June 21, 2023
Light-Duty Vehicles, Air Pollution, and Climate Change
On August 5, 2021, President Biden signed Executive
organic gases (NMOG), NOx, PM, carbon monoxide (CO),
Order 14037, “Strengthening American Leadership in
and formaldehyde (an air toxic).
Clean Cars and Trucks” (86 Federal Register 43583). The
order required, among other items, executive agencies to
NHTSA’s CAFE Standards
revisit and amend the federal standards that regulate air
The Energy Policy and Conservation Act of 1975 (EPCA;
pollution emissions, greenhouse gas (GHG) emissions, and
P.L. 94-163) established CAFE standards for passenger cars
fuel economy of new passenger cars and light trucks. These
beginning in model year (MY) 1978 and for light trucks
standards include the Motor Vehicle Emission and Fuel
beginning in MY1979. The standards are designed
Standards promulgated by the U.S. Environmental
primarily to conserve petroleum. They require each auto
Protection Agency (EPA), the Corporate Average Fuel
manufacturer to meet a target for the sales-weighted fuel
Economy (CAFE) Standards promulgated by the National
economy of its entire fleet of vehicles sold in the United
Highway Traffic Safety Administration (NHTSA), and the
States in each model year. Under EPCA, CAFE standards
Light-Duty Vehicle GHG Emissions Standards
and new vehicle fuel economy rose steadily through the late
promulgated by EPA. The order also included a nonbinding
1970s and early 1980s. After 1985, Congress did not revise
electrification goal that “50 percent of all new passenger
the legislated standard for passenger cars for several
cars and light trucks sold in 2030 be zero-emissions
decades, and it remained at 27.5 miles per gallon (mpg)
vehicles, including battery electric, plug-in hybrid electric,
until 2011. The light truck standard was increased to 20.7
or fuel cell electric vehicles.” EPA published its proposal—
mpg in 1996, where it remained until 2005. In 2007,
the “Multi-Pollutant Emissions Standards for Model Years
Congress enacted the Energy Independence and Security
2027 and Later Light-Duty and Medium-Duty Vehicles”—
Act (P.L. 110-140), mandating a phase-in of higher CAFE
on May 5, 2023 (88 Federal Register 29184). NHTSA has
standards reaching 35 mpg by 2020. This was the last
not yet released its proposal.
legislation passed by Congress to set fuel economy goals.
Emissions from Light-Duty Vehicles
EPA’s GHG Standards
The light-duty vehicle (LDV) and medium-duty vehicle
In the 2007 decision Massachusetts v. EPA, the Supreme
(MDV) sectors (defined at 40 C.F.R. §86 and 49 C.F.R.
Court held that EPA has the authority to regulate GHGs
§523) generally include passenger cars, light trucks, and
from new motor vehicles as “air pollutants” under CAA
most sport utility vehicles; as well as class 2b and class 3
Section 202. In the 5-4 decision, the Court’s majority
trucks such as large pickups and vans. EPA reports that
concluded that EPA must decide whether GHG emissions
these vehicles contribute to air pollution, such as “ozone,
from new motor vehicles contribute to air pollution that
particulate matter, and air toxics, which are linked with
may reasonably be anticipated to endanger public health or
premature death and other serious health impacts, including
welfare or provide a reasonable explanation why it cannot
respiratory illness, cardiovascular problems, and cancer.”
or will not make that decision. In December 2009, EPA
The agency estimates that LDVs and MDVs currently
promulgated findings that GHGs endanger both public
account for approximately 11% of the United States’ annual
health and welfare and that GHG emissions from new
anthropogenic emissions of nitrogen oxides (NOx), 8% of
motor vehicles contribute to that endangerment (74 Federal
volatile organic compounds (VOC), and 1% of fine
Register 66495). With these findings, the CAA required
particulate matter (PM2.5). Further, according to EPA’s
EPA to establish standards.
Inventory of U.S. Greenhouse Gas Emissions and Sinks:
1990–2021 (published April 2023), LDVs emitted over 1
Current Standards
billion metric tons of GHGs in 2021, or 17% of the United
Air Pollution Standards
States’ annual anthropogenic emissions of GHGs.
The most recent air pollution standards for LDVs are
Agency Authorities
referred to as Tier 3 (79 Federal Register 23414), which
EPA’s Air Pollution Standards
follow the earlier Tier 2, Tier 1, and pre-Tier 1 federal
emissions regulations. Tier 3 standards were finalized in
Section 202 of the Clean Air Act Amendments of 1970
March 2014, to be phased-in between 2017 and 2025, and
(CAA; P.L. 91-604, as amended) requires EPA to establish
closely align with California’s Low-Emission Vehicle
standards for emissions of air pollutants from new motor
vehicles which, in the Administrator’s judgment, cause or
(LEV) III program. Manufacturers must meet fleet-average
tailpipe emissions standards for NMOG + NOx, PM, CO,
contribute to air pollution which may reasonably be
and formaldehyde in a given model year across several
anticipated to endanger public health or welfare. Standards
different test cycles. Tier 3 also includes standards for low-
under Section 202 must also consider issues such as
sulfur fuel, evaporative emissions, and on-board
technological feasibility, the cost of compliance, and
diagnostics, as well as compliance flexibilities such as an
industry lead time, among other items. EPA has since
emissions averaging, banking, and trading program.
promulgated standards for emissions of nonmethane
https://crsreports.congress.gov
Light-Duty Vehicles, Air Pollution, and Climate Change
CAFE and GHG Standards: Rulemakings
EPA’s 2023 Proposal
In 2010, the Obama Administration brokered an agreement
Air Pollution Standards. EPA’s 2023 proposal for LDVs
between 13 auto manufacturers, the State of California, the
(Tier 4) includes NMOG + NOx standards that would
United Auto Workers union, and other parties to develop
phase-down to a fleet average of 12 milligrams (mg)/mi by
and implement uniform vehicle GHG emissions standards.
MY2032, representing a 60% reduction from the existing
Because carbon dioxide (CO2) from vehicle fuel
Tier 3 standards. The MDV proposal would see a 66% and
combustion is a major source of GHG emissions, EPA
76% reduction, for 2b and class 3 vehicles, respectively.
aligned its standards with NHTSA’s CAFE program.
EPA is also proposing a PM standard of 0.5 mg/mi.
While EPCA and CAA generally preempt states from
GHG Standards. EPA is proposing light-duty GHG
adopting their own fuel economy and emissions standards
standards that would increase in stringency each year from
for new motor vehicles, respectively, CAA Section 209(b)
MY2027 to MY2032. The proposed standards are projected
allows the State of California to request a preemption
to result in an industry-wide average target for the light-
waiver under certain conditions. In 2009, EPA granted
duty fleet of 82 g/mi of CO2 in MY2032, representing a
California a waiver for its LDV GHG standards (74 Federal
56% reduction relative to the existing MY2026 standards.
Register 32744), and EPA and NHTSA aligned the federal
The MDV proposal would represent a 44% reduction.
GHG and fuel economy standards with those developed by
Additional components of the proposal include, among
California.
other items, narrowing the difference in stringency between
EPA’s current
passenger cars and light trucks, phasing out the off-cycle
set of GHG emissions standards (86 Federal
credit programs, and rescinding regulations that would
Register 74434), promulgated in December 2021, extends
consider upstream power sector emissions tied to electric
through MY2026, culminating in a projected industry fleet-
vehicle use, which are to start in MY2027.
wide GHG compliance target of 161 grams/mile (g/mi).
NHTSA’s current set of fuel economy standards (87
In projecting potential industry compliance, EPA estimates
Federal Register 25710) also extends through MY2026,
that one potential pathway to meet the proposed standards
culminating in a projected industry fleet-wide fuel economy
would be through
target of 49 mpg.
• about 67% electric vehicle penetration in MY2032
across the combined LDV fleet;
CAFE and GHG Standards: Attributes
• about 40% electric vehicle penetration by MY2032
The agencies’ fuel economy and GHG standards apply to
across the combined MDV fleet;
the new fleet of passenger cars and light trucks sold by a
• widespread use of gasoline particulate filters to reduce
manufacturer within the United States during a given model
PM emissions; and
year. Starting with the standards finalized in 2010, the
• improvements in technology to reduce GHGs from
agencies have used the concept of a vehicle’s “footprint”
conventional gasoline vehicles.
(i.e., the measured area enclosed by the four tires) to set
Manufacturers could also choose to employ hybrid or plug-
differing targets for different-sized vehicles, all of which
in hybrid technologies to help meet the proposed standards.
increase in stringency year after year. Generally, the larger
the vehicle footprint, the lower the corresponding fuel
EPA estimates that the total benefits of the proposal exceed
economy target and the higher the CO2-equivalent
the total costs, with net present value of benefits in the
emissions target. This concept differs from the original
range of $850 billion to $1.6 trillion. EPA calculates that
CAFE standards, which grouped domestic passenger cars,
between $63 billion and $280 billion of total benefits are
imported passenger cars, and light trucks into three broad
attributable to reduced emissions of air pollutants; $330
categories. The newer, “attribute-based standards” enable
billion to climate benefits; $450 billion to $890 billion to
manufacturers to produce a range of vehicle sizes rather
fuel savings; and $280 billion to $580 billion to repair and
than designing a lighter and smaller vehicle fleet overall to
maintenance savings, through 2055. Estimates for
meet categorical targets.
compliance costs for vehicle technology range from $180
billion to $280 billion, or by about $1,200 per vehicle on
Manufacturers must report vehicle characteristics sold each
average in MY2032.
model year. These data allow EPA and NHTSA to calculate
each manufacturer’s CAFE and GHG targets under the
EPA contends that its proposal builds upon announcements
standards given the specific pattern of sales. The agencies
by automakers that collectively signal a rapidly growing
then compare the calculated targets against the vehicles’
shift away from internal-combustion engine technologies
fuel economy and emissions results from EPA-approved
and toward zero-emission technologies, including
test cycles to determine compliance. To facilitate
electrification. Further, the agency points to P.L. 117-58
compliance, the agencies provide manufacturers various
(the Infrastructure Investment and Jobs Act) and P.L. 117-
flexibilities. A manufacturer’s fleet-wide performance (as
169 (commonly referred to as the Inflation Reduction Act),
measured on the test cycles) can be adjusted through the use
which provide investment to accelerate the development of
of alternative fuel vehicles, air conditioning efficiency
and market for zero-emission technology. Incorporating
improvements, and “off-cycle” technologies (e.g., active
these initiatives, EPA provides a “no action” analysis in the
aerodynamics, thermal controls, and idle reduction).
proposal that estimates an electric vehicle penetration of
Further, manufacturers can generate credits for over-
52% by MY2030 in the absence of the proposed rule.
compliance with the standards in a given year. They can
bank, borrow, and transfer these credits within their own
Richard K. Lattanzio, Specialist in Environmental Policy
fleets or trade them with other manufacturers to achieve
IF12433
compliance.
https://crsreports.congress.gov
Light-Duty Vehicles, Air Pollution, and Climate Change
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https://crsreports.congress.gov | IF12433 · VERSION 1 · NEW