034
(GHGs, PM, NMOG + NOX*)
Annual tailpipe and upstream emissions, 2025-2034
(GHGs, PM, NMOG + NOX*)
Difference is emissions benefit
6/8/2020
Health, equity, and climate
benefits*Upstream benefits only
Tailpipe emissions benefits
8
SAFE fleet-average CO2 and per-vehicle PM requirements
(gram per mile)
LEV fleet-average CO2 and per-vehicle PM requirements
(gram per mile)
Tailpipe emissions avoided(tons of CO2, PM)
6/8/2020
Annual vehicle miles traveled
PM emissions avoided from additional EVs
Tailpipe emissions benefit
# of additional EVs required by ZEV rule
Upstream emissions benefits
9
SAFE fleet-average CO2 requirement, cars
vs. trucks (gram per mile)
LEV fleet-average CO2
requirement, cars vs. trucks (gram per mile)
MPG MPG
Gallons of fuel saved
6/8/2020
Gasoline production emissions avoided (GHGs, PM,
NMOG + NOX)
CO2 emission rate to real-world MPG conversion
Annual vehicle miles traveled
Electricity generation emissions
from additional
EVs (GHGs, PM,
NMOG + NOX)
Upstream emissions benefit
Health, equity and climate impacts
• Estimated value of climate benefits: federal social cost of carbon
• Estimated health benefits: EPA benefit per ton values and estimates using EPA’s COBRA model
• Equity analysis:
• Estimated PM2.5 concentration reductions in environmental justice areas of concern vs other areas of Minnesota
• Estimated health benefits (using BenMAP model) in EJ areas vs other areas of Minnesota
• Estimated PM2.5 concentration reductions near sensitive land uses, including hospitals, nursing homes, school and child care centers
6/8/2020 10
Health, equity, + climate impacts
What are the health, equity, and climate
benefits of the emissions reductions?
Consumer economic impacts analysis inputs
116/8/2020
Input Source/considerations
LEV and ZEV: Fuel prices for both gasoline and electricity
2019 Annual Energy Outlook Reference scenario.Sensitivity analysis: AEO Low economic growth scenario gas and electricity prices.
LEV: Vehicle purchase costs of LEV certified vehicles vs SAFE-certified vehicles
EPA 2017 Final Determination and Regulatory Analysis for final SAFE rule.
ZEV: Vehicle purchasecosts of ICE vehicles vs BEVs an PHEVs
International Council on CleanTransportation (ICCT) estimates.
Economic impacts
What are the costs and benefits to
Minnesota consumers and businesses
related to vehicle purchase, fuel and maintenance and
what are the overall effects on Minnesota’s
economy?
Consumer economic impacts, LEV standard
• Consumer costs of LEV-certified vs SAFE-certified vehicles
• Vehicle technology costs (purchase prices)
• Fuel costs
• Tax, insurance and maintenance costs
• Considered both cash purchase and loan-financed vehicle purchases
• Costs over vehicle lifetimes discounted at 3% and 7%
• Per-vehicle costs and overall costs based on total projected vehicle sales
6/8/2020 12
Consumer economic impacts, ZEV standard
• Consumer costs of ICE vehicles, BEVs and PHEVs for MY 2025-2034
• Cars, crossovers and SUVs
• Vehicle technology costs (purchase prices)
• Fuel costs
• Maintenance and repair costs
• Costs over vehicle lifetimes discounted at 3% and 7%
• Per-vehicle costs and overall costs based on total projected vehicle sales
6/8/2020 13
LEV and ZEV standard impacts on state tax revenue
• Reduced fuel consumption (from both LEV and ZEV standards) means reduced fuel tax revenue
• Higher vehicle purchase costs produce more sales tax revenue
• Annual registration fee premium for BEVs
6/8/2020 14
We want to hear from you
156/8/2020
• How much and for how long LDV and EV sales may be affected by the economic downturn following COVID-19? Given that Clean Cars Minnesota won’t go into effect for a few years, how can we begin to assess this at the very outset of the crisis?
• Have we sufficiently incorporated analysis for the final SAFE rule?
Submit comments on regulatory analysis methods to cleancarsmn.pca@state.mn.us
Questions?
16
Submit comments to cleancarsmn.pca@state.mn.us
6/8/2020