1. Blunt Rollback of Fuel Economy Standards
DRAFT ICCT Assessment v5
June 8nd, 2017

2. Key Points about the Blunt Bill
Strictly speaking, the bill’s direct impacts are modest because it only adjusts the CAFE standards from now until 2021, and leaves the GHG emission standards untouched.
But such a view about the bill’s impacts ignores the forthcoming regulatory actions to reopen the GHG emissions standards and set the next phase of CAFE standards.
Within this context, the Bill sets the course for delaying the annual rate of improvement from 4.3%/3.0% (car/LDT) to about 1.2% and delaying the 2025 GHG and CAFE standards by 2 to 6 years.
The Bill’s stated rationale of harmonizing the CAFÉ program with the GHG program, but it provides over twice the credits needed to harmonize.
The Bill does this by granting two windfall credits to auto companies that were explicitly designed to ease the transition into the early stages of the rulemaking and then expire.

3. Credits 101
CAFE credits
GHG credits
And why they differ . . .

4. Existing Credit Provisions
2025 CAFE walk-down from the 2012 rulemaking
GHG stds. – mpg equivalent without A/C refrigerant credits
CAFE stds. – adj. for A/C refrigerant credits (2010 baseline)
Actual CAFE achieved with flexibilities and credits (2010 baseline)
54.1 mpg
48.7 mpg
46.2 mpg
Air conditioning refrigerant credits – GHG only
Off-cycle credits (inc. air conditioning efficiency credits)
GHG:
CAFE:
Overcompliance credits – all model years
CAFE: Carryforward 5 years, carryback 3 years
GHG: always allowed carryforward from

5. What would the Blunt Bill do?
Impacts CAFE standards
Increases lifetime of credits for over-compliance
Allow credits from to be carried forward to 2021
Retroactively adds off-cycle credits for
NHTSA specifically set lower CAFE standards to compensate for lack of credits

6. Credit Impacts
CAFE windfall credits

7. Blunt Bill Impacts on CAFE Standards
overcompliance credits gain new life
Windfall credits were granted in 2010 against the old car standard of 27.5 (unchanged since 1990), with the understanding they would expire by 2015
Excess 2010 and 2011 credits have already expired
off-cycle credits are a new windfall
Retroactively weakens the standards – even though they have already been met, this is another pool of credits that can be used through 2021
Net is not harmonization with GHG standards, but far less stringent requirements for CAFE

8. Off-Cycle Credits Windfall
EPA GHG Air Conditioning and Off-Cycle Credits retroactively added to CAFE compliance
A/C and off-cycle credits currently available only for GHG
Tailpipe over-compliance credits available for GHG and CAFE
adapted from analysis by the Union of Concerned Scientists

9. Carry-forward Credits Windfall
Removal of 5-year carry-forward limit roughly doubles the amount of credits available under the CAFE standards, compared with the GHG standards
Left graph: Credits available for to help comply with EPA stds.
Right graph: Same credits applied to CAFE with the 5 year carryforward limit removed
adapted from analysis by the Union of Concerned Scientists

10. Application of Credits to Compliance Pathways
Direct impact on CAFE standards
Baseline for CAFE and GHG standards

11. adapted from analysis by the Union of Concerned Scientists
Direct MPG Loss – Car
Blunt Bill could reduce 2021 car CAFE by 5.7 mpg, 3.0 mpg below EPA GHG-equivalent requirements
Jump needed for 2022
Blunt Bill windfall credits
adapted from analysis by the Union of Concerned Scientists
CAFE Compliance includes 5-year carryforward of overcompliance credits
Blunt-Stabenow adds off-cycle credits and extends all credits to 2021
Trend/EPA line is compliance with GHG requirements, including credits

12. Direct MPG Loss – 2017-21 – Light Truck
Blunt Bill could reduce 2021 light-truck CAFE by 4.4 mpg, 1.3 mpg below EPA GHG-equivalent requirements
Total car + light-truck reductions would result in about 350 million barrels of additional oil being burned and $34 billion in additional fuel costs
Jump needed for 2022
Blunt Bill windfall credits
adapted from analysis by the Union of Concerned Scientists
CAFE Compliance includes 5-year carryforward of overcompliance credits
Blunt-Stabenow adds off-cycle credits and extends all credits to 2021
Trend/EPA line is compliance with GHG requirements, including credits

13. Bigger Issue – Reset of 2022-25 baseline: 4
Bigger Issue – Reset of baseline: 4.7% annual improvement maintained
The Blunt Bill would likely reset the baseline for the standards
Otherwise, CAFE would require massive jump from 2021 to 2022
Current standards require annual improvement of 4.7%
Assuming the 4.7% annual improvement is maintained, resetting the baseline to
Blunt Bill would delay 2025 CAFE compliance by about 3 years
EPA trend line would delay 2025 CAFÉ compliance by 1.5 to 2 years

14. Bigger Issue – Reset of 2022-25 baseline: Annual improvement decreased to 2017-21 trend
The Blunt Bill would likely reset the baseline for the standards
Otherwise, CAFE would require massive jump from 2021 to 2022
annual improvement trend under EPA GHG standards, assuming all available credits are used, is 2.6% for cars and 2.4% for light trucks
Assuming these EPA trends are extended, resetting the baseline to:
Blunt Bill would delay 2025 CAFE compliance 8 to10 years (car/LDT)
EPA trend line would delay 2025 compliance by 5.5 to 8 years (car/LDT)