ICCTCommentsinResponsetotheProposedAccountingRuleofthePhase

ThreeFuelConsumptionStandardsforNewPassengerVehiclenChina
March2
nd
,2012

TheInternationalCouncilonCleanTransportation(ICCT)wouldliketothankthe
ManufacturingEquipmentDepartmentofMinistryofIndustryandInformation
Technology(theDepartmentbelow)fortheopportunitytoprovidecommentson
theproposedAccountingRuleofthePhase3Corporate-AverageFuelConsumption
standardsforNewPassengerCars(AccountingRuleortheRulebelow).

WecommendtheDepartmentseffortsandleadershipindevelopingChinasfirst
evercorporate-averagefuelconsumption(CAFC)standardsforpassengercars,
includingadoptingthetargetvaluesandtestmethodsinDecember2011,and
proposingthisAccountingRule.Thecorporate-averageapproach,comparedwith
banningtheproductionofnon-compliantvehiclesasintheprevioustwostagesof
standards,providesautomanufacturerstremendousflexibilitytoreducetheir
compliancecost.

WearedelightedthattheDepartmentproposes,forthefirsttime,toincludeboth
domesticallymanufacturedvehiclesandimportvehiclesunderthescopeofthe
regulation.Thedramaticgrowthofimportvehicles,combinedwiththefactthatthe
majorityofimportvehiclesarelarger,morepowerfulcarandSUVmodelswith
relativelyhighfuel-consumption,meansthatimportvehiclesareplayingabigger
andbiggerroleintotalcarenergyconsumptioninChina.Includingthesevehiclesin
theupcomingcarfuelconsumptionstandardwillnotonlyclosethisloophole,italso
createsalevelplayingfieldforimportanddomesticallyproducedvehicles.

WealsowelcometheDepartmentseffortinincludingnon-conventionaltechnology
vehicles(suchasbatteryelectric,fuelcell,andplug-inhybridvehicles)intherule.
Trulyadvancedtechnologyvehiclescansubstantiallyreduceconventionalfuel
consumption,andhavegreatpotentialinoverallenergyconsumptionand
greenhousegasemissionsreductionifcoupledwithloworzeroGHGenergy
supplies.Properlydesignedtemporaryincentivesmayhelpthecommercialization
processofsuchvehicleswhiletheirproductioncostisbeingbroughtdownto
competitivelevels.(Seebelowforourcommentsandsuggestionsforimprovingthe
designofincentivesfornewenergyvehicles.)

WeunderstandthemultiplechallengesthattheDepartmentisfacinginintroducing
thenewcorporate-averagecomplianceapproach,includingsettingupawholenew
accountinganddataverificationsystemthatrequiresmulti-agencycoordination,
andbelievetheAccountingRuleisanimportantstep(thoughnotafinalone)to
haveacompleteandcomprehensiveregulatoryandenforcementsystem.However,
tofullydeliverthepromiseofenergyconservationbenefitsfromtheCAFCstandard,
aneffectivecomplianceandenforcementplanthatincludesprohibitivenon-
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conformingpenalties,hastobeinplacetoensurevehiclesproducedactuallymeet
thestandardlimits.

TosupporttheDepartmentinfinalizingacompleteandeffectiveimplementation
andenforcementsystem,wehereoffercommentsidentifyingareasoftheproposal
thatwefullysupport,whichshouldbemaintainedinthefinalAccountingRule,and
areaswheretheproposedRulecouldbeenhancedtoensureeffectiveenforcement.

WesupportthefollowingpositionsoftheDepartment,withminorchanges:

1) Introducingcarry-forwardcreditstoincreasemanufacturerflexibilityin
meetingthestandards.However,werecommendtherulestatethatno
carry-backcreditswouldbeallowedconsideringthespecificsituationin
Chinaforclarification.
2) Requiringmanufacturerstosubmitpre-,mid-andend-of-yearCAFC
reports.However,werecommendrequiringmanufacturerstoprovide
detailedplanstoimprovetheirend-of-yearcorporate-averagefuel
consumptionperformanceiftheirpre-yearandmid-yearCAFC
calculationsuggeststhattheycouldnotmeetthestandardintheend.
Ontheotherhand,thefollowingaspectsoftheproposedrulecouldseverely
underminetheDepartmentseffortsindevelopingatrulycompleteand
comprehensivestandardimplementationsystem,andweakentheeffectivenessof
theCAFCstandardsinhelpingthecountryreachitsenergyconservationgoal.

3) Theproposedruledoesnotincludeanypenaltysystemthatwillhavea
deterrenteffectonmanufacturersnon-complianceactivities.
4) Theproposedruledoesnotspecifyaproductiondataverificationsystem.
5) Therulegrantsarbitraryincentivesforbatteryelectricandfuelcell
vehicles.Inaddition,weareconcernedthattheproposalcouldallow
significantincentivestobeearnedbyleadacidbatteryvehicles,whichdo
nothelpChinatoleapfrogtotrulyadvancedbatteryandvehicle
technologies.
6) Theproposedruledoesnotspecifyanydetailedrequirementor
proceduresforconductingthesamplingconformitytests,anddoesnot
specifyanyconsequencesfortestfailures.
Wewillelaborateoneachoftheseissueintherestofourcommentsandsummarize
relevantbestpracticesintheUS,EUandJapaneseregulationsforChinas
consideration.Wewillalsoprovidetechnicalappendixesattheendofthis
document.

Absenceofapenaltysystemtodeternon-compliance

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Enforcementisacrucialcomponentinvehiclefuelconsumptionregulation,and
consideredasimportantasthestandardvaluesthemselves.Acompleteregulation
shouldcomprisetargetvalues,testproceduresandmethods,implementationplan
andenforcement.

TheAccountingRuledoesnotspecifyanypenaltyfornotcomplyingwiththeCAFC
standards,butonlymentionsbrieflyintheAnnexthattheregulatoryagencywill
issueaseparateenforcementplaninthefuture.Therulealsomentionsbrieflythat
forvehiclesthatfailthepost-productionconformitytest,theDepartmentwould
publicizethetestresultsandannouncethefailedmodelstothepublic.However,
pastexperienceintheEUsuggeststhatmanufacturerswilllackincentivetoimprove
technologiesandmeetfuelconsumptionreductiontargetswithoutatrulystrong
enforcementscheme.

Evenwiththeexistingtargetvalues,andpresumingthisAccountingRulewouldbe
implementedasplannedinJulythisyear,thephase3fuelconsumptionstandards
fornewpassengercarswillnothaveanybindingeffectonmanufacturerswithouta
trueenforcementsysteminplace.Thismeansthereishighriskofcompliancedelay
ofthestandards,whicharesupposedtophaseinstartingthisyear(2012).

EnforcementofacorporateaveragestandardismorecomplicatedthaninthePhase
IandIIper-vehiclefuelconsumptionstandards,whichprohibitproductionofnon-
conformingmodelsbynotgrantingtype-approvalcertificates.Thestandardsapply
toamanufacturersentirefleetforaregulatoryyear,andcomplianceisjudgedupon
thesales-weighted(orproductionvolume-weighted)averagefuelconsumptionof
themanufacturer.Thissystemrequiresanewenforcementmethodeffectiveafter
theproductionorsalesofthevehicles.

TheUnitedStatesandtheEuropeanUnion,aswellasothermajorvehiclemarketsin
theworldthathaveadoptedacorporateaveragestandardsystem,allhave
establishedrelativelystringentandstrongenforcementprogramsfortheirlight-
dutyvehiclefueleconomyorGHGemissionsregulationsthatfeatureoneormore
non-compliancepenalties,includingbothfiscalandnon-fiscalmeasures.Table1
belowsummarizesenforcementapproachesinvariousregions.

Table1.Enforcementschemesinvariousregionsthathaveadoptedcorporateaveragefuel
efficiencyorGHGregulation
Region
Enforcement scheme
Fiscal: civil penalty or
payment to the
government to offset
excessive emissions
Non-fiscal: voiding of
certificate
Non-fiscal: publishing
name of manufacturer
U.S. x x
EU x
Japan x x
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Canada x x
S. Korea x

Asshowninthetable,fiscalpenalties(orcivilpenalties)areadoptedbyallregions
andareconsideredthemosteffectivewayofpenalizingnon-compliance.Although
implementingfiscalpenaltiesmaycreateanadditionalrevenuestreamforthe
government,thatisnotthegoal.Instead,theprimarygoalistoincreasethecostof
violatingthestandardstothemanufacturer,sothatthemanufacturerwillchooseto
comply.

Thisdeterminesthebasicprincipleforsettingthemagnitudeofafiscalpenalty:the
marginalpenaltyshouldbehigherthanmanufacturersmarginalcompliancecost.
Ideally,inorderforallmanufacturerstocomply,thepenaltyshouldbehigherthan
thehighestcompliancecostamongallmanufacturers
1
.Andthebottomlineis,the
penaltyrateshouldbesethigherthanatleastthecompliancecostofthemajorityof
manufacturers.

IntheUSandEU,regulatoryagencieshaveconductedcomprehensiveresearchto
evaluatecosttomanufacturersofmeetingthestandards.Astudycommissionedby
theEuropeanCommission
2
showsthatthecurrentlyproposedpenaltyrateof95
perexcessgramperkilometerishigherthantheaveragemarginalcompliancecost
ofallmajormanufacturersinEurope.WerecommendthattheDepartmentconducts
similarstudiestoassessthecostofcomplianceforChinesemanufacturersasabasis
fordetermininganeffectivelevelofpenalty.Ifadetailedanalysiscannotbe
undertaken,theDepartmentmayconsideradoptingthehigh-endofthepenalty
leveladoptedbyothercountries,liketheEuropeanlevelof95perexcessivegram
perkilometerroughlyequivalentto1,860yuanperexcessive0.1liter/100kmon
eachvehicle.

Theauthoritytoimposenon-compliancepenaltiesisgrantedbylegislationintheEU
andUS.WeunderstandthatinChinathereisnosuchlegislativelygrantedauthority,
andrevisingthelawtograntthisauthoritymaybealengthyprocess.However,we
believethatsuchauthorityisnecessarytoanyeffectiveenforcementofthestandard
andurgetherelevantagencytomakealleffortstopursueit.Whilepursuingthis
authority,theDepartmentmayconsiderimposingotherpunitivebutnon-fiscal
penalties,suchasvoidingthetypeapprovalcertificatesandbanningtheproduction
ofhighfuelconsumptionmodelsproducedbyamanufacturerinthenextregulatory
yearifthatmanufacturerfailstomeettheCAFCtargetforoneyear.

1
Inpractice,itisextremelyhardforsomemanufacturersthattargetnichemarketsandbuilda
limitedproductlinetomeetthestandardsdesignedforthemajorityofthefleet.
2
SupportfortherevisionofRegulation(EC)No443/2009onCO2emissionsfromcars
Servicerequest#1forFrameworkContractonVehicleEmissions,Nov.2011.Figure4onpage13.
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Lackofdataverificationsystemforproductionvolume

Inprovision26,therulestatesthataspecialcommitteeledbytheDepartmentwill
verifymanufacturersCAFCcalculation.Butitdoesnotspecifyanyverification
proceduresformanufacturersproductiondata.Withoutaproductiondata
verificationsystem,itispossibleforthemanufacturerstocheatonCAFCvalueby
manipulatingvehicleproductionvolumesforexamplebyreportingmore
productionoffuel-efficientmodelsorlessproductionofinefficientmodels.

WhiletheUSregulatoryagenciesdidnotannounceanyofficialverificationofmodel
salesdata,EPAmayperiodicallycollectdatafromstateDepartmentsofMotor
Vehicles(whichareinchargeofvehicleregistrations)andotherindependent
sourcestotracktheauthenticityofmanufacturerreportsonproduction.Inaddition,
publiclyavailablethird-partyreportedvehicleproductionandsalesdatamakesit
difficultforUSmanufacturerstodistortproductiondata.IntheU.S.,thereare
severalauto-marketresearchcompanies(e.g.,PolkandCSM)thattrackvehicle
sales/productiondataclosely.

ThesituationinChinaisdifferent,andtherearenotmanyindependentcompanies
thathaveaccesstoproductionorsalesdata.However,theDepartmentmaytake
advantageofsomeoftheofficialvehicleproductiontrackingsystemscurrentlyin
place.Thesesystemsincludevehicleidentificationnumber(VIN),vehicleproduct
certification,andvehiclefuelconsumptionlabel,allrequiredforeachnew
passengercarproducedinChina.

WesupporttheManufacturingEquipmentDepartmentseffortstoestablishonline
vehiclefuelconsumptionreporting,asproposedinAnnex1,andadatabasesystem
throughwhichmanufacturerscansubmitvehiclefuelconsumptionandother
technicaldatainrealtimeaseachvehiclecomesofftheproductionline.Specifically,
therequirementtoincludetheVINonthereportingformmakesitpossibleto
connectthisdatabasetotheexistingvehicleproductiontrackingsystems.Some
generalideasonwaystoverifyproductiondataattheendofeachregulatoryyear:

1) CoordinatewiththeIndustryDepartment(inchargeofissuingvehicle
productcertificates)foreachfuel-consumptionvariant,checkthe
numberofcertificatesissued,andcomparethatwiththenumberofVINs
reportedbymanufacturers.
2) CoordinatewiththeDepartmentofPublicSafety(inchargeofvehicle
registration)tocomparevehicleregistrationdatawiththenumberof
VINsreportedbymanufacturers.
3) Establishavehiclefuelconsumptionlabeltrackingsystem:forexample,
byrequiringalabelseriesnumbertobeprintedonthelabelandkeeping
recordswithintheDepartment,andthencomparingthenumberoflabels
issuedwiththenumberofVINsreportedbymanufacturers.

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AdvancedTechnologyVehicleIncentives

NewEnergyVehicle(NEV)incentives,suchasthoseprovidedinthisAccounting
Rule,willprovidethegreatestbenefitiftheyencourageenergyefficient,full
performanceadvancedtechnologyvehicles.Toaccomplishthatgoal,wesuggest
thatinthisRuletheDepartmentaccountforNEVtanktowheelsenergyusage,
varyNEVmultipliersonthebasisofvehiclerange,andonlyprovidemultipliersto
advancedbatteryvehicles.Lookingtothelongterm,werecommendthatinthe
forthcomingPhase4standardsetting,theDepartmenttransitiontoafullwell-to-
wheelsaccountingofenergyuse,andeliminatetheuseofmultipliersentirely.These
stepswillencouragethemostefficientNEVsandavoidorlimittrade-offswith
conventionalvehicletechnologyimprovements.

Morespecifically,weencouragetheDepartmenttofirstincludetank-to-wheels
energyconsumptionforbatteryelectricvehiclesandhydrogenfuelcellvehiclesin
thePhase3AccountingRule,consistentwiththetreatmentofothervehicles,rather
thanassigningthesevehiclesadefaultvalueofzero.ThecurrentUSvehiclefuel
economylabelingsystemandtheJapanese2020fueleconomyregulation
compliancesystemhaveprocedurestoconvertbatteryelectricityorhydrogen
energyconsumptiontoanequivalentamountofpetroleumenergy(seeTechnical
AppendixAforexamples).ThisapproachwouldprovidesignificantcreditsforNEVs
whilealsocreatinganincentiveforefficientoperation.

Second,wesuggestthattheDepartmentindexproposedmultipliersforbattery
electricvehicles,hydrogenfuelcellvehiclesandultralowfuelconsumptionvehicles
(vehicleswithfuelconsumptiononthecombinedNEDCcyclenottoexceed2.5
Liter/100-km)inthePhase3AccountingRuletorange.Rangeisakeyperformance
criterion,asrecognizedinCaliforniasZeroEmissionVehicleprogram,andwillbe
necessaryforglobalcompetitivenessintheadvancedtechnologyvehiclemarket.
Californiarequireszeroemissionvehiclestoreachatleasta50-mile(81km)
minimumrangetobeeligiblefortheZEVcredits
3
.Inprinciple,thelowerscores
couldbesetbasedonthemostcommontypeofpureelectricdrivevehicleavailable
now.Themediumscorescouldbesetbasedonthetoprunnerswiththehighest
pureelectricdriverangeavailableinthecurrentmarket,whilethehighestscore
couldbereservedforfuturetoprunnerswithevenhigherelectricdriverange
thanthecurrentbest.

Wealsoencourageanadditionalcriteriontospecificallyexcludelead-acidbattery
vehicles,whichdivertresourcesfromdevelopingtheadvancedbatteriesnecessary
forgloballycompetitiveadvancedtechnologyvehicles.TheCaliforniaAirResources

3
TheCaliforniaAirResourceboardhassetathresholdforZEVcreditsat50milesrangeonthe
UrbanDynamometerDrivingSchedule,whichwillapplywhenthelatestrulerevisionsbecome
effectivein2018.Thisminimumrangeisbasedonanassumptionthatvehicleswitharangeunder50
mileswillnotmeetcustomerexpectations.CaliforniasZeroEmissionVehicleprogramusesrangeas
akeycriterionforissuingcredits,withcreditvaluesincreasinguptoarangeof350miles.CARB.
2011.ZEVISOR.p.36.
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Board(CARB)hasdefinedanadvancedbatteryasabatterywithaspecificenergy
ofatleast50W-hr/kgfor1999andsubsequentcalendaryears.
4
Asimilar
minimumspecificenergyrequirementshouldbeincludedinthePhase3Accounting
Rule.AsshowninthebatterydensityfigureintheTechnicalAppendixB,advanced
technologiessuchaslithium-ionbatterieswouldmeetthisdefinitionandlead-acid
batterieswouldnot.

Lookingtothelongterm,ICCTencouragestheDepartmenttogofurtherinthe
Phase4ruletoincludeafullwell-to-wheelsaccountingasNEVsbecomemore
common.Theinclusionofwell-to-wheelsenergyusagesupportsoverallenergy
savinggoalsbyfullyaccountingfordifferencesintheupstreamenergyneededto
producegridelectricityorhydrogenascomparedtoproducingpetroleum.Wellto
wheelsenergyaccountingwillalsohelpsupportGHGreductiongoals,andestablish
animportantprincipleforaccountingforNEVupstreamemissionsinairquality
plans.

Thereareseveralwell-to-wheelsaccountingexamplesthattheDepartmentcan
adaptforthePhase4rules.CARBhasadoptedawelltowheelsGHGaccounting
approachandhasproducedtechnicalmemosonupstreamenergyconsumptionfor
theLowCarbonFuelStandard.TheUSEPAwillincludewell-to-wheelsGHG
emissionsforvehiclesproducedbeyondspecifiedcapsandhaspreparedsome
relatedtechnicalanalysis.
5
WeexpectthattheEUwilltransitiontowell-to-wheels
aswell.TheTechnicalAppendixCprovidesexamplesofcreditsthatNEVscould
achieveunderawell-to-wheelsenergyaccountingsystemadaptedtoChinasPhase
4rule.

WealsorecommendthatthePhase4Ruleeliminatetheuseofmultipliers.NEV
multipliercreditscanbeimprovedwithperformancecriteriaduringPhase3but
shouldeventuallybephasedoutentirely.Pickingtherightwinnersfortechnology
bonusesischallenging,andthebonusescanresultinwindfallcreditsand
undermineimprovementsinothertechnologiesasNEVdeploymentsincrease.The
EUwillreducethevalueofmultipliersintheirruleeachyearstartingin2013and
sunsetthemultipliersin2015.
6
TheUSEPAhasproposedintroducingmultipliersin
MY2017withanannualdeclineandaMY2021sunsetbuthasnotyetdecided
whethertofinalizethesemultipliers.TheICCThascommentedtoUSEPAthat

4
CARB.1998.StaffReport1998Zero-EmissionVehicleBiennialProgramReview,July6,p4
5
CARBandUSEPAtechnicalreportscontaininformationthatishelpfulfordeterminingpowerplant,
refineryandotherupstreamenergy.Thisvaluecouldthenbeconvertedtoanequivalentliters/100
kmscorebasedonequivalentCO2emissionsasshownintheTechnicalAppendixC.SeeCARB2011.
InitialStatementofReasonsforProposedRulemaking,PublicHearingtoConsidertheLEVIII
Amendmentsetc.December7.p136;andUSFederalRegistervol76p75013December12011.See
alsoadditionaltechnicaldocumentsfromCARBsLowCarbonFuelStandards,andtheUSEPAmemo
CalculationofUpstreamEmissionsfortheGHGVehicleRuleSeptember14,2009byCraigHarvey.
6
Regulation(EC)No443/2009oftheEuropeanParliamentandoftheCouncilof23April2009.
Article5.
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MY2017-2021multipliersshouldnotbefinalizedbutiftheyareICCTwouldagree
thataphase-outshouldbeincluded.
7

Finally,theICCTnotesthatinordertofullyrealizethepotentialGHGandairquality
benefitsofNEVs,theefficiency-orientedmeasuresrecommendedheremustbe
combinedwithothermeasuresthatreduceupstreamemissionsfromenergy
production.

Incompletemarketconformitytest

Westronglysupporttheideaofincludingamarketsamplingconformitycheck,
proposedinthisruleinChapter7.However,theruledoesnotspecifyanydetailed
requirementsandtestproceduresforconductingthosechecks.Neitherdoesthe
Chapterspecifyanyenforcementactionsexceptforannouncingthetestresultsand
thefailedmodelstothepublic.TheDepartmentisintendingtoreleaseaseparate
provisionondetailsoftheconformitytestinthefuture.

Hereweoutlinesomekeyelementstobeconsideredinthedetailedrule,basedon
theUSin-useverificationtestexperiences.Theruleshouldinclude,butnotbe
restrictedto,thefollowingelements.

1) Clearpass/failcompliancemarginsforcheckingthefuel-consumptionlevelof
post-productionvehicles.Thecompliancemarginshouldbedetermined
basedonfactorssuchasrun-ineffect,andtestandproductionvariation.
Chinacertifieseachmodeltypeanditsvariants,whichmeanseachpost-
productionvehiclecorrespondstoonlyonecertifiedfuelconsumptionlevel.
Theallowablemarginshouldapplyontheexactcertifiedfuelconsumption
levelofavehicle.

TheDepartmentisintendingtousean8percentmarginforrun-ineffectand
anadditional4percentmarginfortestvariationthesamesetofmargins
specifiedinthefuelconsumptioncertificationtestmethods.
8
Forrun-in
effect,webelievetheproposedmarginiswithinthereasonablerangeoffuel
consumptionlossforvehiclesproduced20yearsago.However,wealsothink
thatrun-ineffectismuchsmalleronmodernvehiclesduetotighter
manufacturingtolerancesandtheeffectlargelydisappearsafterabout2,000
miles(about3,200km).Therefore,weinprincipleencouragetheregulatory

7
USEPApublishedtheirproposalinFederalRegistervol76p75013,December1,2011.ICCTs
February13,2012commentstoUSEPAareavailableat:http://www.theicct.org/news/us-2017-25-
cafeghg-standards-comments-nprm-13-feb-2012,lastaccessedMarch2,2012.
8
TheChineselight-dutyvehiclefuelconsumptiontestmethodsallowmanufacturerstousevehicles
withzeroaccumulatedmilesforthetesting,andallowmanufacturerstousea0.92adjustmentfactor
onthevehiclefuelconsumptiontestresultofazero-milevehicletoreflecttherun-ineffect.But
typically,therulerecommendsmanufacturerstoruntheirvehiclesbetween3,000kmand15,000km
beforetesting.Source:TestMethodsofFuelConsumptionforLight-dutyVehicles,Docketnumber:
GB/T19233-2003.
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agencytoconductteststodeterminefuelconsumptionimpactofrun-in
effectamongnewvehiclestodaybeforeadoptingthe8percentcompliance
margin.Fortestvariation,theUSEPArequiresretestsifthetestresultsdiffer
bymorethan3percent.Thisvalueissetbasedondataandexperiencesfrom
pastEPAfueleconomytests.Wesuggestcuttingthe4percentmargin
proposedbytheDepartmentto3percent.

2) Criteriaforsamplingvehicles.Theselectioncanbecompletelyrandom,or
targetvehiclesthathadproblemsatthecertificationstageorthatadoptnew
andadvancedfuelefficiencytechnologies.Thetotalnumberofvehicles
testedissubjecttothebudgetlimitationoftheregulatoryagency;themore
vehiclesandmodelscovered,themorecomprehensiveandinformativethe
testresultswillbe.Theregulatoryagencycanalsomandatethat
manufacturersconductlarger-scalein-usetestsattheirowncost,withthe
officialtestsservingasaspotcheck.

3) Detailedtestproceduresanddeterminationofcompliance.Theregulatory
agencyshouldsetrequirementsonnumberofvehiclestobetestedforeach
modelandvarianttype,numberofteststoberunoneachvehicle,andhow
toaveragethemultipletestresultstodeterminecompliance.

4) Enforcement.Theruleneedstospecifywhatactionsorpenalties
manufacturersmayfacefornon-compliance.Wesuggestthattheregulatory
agencyrequirerecallofnon-compliantvehiclesonlyiffiscalpenaltiescannot
beimposed,andthatthatrequirementbeeliminatedimmediatelyupon
adoptionoffiscalpenalties.AccordingtotheU.S.2012-2016modelyear
regulationforlight-dutyvehicles,failuretomeetthein-useCO2standard
mayresultinrecallliability,undertheCleanAirAct.Inothercases,EPAcan
fallbackonassessingacompliancepenalty.

5) Fortheconformitytests,theregulatoryagencyshouldperformthetestsina
government-ownedlaboracompletelyneutraltestlab,insteadof
contractingamanufacturerslaboralabwhosemajorclientsarethevehicle
manufacturerstoavoidconflictofinterests.Thisrecommendationalso
appliestopre-productionverificationtests,butthatisbeyondthescopeof
thisAccountingRuleandourcomments.

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The International Council on Clean Transportation is an independent
nonprofit organization founded to provide first-rate, unbiased research and
technical and scientific analysis to environmental regulators. Our mission is
to improve the environmental performance and energy efficiency of road,
marine, and air transportation, in order to benefit public health and mitigate
climate change.

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AppendixA:NEVTanktoWheelsExample

ThecurrentUSvehiclefueleconomylabelingsystemandtheJapanese2020fuel
economyregulatorycompliancesystemusetanktowheelsenergyaccountingfor
batteryelectricvehiclesasnotedinourletter.Tanktowheelscoversdirectenergy
usefromthevehiclebattery(includingexternalvehiclechargerandbatteryloses)
andnottheindirectorupstreamenergyusage.Theelectricalenergyusageis
convertedtoanequivalentamountofgasolineenergyusagewiththefollowing
equation.Thismethodcanalsobeusedforthegridelectricityfractionofplug-in
hybridsandforfuelcellelectricvehicles.

Gasolineequivalentfuelconsumption=NEVefficiency(inkWh/100-
km)Electricenergyunitconversion(inMJ/kWh)Gasolineenergy
density(inMJ/L)

Theresults(asshownbelowinTableA-1)varyslightlyforJapanandtheUnited
States,presumablyduetoslightlyhigherethanolcontentofUSfuels,whichresults
inalowerenergycontentperliter.

TableA-1:TanktoWheelsdirectenergyusageaccounting,NissanLeafefficiencyonNEDC
testcycle(sources:multiple
9
)

JapanCompliance
System
USEPALabeling
System
NEVefficiency(kw-hr/100km) 13.7 13.7
Electricalenergyunitconversion(MJ/kw-hr) 3.6 3.6
Gasolineenergydensity(MJ/liter) 32.9 32.0
Gasolineequivalentfuelusage(l/100km) 1.50 1.53

9
Sources:
NEDCefficiencycalculatedfromNissanrangeandbatterycapacity:
http://www.nissan.co.uk/#vehicles/electric-vehicles/electric-leaf/leaf/pricing-and-
specifications/specifications,lastaccessedMarch6,2012.
USEPAfueleconomyrating(inmilespergallon):
http://www.fueleconomy.gov/feg/evsbs.shtml,lastaccessedMarch6,2012.
Japanfueleconomyrating:Kajiwara,A.2012OverviewofFY2020FuelEfficiencyStandardsfor
PassengerVehiclesJanuary.Availableat
http://www.unece.org/fileadmin/DAM/trans/doc/2012/wp29grpe/GRPE-63-07e.pdf,last
accessedMarch6,2012.

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AppendixB:AdvancedBatteryDefinition

FigureB-1belowshowstheperformancecharacteristicsofvariousbattery
chemistries.Specificenergy(thexaxis)istheamountofenergyperunitofweight
andthusdetermineshowmuchenergycanbestoredinabatteryofagivenweight.
Theamountofstoredenergyinthebatteryinturndeterminesavehicle'srange
(alongwithvehicleefficiency).Asthefigureshows,advancedbatterychemistries
suchasLi-ionhaveamuchhigherspecificenergythanleadacid.
10
Giventhewide
gapinperformance,avarietyof"cut-off"pointscouldbeusedtodifferentiate
advancedchemistries.The50wh/kglevel,measuredatthepacklevel,waschosen
bytheCaliforniaAirResourcesBoardasadefinitionofanadvancedbattery
11
as
notedinourletter.ThisdefinitionhashadtheeffectofrulingoutleadacidandNi-
CdbatterieswhileallowingtheuseofNi-MHandLi-ionbatteries.ICCTsuggests
usingCARBsdefinitionasanappropriatedividinglinefordeterminingwhich
chemistriesqualifyasanadvancedbattery.

FigureB-1:Energyandpowerdensityofbatterychemistries(source:USNational
RenewableEnergyLab)

10
Some"veryhighpower"Li-ionvariantshavealowerspecificenergybutarenotexpectedtobe
usedinplug-invehiclesduetohigherspecificenergydensitydemandsandlowerspecificpower
demandscomparedtonon-pluginhybrids.
11
CARB.1998.StaffReport1998Zero-EmissionVehicleBiennialProgramReview,July6,p4
NATIONAL RENEWABLE ENERGY LABORATORY
Battery Choices: Energy and Power
14
NiMH proven
sufficient for
many HEVs.
Still recovering
early factory
investments.
Lithium ion
technologies
can meet most
of the required
EDV targets in
the next 10
years.
Source: www1.eere.energy.gov/vehiclesandfuels/facts/2010_fotw609.html
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AppendixC:NEVWelltoWheelsExample

TheCaliforniaAirResourceBoardandtheUnitedStatesEPA
12
haveadoptedawell
towheelsmethodofemissionsaccountingthatprovidesathoroughassessmentof
GHGimpactsincludingwelltotankorupstreamemissionsinadditiontotankto
wheels.Themethodhasthreemaincomponents:
1) assignaGHGintensityscoretoelectricitydeliveredtotheNEVexternal
charger,includingfossilfuelextractionandcombustionandelectricity
transmissionanddistributionlosses
2) multiplyelectricityGHGintensitybytheNEVenergyconsumption,including
externalchargerandinternalbatteryloses
3) subtracttheavoidedpetroleumupstreamemissionsfromaninternal
combustionengine,includingfuelproductionandrefining

TableC-1showsanexampleofthescoresfora2012NissanLeaf,andahypothetical
2020batteryelectricvehicle,usingCaliforniaandUSdataforupstreamemissions.

TableC-1:WelltoWheelsGHGaccountingexample,NEDCtestcycle(sources:multiple
13
)
2012Leaf
CaliforniaUnitedStates
2020BEV
CaliforniaUnitedStates
Energyefficiency(w/km) 137 137 126 126
ElectricityGHGintensity(gGHG/w) 0.349 0.628 0.270 0.599
BaseNEVscore(gGHG/km) 48 86 34 76
Petroleumupstreamcredit(gGHG/km) 22 22 22 22
FinalScore(gGHG/km) 26 64 12 54

Thissamewell-to-wheelsmethodcouldalsobeusedforfossilortotalenergy
consumptionbysubstitutingtotalorfossilenergyusageinsteps1-3above.In
addition,well-to-wheelsaccountingcanbeusedforthegridelectricityfractionof
plug-inhybridsandforfuelcellelectricvehicles.

12
CARB2011.InitialStatementofReasonsforProposedRulemaking,PublicHearingtoConsiderthe
LEVIIIAmendmentsetc.December7.p134;andUSFederalRegistervol76p75014December1
2011.
13
Sources:
2012CA/USgridGHGintensityfromUSEPADraftRegulatoryImpactAnalysisProposed
Rulemakingfor2017-2025Light-DutyVehicleGreenhouseGasEmissionStandardsand
CorporateAverageFuelEconomyStandards,November2011p.4-32
2020electricityGHGintensityforCaliforniafromCARBLowEmissionVehicleInitial
StatementofReasons,November2011,p.136;forUSfromICCTPowersectorRoadmap
PetroleumupstreamGHGavoided:USFederalRegistervol76p.75014,December12011;
adjusteddownwardby10%byICCTtomatchNEDCtestcycle;actualvaluemayvarybyyear
NEDCefficiencycalculatedfromrangeandbatterycapacitystatedbyNissan:
http://www.nissan.co.uk/#vehicles/electric-vehicles/electric-leaf/leaf/pricing-and-
specifications/specifications
FutureBEVenergyconsumptionestimatedbyICCTbasedon1%annualefficiency
improvement