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Customer LoginsUS regulator issues Phase 2 greenhouse gas rules for MHCVs
The US Environmental Protection Agency (EPA) has released new rules on emissions and fuel consumption for the largest vehicles in the automotive industry, covering model years 2021−27.
- Significance: The EPA has released the final rules on greenhouse gas emissions and fuel consumption for medium and heavy commercial vehicles (MHCVs) in the United States. This is the Phase 2 programme, covering model years 2021−27.
- Implications: The rule changes may prompt some increase in near-term sales, if customers look to get in ahead of more stringent requirements and more expensive products. Unlike the current mid-term review of the light-duty vehicle standards, there is no mid-term review scheduled for this programme.
- Outlook: Overall, IHS Automotive forecasts largely stable MHCV sales volume in the US, with some fluctuation. We project an increase to about 447,000 units in 2017, compared with sales of about 457,000 units in 2027. Sales are forecast to fluctuate, at their lowest in 2016 and peaking at 496,000 units in 2026.
The US Environmental Protection Agency (EPA) has released the final ruling on its Phase 2 greenhouse gas (GHG) regulations. These are applicable to companies that "manufacture, sell, or import into the United States new heavy-duty engines and new Class 2b through 8 trucks, including combination tractors, all types of buses, vocational vehicles including municipal, commercial, recreational vehicles, and commercial trailers as well as ¾-ton and 1-ton pickup trucks and vans", according to an EPA statement. Full details of the regulations and how the EPA arrived at them are available in a 1,690-page document at www.epa.gov.
The new regulations cover all motor vehicles with a gross vehicle weight rating of 8,500 pounds or greater, and the engines that power them. The standards are referred to as Phase 2 and build on the light-duty vehicle standards through 2025 and Phase 1, which covered medium and heavy commercial vehicles (MHCVs) and engines in model years 2014−18. With the Phase 2 standards, the underlying regulatory structure from Phase 1 is carried over. The EPA says that Phase 2 also bases its standards on current and future technology under development or not yet widely deployed; develops first-time GHG and fuel-efficiency standards for trailers; allows ample time for compliance (10 years), and incorporates enhanced test procedures and uses an expanded and improved compliance simulation model. The EPA notes that while costs are higher, "benefits greatly exceed costs, and payback periods are short".
The payback period of adoption of the rules for tractors and trailers is estimated by EPA at about two years, four years for vocational vehicles, and three years for heavy-duty pick-ups and vans. The EPA believes performance targets can be met through a mix of technologies and leave manufacturers free to choose any means of compliance. The agency has also included flexible compliance rules for small businesses, delaying the initial implementation of Phase 2 standards by one year and simplifying certification. The new rules will require 10% more GHG and fuel-consumption requirements and more stringent diesel engine standards, an improved vocational vehicle program, and allow manufacturers to choose their own technology mix.
As expected, trailers have standards applied for the first time as well; the trailers have staggered effective dates; EPA regulations take effect in the 2018 model year and National Highway Traffic Safety Administration (NHTSA) standards in 2021. For combination tractors, CO2 and fuel-consumption standards start in model year 2021, increase incrementally in model year 2024 and are fully phased in by model year 2027; once fully phased in, the expectation is for 25% lower CO2 emissions and fuel consumption compared with Phase 1. For vocational vehicles, the step years are the same, with an expectation of fully phased in standards to see up to 24% CO2 and fuel-consumption improvements. The agencies project that vocational vehicle standards could be me through "improvements in the engine, transmission, driveline, lower rolling resistance tyres, workday idle reduction technologies, weight reduction, and some application of hybrid technology". For heavy-duty pick-ups and vans, a set of target standard curves is based on work factor (vehicle payload, towing capabilities, and whether it has four-wheel drive). These standards become 2.5% more strict every year from 2021 to 2027, with a reduction of 16% past Phase 1 by 2027. The agencies believe those vehicles will use engine stop start and powertrain hybridisation, on top of the improving engines and transmissions and using lower-rolling-resistance tyres.
Engine standards also see steps at 2021, 2024 and 2027, with separate standards and test cycles for diesel tractor engines (model-year 2027 reduction in CO2 emissions and fuel consumption 5.1% better than 2017, and 1.8% and 4.2% better in 2021 and 2024), vocational diesel engines (reductions of 2.3%, 3.6% and 4.2%in MY2021, 2024 and 2027) and vocational gasoline (petrol) engines.
Regarding advanced propulsion technology, the latest ruling eliminates a technology credit available in the Phase 1 rules. However, the agency "remained open to targeted incentives that would address truly advanced technology". After receiving feedback from the industry, the EPA will apply a 3.5 multiplier to plug-in hybrid electric vehicles, a 4.5 multiplier to all-electric vehicles, and a 5.5 multiplier for fuel-cell vehicles in these segments. These multipliers are larger than in the light-vehicle sector, the EPA says, because of the tendency for the heavy-duty sector to significantly lag the light-duty sector in adopting such technology.
Outlook and implications
These rules were created jointly between the EPA and the NHTSA, as with those for the light-duty vehicle industry. The EPA expects the new standards to save 530 million barrels of oil and reduce carbon emissions by about 270 million metric tons. The agencies have also built in the ability to earn and trade credits to meet the requirements (averaging, banking and trading, ABT); ABT was allowed with Phase 1 and is carried over with minor revisions.
The rule changes may prompt some increase in near-term sales, if customers look to get in ahead of more stringent requirements and more expensive products. Unlike the current mid-term review of the light-duty vehicle standards, there is no mid-term review scheduled for this programme. Overall, IHS Automotive forecasts largely stable MHCV sales volume in the US, with some fluctuation. We project an increase about 447,000 units in 2017, compared with sales of about 457,000 units in 2027. Sales are forecast to fluctuate, at their lowest in 2016 and peaking at 496,000 units in 2026.
While these rules will push adoption of advanced technologies, development of such within the industry has started. At this point, IHS Automotive cannot confirm the EPA's expectation on payback periods; the cost of the systems could impact technology adoption assumptions and overall cost to transport goods within the US.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.