The Environmental Protection Agency’s (EPA) final greenhouse gas and criteria pollutant rules for light-duty vehicles covering model years 2027-2032 is about to be to be announced. It’s part of a tangled maze of regulations from multiple federal and state agencies affecting automakers and ultimately consumers in the US, often referred in shorthand as CAFE – corporate average fuel economy.
In the latest development, The Department of Energy last year proposed decreasing the so-called “petroleum-equivalent fuel economy factor” (PEF) for EVs by 72% in 2027. The Petroleum Equivalency Factor expresses electric vehicle efficiency as equivalent-miles-per-gallon of gasoline for purposes of the EPA’s calculation of manufacturers’ compliance with NHTSA’s CAFE regulations. DOE is responsible for establishing the value of the PEF. With a final rule, issued yesterday, the PEF will be established for model years beginning in 2027. It slows forcing EV adaption, and in AutoInformed’s view this is a good thing.
PEF is factored into automakers’ product line averages under federal Corporate Average Fuel Economy (CAFE) rules. The final DOE rule will instead gradually lower the ratings by 65% through 2030, giving automakers more time to balance production between internal combustion engine powered (ICE) vehicles, hybrids, plug-in hybrids (PHEVs) and pure electric vehicles (EVs).
“While we’re all waiting for EPA’s final greenhouse gas and criteria pollutant rules for light-duty vehicles covering model years 2027-2032 the Energy Department is just out with changes to its less well-known (but hugely significant) petroleum equivalency factor rule,” said John Bozzella is president and CEO of Alliance for Automotive Innovation.
“It’s how the ‘fuel economy’ of an EV is determined for the Transportation Department’s Corporate Average Fuel Economy (CAFE) rule. CAFE is calculated by averaging the fuel economy of all vehicles across a manufacturer’s product line.
“You’ve heard me say vehicle tailpipes are regulated by multiple federal agencies with at least four different rules. Here we are…
“Here’s what to know:
“Today the PEF formula equates a pure battery electric vehicle (BEV) with a gas-powered car that gets about 300 miles per gallon. That’s really high fuel economy. An EV doesn’t use gas, so that makes sense. (In truth, a BEV’s fuel economy is actually… infinity). But the Energy Department proposed changing the PEF formula, slashing the equivalent fuel economy rating of a BEV by 72% in 2027.
“That would have said – for the purposes of a CAFE rating – a battery electric vehicle is not that much more efficient than the most efficient internal combustion engine vehicle out there. Really? The EV doesn’t use gas. So changing PEF (we said) will perversely disincentivize the production of battery electric vehicles and further misalign the greenhouse gas and CAFE rules, something that could result in manufacturers paying billions of dollars in CAFE civil penalties – even if they meet EPA’s stricter emissions standards.
“Does your head hurt?
“Anyway, it looks like the administration changed course and adjustments to PEF will instead phase in over a number of years. That’s positive. What we still don’t have is the actual CAFE rule. Maybe another two months? The CAFE rule is obviously closely related to EPA’s plan. Lowering greenhouse gas emissions improves fuel economy… and vice versa.
“CAFE is a major question mark because these regulations only work… if they work together. By the way, my sense is that agency coordination is starting to happen across the government.
“Final point on fuel economy. I’m not sure there’s a need for CAFE in an electric vehicle world. (The weirdness of PEF is exhibit A). CAFE is an artifact of the 1970s – a policy to promote conservation and energy independence and make internal combustion vehicles more efficient. Here’s the rub. EVs on the road today don’t combust anything. They don’t emit anything either, but that’s for another day.
“The policy question: what should the government require of the remaining gasoline vehicles in the fleet? Should an automaker be considered in violation of CAFE and subject to billions in civil penalties if it’s compliant with GHG rules? For the record: no.Or do we want a more modest pace of fuel economy improvement (according to EPA new vehicle fuel economy increased 35% since 2004) to preserve the ability of self-funding automakers to invest in the electric transition – again, the ultimate policy goal for policymakers and the industry? For the record: yes.” – John Bozzella is president and CEO of Alliance for Automotive Innovation.
Petroleum Equivalency Factor Change Slows EV Adoption
The Environmental Protection Agency’s (EPA) final greenhouse gas and criteria pollutant rules for light-duty vehicles covering model years 2027-2032 is about to be to be announced. It’s part of a tangled maze of regulations from multiple federal and state agencies affecting automakers and ultimately consumers in the US, often referred in shorthand as CAFE – corporate average fuel economy.
In the latest development, The Department of Energy last year proposed decreasing the so-called “petroleum-equivalent fuel economy factor” (PEF) for EVs by 72% in 2027. The Petroleum Equivalency Factor expresses electric vehicle efficiency as equivalent-miles-per-gallon of gasoline for purposes of the EPA’s calculation of manufacturers’ compliance with NHTSA’s CAFE regulations. DOE is responsible for establishing the value of the PEF. With a final rule, issued yesterday, the PEF will be established for model years beginning in 2027. It slows forcing EV adaption, and in AutoInformed’s view this is a good thing.
PEF is factored into automakers’ product line averages under federal Corporate Average Fuel Economy (CAFE) rules. The final DOE rule will instead gradually lower the ratings by 65% through 2030, giving automakers more time to balance production between internal combustion engine powered (ICE) vehicles, hybrids, plug-in hybrids (PHEVs) and pure electric vehicles (EVs).
“While we’re all waiting for EPA’s final greenhouse gas and criteria pollutant rules for light-duty vehicles covering model years 2027-2032 the Energy Department is just out with changes to its less well-known (but hugely significant) petroleum equivalency factor rule,” said John Bozzella is president and CEO of Alliance for Automotive Innovation.
“It’s how the ‘fuel economy’ of an EV is determined for the Transportation Department’s Corporate Average Fuel Economy (CAFE) rule. CAFE is calculated by averaging the fuel economy of all vehicles across a manufacturer’s product line.
“You’ve heard me say vehicle tailpipes are regulated by multiple federal agencies with at least four different rules. Here we are…
“Here’s what to know:
“Today the PEF formula equates a pure battery electric vehicle (BEV) with a gas-powered car that gets about 300 miles per gallon. That’s really high fuel economy. An EV doesn’t use gas, so that makes sense. (In truth, a BEV’s fuel economy is actually… infinity). But the Energy Department proposed changing the PEF formula, slashing the equivalent fuel economy rating of a BEV by 72% in 2027.
“That would have said – for the purposes of a CAFE rating – a battery electric vehicle is not that much more efficient than the most efficient internal combustion engine vehicle out there. Really? The EV doesn’t use gas. So changing PEF (we said) will perversely disincentivize the production of battery electric vehicles and further misalign the greenhouse gas and CAFE rules, something that could result in manufacturers paying billions of dollars in CAFE civil penalties – even if they meet EPA’s stricter emissions standards.
“Does your head hurt?
“Anyway, it looks like the administration changed course and adjustments to PEF will instead phase in over a number of years. That’s positive. What we still don’t have is the actual CAFE rule. Maybe another two months? The CAFE rule is obviously closely related to EPA’s plan. Lowering greenhouse gas emissions improves fuel economy… and vice versa.
“CAFE is a major question mark because these regulations only work… if they work together. By the way, my sense is that agency coordination is starting to happen across the government.
“Final point on fuel economy. I’m not sure there’s a need for CAFE in an electric vehicle world. (The weirdness of PEF is exhibit A). CAFE is an artifact of the 1970s – a policy to promote conservation and energy independence and make internal combustion vehicles more efficient. Here’s the rub. EVs on the road today don’t combust anything. They don’t emit anything either, but that’s for another day.
“The policy question: what should the government require of the remaining gasoline vehicles in the fleet? Should an automaker be considered in violation of CAFE and subject to billions in civil penalties if it’s compliant with GHG rules? For the record: no.Or do we want a more modest pace of fuel economy improvement (according to EPA new vehicle fuel economy increased 35% since 2004) to preserve the ability of self-funding automakers to invest in the electric transition – again, the ultimate policy goal for policymakers and the industry? For the record: yes.” – John Bozzella is president and CEO of Alliance for Automotive Innovation.