Paper presented at the 15th Global Warming International Conference in San Francisco, April 22, 2004

This paper is concerned with the present status and future projections for emerging technologies that can be utilized in light-duty vehicles in the next five to ten years to significantly reduce their CO2 emissions. The emerging technologies considered are modern clean diesel engines and hybrid-electric powertrains using batteries and/or ultracapacitors for energy storage. Throughout the study, six classes of vehicles—compact passenger cars to large SUVs—were considered. For each vehicle class, computer simulations (Advisor 2002) and cost analyses were performed for conventional ICE and mild and full parallel hybrids using port-fuel injected and lean burn gasoline engines and direct-injection turbo-charged diesel engines to determine the fuel economy and differential costs for the various vehicle designs using the conventional gasoline PFI engine vehicle as the baseline. CO2 emissions (gmCO2/mi) for each driveline and vehicle case were calculated from the fuel economy values. On a percentage or ratio basis, the analyses indicated that the fuel economy gains, CO2 emissions reductions, and cost/price increases due to the use of the advanced engines and hybrid-electric drivelines were essentially independent of vehicle class. This means that a regulation specifying the same fractional reductions in CO2 emissions for all the vehicle classes would not favor one class over the others.

The results of the study were then used to calculate the increase in the CAFE standard (miles per gallon gasoline for the new car fleet) that was feasible using each of the emerging technologies and the associated vehicle price increase that would be incurred. It was determined that the CAFE standard could be increased to 38 mpg and 48 mpg using the PFI and lean-burn gasoline engines, respectively, in mild hybrids with an associated percentage price increase of 7-9%. The CAFE standard could be increased to 42 mpg and 52 mpg using the PFI and lean-burn gasoline engines, respectively, in full hybrids with an associated cost increase of 16-18%. The CAFE increases using the diesel engines in mild hybrids were close to those of gasoline engines in full hybrids. The vehicle price increases using diesel engines in hybrids were 17-23% compared to the baseline ICE vehicles using the PFI engine. The fleet CO2 emissions corresponding to the cited CAFE standards were 185-234 gmCO2/mi for the mild hybrids using gasoline engines and 170-208 gmCO2/mi for full hybrids. The corresponding values using diesel engines are 189-216 gmCO2/mi. The CO2 emissions of the new car fleet for a CAFE standard of 27.5 mpg are 322 gmCO2/mi indicating that implementing the hybrid powertrain technologies in the new car fleet could reduce CO2 emissions of the fleet by 25-50%.

This report documents the automotive industry's response to federal regulations of light duty vehicle tailpipe emissions, with the intent of identifying lessons learned that might be applicable to future regulation of greenhouse gas emissions. The focus is on 1975 and 1979-1981, when new standards took effect that led directly to the adoption of costly new emission control equipment. The costs were significant during those time periods — with almost all automakers installing new oxidation catalyst technology in the first time period and three-way catalytic converters in the second. However, prices of new vehicles did not appear to reflect the full costs of emissions control. Other cost and pricing considerations seemed to be even more important. The added compliance costs associated with emissions reduction were just one more factor used by companies in setting prices. Aggregate new car sales were affected only in a minor way by emissions regulations.

On July 22, 2002, Governor Gray Davis signed AB 1493 into law. This law requires that the California Air Resources Board (CARB) propose rules that would reduce greenhouse gas emissions of light duty vehicles in California. The goal of this study was to provide insight into industry and consumer response to government regulations, especially as they might relate to future regulations that reduce greenhouse gas emissions from vehicles. This report addresses industry and consumer behavior with respect to emissions, safety, and energy use in the U.S. and Europe over the past few decades.

We created and analyzed a large data set of vehicle characteristics, sales, and prices, vehicle financing practices, and exogenous factors such as income, for the period 1975-2003, and supplemented the data analysis with case studies of the introduction of oxidation and three-way catalysts, air bags, and hybrid electric vehicles in the US; and diesel cars in Europe.

We found that costs imposed on vehicles due to US emissions and safety regulations have been significant — somewhere between $2500 and $4000 per vehicle. These costs represent up to 1/3 of vehicle price increases since the 1970s. Whether one considers these costs to be large or small, they had little discernible effect on industry performance and activities. The cost increases have been largely accommodated within normal business and market planning processes of companies.