California Zero-Emission Vehicle regulations for model years 2018 and beyond

Release Date: 9/xx/2016

On July 10, 2014, the California Air Resource Board (CARB) issued a new rule for its Zero Emission Vehicle (ZEV) program for MY 2018 and later [43]. The ZEV program is part of California's Advanced Clean Cars Program, which also includes control of criteria emissions (including greenhouse gas emissions (GHG)). California is the only state that has the right to enact its own emissions standards for new engines and vehicles, and its standards often are more stringent than those established by the U.S. Environmental Protection Agency (EPA). Clean Air Act (CAA) Section 177 allows other states to adopt either the federal standards or the California standards. To date, nine other states have fully adopted the CARB Advanced Clean Cars program standards. CARB was involved in developing the latest corporate average fuel economy (CAFE) standards for light-duty vehicles (LDV), jointly issued by EPA and the U.S. National Highway Traffic Safety Administration (NHTSA), which set national fuel economy and GHG standards for model year (MY) 2017 and later. In addition, CARB issued the state-based ZEV program to address its Californiaspecific smog and emissions concerns.

The latest amendment to the ZEV program, which affects MY 2018 and later, requires a certain percentage of an automaker's sales to be made up of ZEVs and Transitional Zero-Emission Vehicles (TZEVs). Advanced Technology Partial Zero-Emission Vehicles (ATPZEVs) and conventional Partial Zero-Emission Vehicles (PZEVs) can make up a small part of the required percentage. ZEVs are battery electric and hydrogen fuel cell vehicles; TZEVs are plug-in hybrid electric vehicles and hydrogen internal combustion vehicles; ATPZEVs are hybrid, compressed natural gas, and methanol fuel cell vehicles with near-zero emissions and extended
emissions system warranties; PZEVs are extremely clean conventional vehicles with extended emissions system warranties.

The ZEV sales requirement is administered through credits, with the required allowable credits calculated as a percentage of an automaker’s conventional gasoline and diesel LDV sales, averaged over the previous three model years. The ZEV sales requirement for large manufacturers is 4.5% starting in MY 2018 and increasing by 2.5 percentage points each MY through 2025, to a total of 22.0%. Large manufacturers must produce credits from ZEVs and TZEVs with increasing sales volumes through 2025 (Figure LR5-1). There are limits on the number of credits that can be claimed for TZEVs, and ZEVs are expected to account for a minimum
of 16% of the required credits in MY 2025.
figure data

The number of credits assigned to a vehicle varies according to its zero-emission range, with more credits allotted to vehicles with higher ranges. To receive credits, ZEV vehicles must have a minimum driving range of 50 miles, determined in accordance with California Exhaust Emission Standards and Test Procedures [44]. The ZEV credit is calculated as:

ZEV credit = (0.01) × (ZEV range) + 0.50.

Credits are administered for TZEV vehicles that have a zero-emission range of 10 miles or more, as calculated by the same procedure. An amendment in May 30, 2014, incorporated an equivalent all-electric range (EAER) for better comparisons with ZEVs, which generate the TZEV credit equation. TZEVs with a range of 80 miles or more have a credit cap of 1.10. The TZEV credit is calculated as follows:

TZEV credit (10 mi ≤ ZEV range < 80 mi) = (0.01) * EAER + 0.30.

Credits for PZEVs and ATPZEVs may not account for more than one-quarter of a large manufacturer's allowed TZEV credit limit. PZEVs earn 0.2 credits each. ATPZEVs earn the same 0.2 credits, with the addition of credits for advanced components and low-emission fuels, which typically result in totals of 0.6 credits to 0.7 credits, depending on the vehicle. Manufacturers also can receive small amounts of credits for low-speed neighborhood electric vehicles and for vehicles used for advanced technology demonstration programs and transportation systems.

Credits are tradable and transferable with limitations, allowing manufacturers to meet their credit requirements when their vehicle sales do not meet the required minimums. Manufacturers that comply fully with the 10 Section 177 state requirements may trade and transfer credits from western states to eastern states with no penalty, and from eastern states to western states with a 30% penalty. However, credits can never be traded or transferred to or from California. Excess credits earned in MY 2012 and later also can be banked for future MYs, and can be used retroactively for the previous MY. The credit system provides greater flexibility for
manufacturers to reach compliance.

Requirements are reduced for intermediate-volume manufacturers, who must meet the same total credit requirements but who are allowed to do so entirely with TZEVs. Small-volume manufacturers are not required to meet the credit percentage requirements, but they may participate in credit earning, marketing, trading, and banking.

If a manufacturer's sales increase or drop sufficiently over a sustained period of time, its size classification will change. If a manufacturer’s average MY sales in California over a three-year period for three consecutive running averages crosses the sales threshold, it will be reclassified to the new manufacturer size for the next MY. The threshold between small and intermediate volume is 4,500 averaged sales per MY, and the threshold between intermediate and large volume is 20,000 averaged sales per MY. For example, if an intermediate-volume manufacturer exceeded 20,000 sales on average (more than 60,000 total sales over a three-MY period) for MY 2018–20, 2019–21, and 2020–22, that manufacturer would be reclassified as a large-volume
manufacturer starting in MY 2023.

The AEO2016 Reference case includes the latest ZEV regulation for MY 2018 and later, with implementation applied to California and the other nine complying states. Projected sales of passenger cars, light-duty trucks, and combined LDVs, along with other alternative-vehicle sales, including ZEVs and TZEVs, reflect the impacts of the California Zero-Emission Vehicle regulations on a U.S. Census-division basis for model years 2018 and beyond, including their impacts on fuel demand and new LDV fuel economy.

Endnotes

43. California Air Resources Board, "Zero-Emission Vehicle Standards for 2018 and Subsequent Model Year Passenger Cars, Light-Duty Trucks, and Medium-Duty Vehicles" (Sacramento, CA: August 10, 2014), http://www.arb.ca.gov/msprog/zevprog/zevregs/1962.2_Clean.pdf.
44. California Air Resources Board, California Exhaust Emission Standards and Test Procedures for 2018 and Subsequent Model Zero-Emission Vehicles and Hybrid Electric Vehicles, in the Passenger Car, Light-Duty Truck and Medium-Duty Vehicle Classes (Sacramento, CA: March 22, 2012; Amended December 6, 2012, May 30, 2014, September 2, 2015, and September 3, 2015), http://www.arb.ca.gov/msprog/levprog/cleandoc/2018+%20my%20hevtps_clean%20complete_1-16.pdf.