Evaluation of California Greenhouse Gas Standards and Federal Energy Independence and Security Act – Part 1:Impacts on New Vehicle Fuel Economy

Carbon dioxide (CO₂) is the primary greenhouse gas emitted by gasoline-powered motor vehicles, and the amount of CO₂ emitted depends directly on the amount of gasoline burned by the vehicle. Any reduction in vehicle fuel consumption will also reduce CO₂ emissions, and any reduction in CO₂ emissions requires a reduction in fuel consumption.

In 2004, pursuant to Assembly Bill (AB) 1493, the California Air Resources Board (CARB) adopted greenhouse gas emission standards for new vehicles that would require substantial reductions in CO₂ emissions and fuel consumption from light-duty motor vehicles. In December 2007, Congress made significant amendments to the Corporate Average Fuel Economy (CAFE) program with the passage of the Energy Independence and Security Act of 2007 (EISA2007). After the President signed EISA2007 into law, U.S. EPA announced its decision to deny an application for a waiver of federal Clean Air Act preemption that CARB was seeking in order to enforce its AB 1493 regulations. CARB has challenged U.S. EPA's decision to deny the waiver, claiming that the AB 1493 regulations and a second phase of standards that are not yet adopted would achieve the following:

1. 1
   Yield a new vehicle fleet with higher fuel economy ratings than will occur under the CAFE regulations, and
2. 2
   Yield greater GHG emission reductions than will occur under the federal program.

This paper-which is the first of a two-part series- addresses the issue of whether the California rules do, in fact, yield a new vehicle fleet with higher fuel economy ratings than under the CAFE regulations. The second paper¹ addresses the issue of whether the California rules yield greater fuel consumption and GHG emission reductions.

A comparative analysis of the AB 1493 regulations and the federal CAFE standards required under EISA2007 indicates that the federal CAFE standards require greater reductions in fuel consumption. CARB's conclusion that the AB 1493 standards are superior to those under the CAFE program rests on the assumption that a second round of AB 1493 standards (referred to as Pavley 2) will ultimately be adopted in California, even though CARB has not yet started the process required under State law to adopt new standards. Further, CARB has not even attempted to demonstrate that compliance with the Pavley 2 standards is either technically feasible or cost effective. Absent CARB's assumption that compliance with the hypothetical Pavley 2 standards is both feasible and cost effective, the federal CAFE program will result in greater improvements in new vehicle fuel economy than the California standards.