Assessing Canada's 2025 passenger vehicle greenhouse gas standards: Technology deployment and costs
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WORKING PAPER 2018-23
Assessing Canada’s 2025 passenger
vehicle greenhouse gas standards:
Technology deployment and costs
Authors: Francisco Posada, Aaron Isenstadt, Ben Sharpe, and John German
Date: September 2018
Keywords: Passenger vehicle efficiency technologies, manufacturing costs, consumer benefits, climate benefits,
U.S. EPA OMEGA model
Background The ICCT analysis uses the U.S. Envi- Results of OMEGA modeling
ronmental Protection Agency’s Opti-
This paper is part of a series that of the Canadian LDV fleet
mization Model for Reducing Emis-
reports on an analysis done by the This paper presents the core results of
sions of G reenhouse Gases from
ICCT of Canada-specific technol- Automobiles (OMEGA) version 1.4.56, the ICCT analysis: the projected tech-
ogy pathways, costs, and benefits updated most recently to support the nology deployment in the Canadian
of Canada’s 2025 passenger vehicle technical assessment for the midterm vehicle fleet, with associated per-vehi-
greenhouse gas standards, as final- review (U.S. Environmental Protection cle costs, by car and truck class and
ized in 2014 (Regulations Amending Agency [EPA], National Highway Traf- by vehicle type. (See Appendix I for a
the Passenger Automobile and Light fic Safety Administration [NHTSA], brief description of the technologies.)
Truck Greenhouse Gas Emission Reg- and California Air Resources Board
ulations, 2014). The analysis compares [CARB], 2016). The model evaluates Two scenarios were studied: main-
the standards presently in force to the relative costs and effectiveness taining GHG 2025 targets for MY
following the Trump Administration’s (CO2 emission reduction) of vehicle 2021–2025 vehicles, and freezing GHG
proposal to roll back the 2025 U.S. technologies and applies them to a standards at 2020 targets, beginning
fuel economy and greenhouse gas defined baseline vehicle fleet to meet with MY 2021. In the first, technology
emissions standards. a specified CO2 emissions target. projections and costs were calculated
for a Canadian LDV fleet that follows
Such a comparison is relevant For a detailed discussion of the Cana- the GHG 2025 standards. The second
because Canada’s passenger vehicle dian baseline vehicle fleet defined presents a Canadian LDV fleet that
fuel efficiency regulation is structured for this project, a description of the harmonizes with the U.S. MY 2021–
in such a way as to tie Canada’s stan- OMEGA model and the inputs to the 2025 targets frozen at 2020 levels.
dards directly to the U.S. regulation. If C anada-specific analysis , and an
Canada maintains its regulatory sta- evaluation of consumer benefits and The analysis shown here illustrates the
tus quo, its light-duty vehicle (LDV) social/environmental benefits of the projected least-cost technology path-
greenhouse gas standards will auto- two regulatory alternatives, see the way toward compliance. Manufactur-
matically retreat to whatever level is other papers in this series (Posada, ers may choose other compliance
the final outcome of the U.S. rulemak- Isenstadt, Sharpe, & German, 2018a, pathways—including shifting their
ing process initiated in August 2018. 2018b, 2018c). product mix to vehicles of larger or
© INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION, 2018 WWW.THEICCT.ORGASSESSING CANADA’S 2025 PASSENGER VEHICLE GREENHOUSE GAS STANDARDS: TECHNOLOGY DEPLOYMENT AND COSTS
smaller size than those currently sold, Canada fleet average technology penetration
or promoting SUV sales over compact 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
cars—depending on marketing strate- Turbo-downsizing
gies, fuel price variations, local condi-
Non-hybrid Atkinson
tions and consumer preferences, and
further technology development. Gasoline direct injection
Stop-start
TECHNOLOGY DEPLOYMENT Cylinder deactivation
Mild hybrid
Figures 1, 2, and 3 show the Canadian
fleet-wide shift in technology market Full hybrid
adoption rates from the baseline (CY Battery Electric
2016) for a selected group of technol-
>6-speed
ogies under the scenarios considered.
Figure 1 compares the technology ICCT: CY16 baseline EPA: CY16 baseline ICCT: MY20 EPA: MY20
projections using EPA’s technology- to MY25 to MY25
cost curves as defined in the midterm
Figure 1. Comparison of projected Canadian LDV fleet average changes in technology
review evaluation and the projections penetration under EPA cost-effectiveness assumptions (brown lines), and under ICCT’s
using ICCT’s updated technology- cost-effectiveness assumptions (blue lines). Baseline (CY 2016) data shown as line start
cost curves. points; MY 2025 values shown as line arrowheads; MY 2020 values shown as dots.
As the figure illustrates, most tech- Can & US fleet average technology penetration-EPA OMEGA Input
nologies progress in the same direction
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
under both ICCT and EPA technology
Turbo-downsizing
assumptions, although to varying lev-
els of penetration. Notable exceptions Non-hybrid Atkinson
are turbo-downsizing, stop-start, and Gasoline direct injection
mild hybrids. These three technolo-
Stop-start
gies are expected to increase in mar-
ket share under EPA assumptions, but Cylinder deactivation
decrease or remain stagnant under Mild hybrid
ICCT assumptions. This is due, in part, Full hybrid
to ICCT assigning greater cost-effec-
Battery Electric
tiveness of non-hybrid (naturally aspi-
rated), Atkinson-cycle engines with >6-speed
cooled exhaust gas recirculation (EGR).
Can: CY16 baseline US: MY15 baseline Can: MY20 US: MY20
to MY25 to MY25
The OMEGA model does not consider
performance factors that consumers Figure 2. Comparison of estimated technology adoption rates in Canada (blue) and the
weigh when purchasing a new vehi- U.S. (brown) under EPA cost-effectiveness inputs. Baseline (CY 2016 or MY 2015) data are
cle. Since turbocharged engines have shown as line start points; MY 2025 values are line arrowheads; MY 2020 values are dots.
higher torque at lower engine speeds
suggesting that there is ample room United States under EPA cost assump-
than naturally aspirated engines, con-
in Canada’s baseline fleet for down- tions. Figure 3 shows the same com-
sumers who favor forced induction
sizing engines. parison under ICCT cost assump-
may be willing to pay more for turbo-
charged engines. This consumer pref- tions. As noted in our description of
The differing projections from ICCT
erence is not factored into the OMEGA the baseline fleet used in this project
and EPA inputs indicate that there are
model, which projects that naturally (Posada et al., 2018a), the Canadian
many possible ways in which automak-
aspirated engines will be the least baseline fleet is comprised of MY
ers can both meet GHG standards and
expensive path to compliance under 2016 and MY 2017 vehicles, whereas
consumer performance expectations.
ICCT’s technology assumptions. Only the U.S. baseline fleet is comprised
27% of 6-cylinder engines and 4% of Figure 2 compares the C anadian of MY 2015 vehicles. Consequently,
8-cylinder engines are turbocharged, market projections with those of the some of the Canadian baseline
2 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION WORKING PAPER 2018-23ASSESSING CANADA’S 2025 PASSENGER VEHICLE GREENHOUSE GAS STANDARDS: TECHNOLOGY DEPLOYMENT AND COSTS
vehicles already have more efficient Can & US fleet average technology penetration-ICCT OMEGA Input
technology than their counterparts 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
in the U.S. baseline. This difference Turbo-downsizing
may have a small impact in the final
Non-hybrid Atkinson
projections, most likely toward lower
costs for Canada. Gasoline direct injection
Stop-start
The trends in Figures 2 and 3 mir-
ror one another: the U.S. estimated Cylinder deactivation
technology update and related cost- Mild hybrid
effectiveness work just as well in Can- Full hybrid
ada. In general, technology adoption
Battery Electric
rates increase as CO2 targets become
more challenging for manufacturers >6-speed
to meet.
Can: CY16 baseline US: MY15 baseline Can: MY20 US: MY20
The model estimates that almost all to MY25 to MY25
vehicles (> 97%) are going to receive
l e a s t- c o s t t e c h n o l o g y o p t i o n s , Figure 3. Comparison of estimated technology adoption rates in Canada (blue) and the
such as low-rolling resistance tires, U.S. (brown) under ICCT cost-effectiveness inputs. Baseline (CY 2016 or MY 2015) data
improvements to engine friction, are shown as line start points; MY 2025 values are arrowheads; MY2020 values are dots.
electrification of accessories, and
(15%–20% market share) and a much more predominant in the model run
aerodynamic improvements.
lesser role for full-hybrid and bat- using ICCT inputs (Figure 3), as this
Across all projections, the 2020 target tery-electric technologies. The ICCT relatively new technology is open-
would require only modest improve- update of those pathways (Figure 3) ing up a low-cost option to achieve
ments in technology with respect to results in little hybridization of any higher efficiency.1 Lutsey et al. (2017)
the Canadian CY 2016 baseline. This kind, due primarily to the lower costs discuss how the costs and benefits of
would be achieved with least-cost and higher benefits forecasted for Atkinson-cycle engines are estimated.
technology options, as listed above, conventional technologies.
and with improvements in transmis- Stop-start systems
sions. A small increase in GDI adoption Turbocharged and downsized GDI
engines and high-compression As shown in Figures 2 and 3, stop-start
is also projected. When compared to
Atkinson-cycle engines already enjoys greater market share in
GHG 2025 targets, this unambitious
Canada’s baseline than in the United
technology shift would be reflected A look at the projected fleet wide
States. The U.S. baseline has about
as small increases in cost and as small, market share (Figures 2 and 3) shows
9.8% of models with stop-start. The
fleet-wide benefits of avoided CO2. that the large majority of naturally
Canadian baseline, which is slightly
aspirated engines are projected to be
The OMEGA model also projects that newer, has around 16% of models with
replaced by high-compression, Atkin-
for the average vehicle, most of the stop-start. Thus, the greater market
son-cycle engines or by turbocharged
efficiency gains are expected to be and downsized GDI engines to com- share in Canada is due to the more
realized by improvements to conven- ply with 2025 targets. recent and advanced Canadian base-
tional technologies, with very little line fleet, as well as some consumer
market uptake required for more High-compression Atkinson-cycle preference for vehicles that happen to
advanced powertrains, such as those engines (e.g., Mazda’s Skyactiv or Toy-
in full hybrids and electric vehicles. ota’s Dynamic Force gasoline engines) 1 The actual future product mix may be
In the 2025 time frame, EPA’s tech- are projected to gain a large market affected by possible consumer preferences
for the performance of turbocharged
nology pathways (Figure 2) lead share across Canada’s fleet. Note engines, which the OMEGA model does not
to some 48 volt mild-hybridization that this type of engine technology is account for.
WORKING PAPER 2018-23 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION 3ASSESSING CANADA’S 2025 PASSENGER VEHICLE GREENHOUSE GAS STANDARDS: TECHNOLOGY DEPLOYMENT AND COSTS
have stop-start. Using EPA inputs, the Table 1. Level of mass reduction/lightweighting in the OMEGA model’s GHG 2025
stop-start market share is expected projections for Canada and the United States, using both ICCT and EPA technology cost-
to increase nearly 75% by 2025 and benefit inputs. Baseline masses shown for reference.
make up 28% of the overall fleet. Using Canada US
ICCT inputs, however, stop-start mar-
Cars 6.1% 6.0%
ket share is expected to decrease
EPA Inputs Trucks 9.0% 10.2%
about 10% by 2025. Again, the ranges
of cost-effectiveness of various tech- Fleet 7.6% 8.0%
nologies leads to different projected Cars 6.4% 6.4%
outcomes by 2025. But these differ- ICCT Inputs Trucks 10.2% 11.5%
ences signal a wide variety of paths Fleet 8.4% 8.8%
manufacturers can choose from in Cars 1,480 (-2.6%) 1,520
order to comply with the standards. Baseline Mass (kg) Trucks 2,010 (-0.8%) 2,026
Fleet 1,757 (+1.2%) 1,736
Cylinder deactivation
Cylinder deactivation promises to be a to the electrical system. Combined, estimated to provide a 5%–7% reduc-
very cost-effective technology in gen- these effects can dramatically reduce tion in CO2 emissions. And reducing
eral, but especially for large engines urban driving fuel consumption. EPA mass with design optimization and
that automakers cannot or will not inputs predict that mild hybrids will some material substitution can lead
downsize. At low engine loads, deac- occupy 17% of the market by 2025. to net cost savings. Lightweighting
tivating cylinders allows the engine to ICCT inputs, on the other hand, show results are tabulated in Table 1. The
run as though it were a much smaller fleet-wide compliance without the use results of the OMEGA modeling are
engine, saving fuel. EPA’s technology of any mild hybrids. The difference in included for comparison.
inputs assumed that these engines projected outcomes is due to ICCT’s
would have a fixed bank of cylinders assumptions that improvements in Under both ICCT and EPA assumptions,
that would be deactivated. But with conventional combustion technolo- the Canadian fleet requires slightly
more recent technology that allows gies—like those discussed above—will less lightweighting than the U.S. fleet.
for dynamic cylinder deactivation, the be more cost-effective than those Part of this slight difference is due to
number and timing of cylinders deac- used in EPA’s assumptions. the Canadian baseline vehicles’ lower
tivated is flexible and variable. This masses (curb weights). The average
dynamic control extends the engine’s Electric vehicles Canadian car in the CY 2016 baseline
operating range and further increases is 2.6% lighter than the U.S. car in its
Regardless of the technology cost
its effectiveness. The market share of MY 2015 baseline. The average truck
assumptions, Figures 2 and 3 illustrate
cylinder deactivation is expected to is 0.8% lighter in Canada than in the
that battery-electric vehicles play little,
grow from about 11% in 2016 to around United States. The estimated fleet-wide
if any, role in meeting the GHG 2025
47% by 2025. average weight reduction in Canada is
standards in Canada, as well as in the
7.5%–8.5% in 2025.
United States. The standards simply do
48V mild hybrids not require widespread uptake of EVs.
The 48V mild hybrid offers roughly Should national-level and local-level COST PER VEHICLE
governments desire broad adoption
half of the benefits of a full hybrid at When using the ICCT cost-benefit
of electric vehicles, additional strate-
only a third of the cost. These vehicles estimates, meeting the 2025 stan-
gies and incentives would be required
permit acceleration assist and turbo dards costs, on average, $865 (2015
beyond the CO2 standards.
lag reduction, both of which could CAD, $651 USD) more per vehicle
prove attractive to the Canadian fleet, than meeting the 2020 standards.
which, as of CY 2016, is more than Lightweighting The costs are higher when using EPA
25% turbocharged. Mild hybrids also Though not shown in the preced- cost-benefit estimates , at $1 , 368
enable more robust stop-start, regen- ing figures, lightweighting, or weight ($1,029 USD) more per vehicle for
erative braking, engine downspeed- reduction, is an extremely cost-effec- meeting the 2020 standards. Table
ing, sailing, and shifting the burden tive technology for reducing CO2 emis- 2 summarizes the results. The sum-
of some accessories from the engine sions. Every 10% reduction in weight is maries include direct manufacturing
4 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION WORKING PAPER 2018-23ASSESSING CANADA’S 2025 PASSENGER VEHICLE GREENHOUSE GAS STANDARDS: TECHNOLOGY DEPLOYMENT AND COSTS
costs, or the added costs incurred by Table 2. Estimated total costs for the Canadian fleet to meet the 2025 standards
manufacturers to meet the standards, compared to the costs of meeting the 2020 standards (2015 CAD).
as well as indirect costs, including
Costs to meet 2025 Costs to meet 2020 Difference
overhead, marketing, distribution, standards in 2025 standards in 2025 (2025 vs 2020)
warranty, and profit. Cars $1,542 $331 $1,211
EPA inputs Trucks $1,972 $461 $1,511
Figure 4 compares the total costs
incurred by individual manufacturers Fleet $1,766 $399 $1,368
on a fleet-wide basis for the Cana- Cars $1,045 $260 $784
dian fleet, under both ICCT’s assump- ICCT inputs Trucks $1,308 $369 $938
tions and EPA’s more conservative Fleet $1,183 $318 $865
assumptions.
The story is much the same under The average compliance costs shown
In general, the total costs for Cana- ICCT technology cost-effectiveness in Figures 5 and 6 are, in Canada,
dian manufacturers are quite similar to inputs, plotted in Figure 6. Six differ- within 2% of the average costs in the
those incurred by the same manufac- ent manufacturers experience slightly United States. The slight differences
turers in the United States, as shown higher compliance costs per vehicle in stem largely from the differences in
in Figures 5 and 6. Figure 5 shows that Canada than in the United States, but baseline fleet technology penetra-
six automakers have slightly higher the majority see a cost decrease. The tion and relative share of cars and
costs of compliance in Canada than in full fleet is estimated to cost about $8 trucks, which have different compli-
the United States. Most see a decrease more per vehicle in Canada than in the ance costs. The difference in manu-
in fleet-average costs, while the entire United States. As expected, the over- facturer car-truck split between the
GHG emissions program is estimated all program cost is much lower under two countries also suggests com-
to cost $28 less per vehicle in Canada the ICCT technology assumptions pliance costs will dif fer for each
than in the United States. than under those from the EPA. manufacturer.
$3,000
Cost to meet 2025 standards incremental to 2020 (2015 CAD)
Canada Combined - EPA Canada Combined - ICCT
$2,500
$2,000
$1,500
$1,368
$1,000
$865
$500
$0
BMW Ford Honda JLR Mercedes Nissan Tesla Volkswagen Fleet
FCA GM Hyundai/ Mazda Mitsubishi Subaru Toyota Volvo
Kia
Figure 4. Comparison of manufacturer fleet-average total costs to meet the 2025 standards in Canada under ICCT (dark) and EPA
(light) technology inputs compared to meeting the 2020 standards.
WORKING PAPER 2018-23 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION 5ASSESSING CANADA’S 2025 PASSENGER VEHICLE GREENHOUSE GAS STANDARDS: TECHNOLOGY DEPLOYMENT AND COSTS
$3,000
Cost to meet 2025 standards incremental to 2020 (2015 CAD)
US Combined - EPA Canada Combined - EPA
$2,500
$2,000
$1,500 $1,396 $1,368
$1,000
$500
$0
BMW Ford Honda JLR Mercedes Nissan Tesla Volkswagen Fleet
FCA GM Hyundai/ Mazda Mitsubishi Subaru Toyota Volvo
Kia
Figure 5. Comparison of manufacturer total costs to meet the 2025 standards in the United States (yellow) and in Canada (blue)
under EPA’s technology cost-effectiveness inputs when compared to meeting the 2020 standards.
$1,400
Cost to meet 2025 standards incremental to 2020 (2015 CAD)
US Combined - ICCT Canada Combined - ICCT
$1,200
$1,000
$857 $865
$800
$600
$400
$200
$0
BMW Ford Honda JLR Mercedes Nissan Tesla Volkswagen Fleet
FCA GM Hyundai/ Mazda Mitsubishi Subaru Toyota Volvo
Kia
Figure 6. Comparison of manufacturer total costs to meet the 2025 standards in the United States (yellow) and in Canada (blue)
under ICCT’s technology cost-effectiveness inputs when compared to meeting the 2020 standards.
6 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION WORKING PAPER 2018-23ASSESSING CANADA’S 2025 PASSENGER VEHICLE GREENHOUSE GAS STANDARDS: TECHNOLOGY DEPLOYMENT AND COSTS
SUMMARY OF TECHNOLOGY Table 3. Technologies and costs (2015 CAD) needed to meet the 2025 GHG standards for
DEPLOYMENT AND COST PER the Canadian fleet.
VEHICLE DISCUSSION Area Technology EPA inputs ICCT inputs
Table 3 summarizes the costs and High compression ratio Atkinson/Miller 23.9% 61.8%
technologies required to meet the Advanced
Turbocharged and downsized 39.3% 15.1%
2025 standards in Canada by MY combustion
Cylinder deactivation 46.1% 48.3%
2025. Both EPA and ICCT inputs lead
Non-hybrid and non-electric 80.8% 97.8%
to the straightforward conclusion that
improvements to conventional pow- Mild hybrid 17.2% 0.0%
Hybrid
ertrains make up the vast majority of Full hybrid 1.2% 1.2%
technology required to meet the GHG Plug-in hybrid electric 0.3% 0.3%
Electric
standards in 2025. Such improve- Battery electric 0.5% 0.7%
ments—termed “advanced combus- Incremental technology cost from 2020 standards $1,368 $865
tion” in Table 3—include Atkinson- Incremental technology cost from Baseline (CY2016) $1,766 $1,183
cycle and Miller-cycle engines, cylinder
deactivation, turbo-downsizing, and
combustion engines (81% under EPA Unit costs decrease as manufacturers
a suite of technologies that allow
cost assumptions and 98% under ICCT refine their production processes, use
more precise control over engine and
cost assumptions). less expensive materials, and simplify
transmission operation. Furthermore,
or improve component parts. When
automakers have recently announced Although the GHG 2025 standards the standards of the combined mar-
plans for additional advanced com- by themselves will not significantly ket first splits in MY 2021, it is pos-
bustion efficiency technologies that increase the number of zero-emission sible that the rate at which unit costs
were not incorporated into either vehicles (ZEVs), ZEVs can help Canada decrease will slow due to less produc-
EPA’s or ICCT’s inputs to the OMEGA achieve this goal. The ZEV standard in tion volume.
model. 2 Although electrification and Québec serves as an example of man-
full hybridization are not necessary datory requirements for automakers The ICCT made use of the individual
to comply with Canada’s 2025 GHG to sell or lease a minimum number of technology cost reduction-by-learn-
standards, the popularity of plug-in ZEVs per year. ing curves developed by EPA and
hybrids and fully electric vehicles will estimated the cost impact assuming
likely grow as battery technology potential volume sales reductions
improves and costs decline. Many Technology cost impact driven by a bifurcated North Ameri-
automakers have publicly committed and sensitivity analysis of a can market. Those technology cost-
to offering fully electric vehicles. Such bifurcated market learning curves were developed by
commitments serve as further indica- EPA for the 2012 and the 2016 regu-
tion that manufacturers have many A bifurcated LDV market in North
America would occur if Canada main- latory impact assessment analysis
possible pathways in which to improve (EPA, NHTSA, CARB, 2016), and were
the efficiency of their fleets and meet tained its 2025 targets, along with
California and the Section 177 states, adopted for all the technology cost
future GHG emissions standards. analysis included in the OMEGA model.
while the remainder of the U.S. mar-
ket kept GHG targets at 2020 levels For instance, the EPA estimates that
Note that engines can have several
out to 2025. Under this scenario, in 2020, non-hybrid, Atkinson-cycle
advanced combustion technologies,
approximately 40% of the combined engines and cylinder deactivation will
as well as some level of hybridization
Canadian-U.S. market would be sub- fall to about 90% of their cost the year
or electrification. Very little hybridiza-
ject to 2025 targets by MY 2025, and they were first introduced—a 10% cost
tion is required to meet GHG 2025
standards. They can be met with the remaining 60% would be covered reduction by learning. By 2025, the
a fleet that is comprised mainly of under 2020 targets until MY 2025. cost of those two technologies will
non-electric vehicles with advanced have fallen to about 85% of their origi-
The cost impacts of such a market were nal costs—a 15% reduction by learning
2 For example, Mazda will introduce a gasoline estimated by looking at the changes (see Appendix II). Similarly, EPA esti-
compression ignition engine in 2019, FCA’s in production volumes and adoption mates that by 2020, stop-start costs
2019 RAM pickup has a 48v hybrid system rates for key fuel-efficiency technolo- will fall to about 75% of their original
standard on the base V6 engine, and Infiniti’s
2019 QX50 has a variable compression ratio, gies. The cost of producing technolo- value and, by 2025, drop to about
turbocharged engine. gies decreases as volume increases. 64% of their original value.
WORKING PAPER 2018-23 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION 7ASSESSING CANADA’S 2025 PASSENGER VEHICLE GREENHOUSE GAS STANDARDS: TECHNOLOGY DEPLOYMENT AND COSTS
To assess the impact of Canada’s fleet EC 2012 EPA inputs ICCT inputs
$3,000
belonging to a smaller market with a
slower production volume rate, the $2,602
ICCT estimated the cumulative pro-
Average per vehicle costs (2015 $CAD)
$2,500
duction rate of technology adoption
$2,222
for 2020 and 2025, and then esti-
mated how the slower production $1,969 $1,972
$2,000
would affect the incremental cost $1,766
of the technology. Each technology $1,542
exhibits a particular cost impact for $1,500
$1,308
changes in production rates because $1,183
each technology has different levels $1,045
of complexity and is currently at dif- $1,000
ferent levels of market adoption levels.
For example, stop-start costs, which,
$500
under the full-learning rate would
reach about 64% of original cost by
2025, could fall to 70% of the original
$0
cost under a slower learning rate. This Cars Trucks Average LDV
corresponds to a 9.2% increase in cost
for stop-start in a split market. See Figure 7. Comparison of 2012 Environment Canada (EC) estimated manufacturer total
appendix II for further details, along costs (corrected to 2015 CAD) to the updated EPA’s and ICCT’s technology cost-
effectiveness inputs.
with a sensitivity analysis under higher
and lower rates of learning. Even under the (highly unrealistic) estimated by EC staff as $1,856 CAD
worst case, in which technology costs for cars, $2,453 CAD for trucks, and
Assuming that the learning rates
no longer decrease after MY 2020, the $2,095 CAD for the average Canadian
decelerate according to the market
average 2025 per-vehicle technology LDV (Regulations Amending the Pas-
split, under a 60% reduction in learn-
cost would only be about 8% higher senger Automobile and Light Truck
ing rate (i.e., only 40% of the market
than under full-scale learning. See Greenhouse Gas Emission Regula-
requires additional technologies) the
appendix II for further details. tions, 2012). Figure 7 compares these
majority of technologies experience
original 2012 costs with the cost values
a cost increase of 3% to 5%. Averag-
found in this analysis. Note that the
ing the percent increases, weighted Comparison to Environment original EC 2012 values, in 2011 CAD,
by estimated 2025 market share (fig-
Canada’s 2012 technology were corrected for inflation and con-
ure 1) leads to an overall cost increase
of 4.7%–4.9% , or $41–$67 (based
cost assessment verted to 2015 CAD (CPI = 1.0608). 3
on Table 3). The reason costs are I n D e ce m b e r 2 01 2 , Enviro n m e nt
Improved technology cost-effective-
affected so marginally if the market Canada staff presented the results of
ness inputs have significantly reduced
splits is that the most important tech- a technical analysis supporting the
the estimated cost of compliance with
nologies to meet the 2025 targets are proposal for harmonization with EPA’s
the MY 2025 standards in Canada. The
well-known, broadly applied improve- GHG rule covering MY 2017–2025, and
2016 EPA cost-effectiveness inputs
ments to conventional vehicles. consistent with the authority set by
bring EC’s 2012 costs down by about
the Canadian Environmental Protec-
21% on average. When compared to
A sensitivity analysis was applied to tion Act of 1999. The impact assess-
the most cost-effective inputs from
assess the impact of potential market ment team used the 2012 version of
the ICCT analysis, the EC 2012 costs
size variations on technology costs. the OMEGA model to estimate the
dip more than 47%.
The market sizes were defined as cost to comply for vehicles sold in
retaining the GHG 2025 targets, and Canada. The total incremental cost,
3 Bank of Canada, Inflation calculator. Accessed
were evaluated from 0% to 100% of in 2011 CAD, to comply with the MY on Sep 4th, 2018. https://www.bankofcanada.
the total North American market. 2025 targets (from MY 2016) was ca/rates/related/inflation-calculator/
8 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION WORKING PAPER 2018-23ASSESSING CANADA’S 2025 PASSENGER VEHICLE GREENHOUSE GAS STANDARDS: TECHNOLOGY DEPLOYMENT AND COSTS
Appendix I Vehicle efficiency technologies
Table 4. Technologies projected by the OMEGA model. Source: (EPA, NHTSA, CARB, 2016).
Technology Code Description
Turbocharging increases the specific power level, allowing a reduced engine size while
maintaining performance. The OMEGA model considers three levels of boosting, 18-bar brake
mean effective pressure (BMEP), 24-bar BMEP and 27-bar BMEP, as well as four levels of
TDS 18 / downsizing, from four cylinders (I4) to smaller I4 or I3, from V6 to I4 and from V8 to V6 and
Turbocharging and
TDS 24 / I4. Cooled EGR is also used for the 24-bar and 27-bar systems and the 27-bar system uses a
downsizing
TDS 27 2-stage turbocharger. An 18-bar BMEP is applied with 33 percent downsizing, 24-bar BMEP is
applied with 50 percent downsizing and 27-bar BMEP is applied with 56 percent downsizing.
In addition to the efficiency benefits, turbocharging improves performance, especially in steep
and high-altitude conditions.
Gasoline direct injection injects fuel at high pressure directly into the combustion chamber.
This provides evaporative cooling of the air/fuel charge within the cylinder, which allows for
Gasoline direct injection DI
higher compression ratios and increased thermodynamic efficiency. GDI is generally paired
with TDS to further support engine downsizing for improved efficiency.
A conventional AT is optimized by adding additional gears, which reduces gear ratio spacing
and increases the overall gear ratio spread. This enables the engine to operate more efficiently
Automatic transmissions AT6 / AT8 over a broader range of vehicle operating conditions, with options for six and eight gears.
In addition to the efficiency benefits, the higher number of gears improves performance,
especially in steep and high-altitude conditions.
Improvements to MTs include six-speed manual transmissions, offering an additional gear
Manual transmission MT ratio, often with a higher overdrive gear ratio, compared to the baseline five-speed manual
transmission.
DCTs are similar in construction to a manual transmission, but the vehicle’s computer controls
Advanced transmissions
DCT6 / shifting and launch functions, instead of the driver. A dual-clutch automated shift manual
and dual clutch
DCT8 transmission uses separate clutches for even-numbered and odd-numbered gears, so the next
transmission
expected gear is pre-selected, which allows for faster, smoother shifting.
Diesel engines have good fuel-efficiency due to reduced pumping losses and a combustion
cycle that operates at a high compression ratio, with a very lean air-fuel mixture. This
Advanced diesel DSL
technology requires the addition of relatively costly emissions control equipment, including
NOx after-treatment and diesel particulate filters (DPFs).
Also known as idle-stop or 12V micro-hybrid and commonly implemented as a 12-volt, belt-
driven integrated starter-generator, this is the most basic hybrid system that facilitates idle-
Start-stop system, 12 V SS
stop capability. This system replaces a common alternator with an enhanced power starter-
alternator, both belt-driven, and a revised accessory drive system.
MHEVs provide regenerative braking and acceleration assist capacity, in addition to idle-stop
capability. A higher voltage battery is used, 48 V, with increased energy capacity compared to
Mild-hybrid electric baseline automotive batteries. The higher voltage allows the use of a smaller, more powerful
MHEV
vehicle electric motor and reduces the weight of the motor, inverter, and battery wiring harnesses.
This system replaces a standard alternator with an enhanced power, higher voltage, higher
efficiency, belt-driven starter. The battery capacity is smaller compared to HEV batteries.
A full hybrid vehicle has larger capacity electric motors and batteries, enabling higher rates of
Hybrid electric vehicle HEV regenerative braking energy and acceleration assist, as well as limited operation on the electric
motor alone. An example of a hybrid vehicle is the Toyota Prius.
PHEVs are hybrid electric vehicles with the means to charge their battery packs from an
Plug-in hybrid electric outside source of electricity (usually the electric grid). These vehicles have larger battery packs
PHEV
vehicle than non-plug-in hybrid electric vehicles with more energy storage and a greater capability to
be discharged.
EVs are vehicles with all drive and other systems powered by energy-optimized batteries
Electric vehicle EV charged primarily from grid electricity. EVs with 75-mile, 100-mile and 150-mile ranges have
been included as potential technologies by the OMEGA model.
The second generation of low rolling resistance tires further reduce frictional losses associated
Low-rolling resistance with the energy dissipated in the deformation of the tires under load, compared to the now
LRRT2
tires common LRRT available on baseline vehicles. LRRTs tend to be stiffer than conventional tires,
giving them more resistance to rough roads.
WORKING PAPER 2018-23 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION 9ASSESSING CANADA’S 2025 PASSENGER VEHICLE GREENHOUSE GAS STANDARDS: TECHNOLOGY DEPLOYMENT AND COSTS
Includes continuous improvement in seals, bearings and clutches, super finishing of gearbox
High-efficiency gearbox HEG parts, and development in the area of lubrication, all aimed at reducing frictional and other
parasitic load in the system for an automatic, DCT or manual type transmission
Second-generation improved accessories include high-efficiency alternators, electrically driven
(i.e., on-demand) water pumps and cooling systems and alternator regenerative braking. This
Improved accessories IACC2
excludes other electrical accessories such as electric oil pumps and electrically driven air
conditioner compressors.
The second generation of components to reduce engine friction includes low-tension piston
rings, roller cam followers, improved material coatings, more optimal thermal management,
Engine friction reduction EFR2
piston surface treatments, and other improvements in the design of engine components and
subsystems that improve engine operation.
Adopted with boost, cooled EGR increases the exhaust-gas recirculation rate used in the
Cooled exhaust gas
EGR combustion process to increase thermal efficiency and reduce pumping losses. Levels of
recirculation
exhaust gas recirculation approach 25% by volume in the highly boosted engines modeled.
Reducing the aerodynamic drag of a vehicle reduces fuel consumption. The OMEGA model
considers two levels of aerodynamic improvements. The first one considers changes to
vehicle shape, which is constrained primarily by design considerations and should have zero
Active aerodynamics AERO implementation cost. The second option covers active aerodynamics technologies. One
example of active aerodynamic technologies is active grill-shutters. Active grill shutters close
off the area behind the front grill under highway driving conditions, reducing the vehicle
aerodynamic drag and thus, fuel consumption.
An Atkinson-cycle engine trades off decreased power for increased efficiency. Essentially,
the intake valve remains open for a longer duration on the intake stroke and closes during
the normal compression stroke. This results in an effective compression ratio that is less than
the expansion ratio during the power stroke, and increases the geometric compression ratio.
High compression
ATK This allows more work to be extracted per volume of fuel as compared to a typical Otto-cycle
Atkinson-cycle engine
engine. However, due to a smaller amount of trapped air mass (a consequence of air being
forced out of the cylinder through the intake valve early in the compression stroke), the power
density in the Atkinson cycle is lower than that of the Otto cycle. Increasing the compression
ratio can partially compensate for this drawback.
Vehicle weight reduction, also referred to as lightweighting, reduces the energy needed
to overcome inertial forces, thus yielding lower fuel consumption and GHG emissions.
Weight reduction WR
Lightweighting was modeled in OMEGA assuming per-vehicle changes of 0%, 5%, 10%, 15%
and 20%. The maximum, 20%, was applied only to 2025 vehicles.
10 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION WORKING PAPER 2018-23ASSESSING CANADA’S 2025 PASSENGER VEHICLE GREENHOUSE GAS STANDARDS: TECHNOLOGY DEPLOYMENT AND COSTS
Appendix II Potential
Percentage of original direct manufacturing cost
100%
technology cost effects of a 90% 4.9%
3.6%
bifurcated North American 80% ATK, DEAC
11.3%
market: Discussion 9.2% TDS, GDI,
70% transmissions,
If Canada, California, and the Section MHEV-Non-batt
60% MHEV-batt
177 U.S. states maintain the GHG stan- SS
dards unchanged, approximately 40%
50%
of the combined Canadian-U.S. mar-
ket would be subject to 2025 targets, 40%
while 60% would remain under the
30%
2020 target through MY 2025. 2020
20% 2025
In this situation, it is possible that 2025 reduced learning rate
10%
rates of decrease in unit production reduced learning rate
costs will slow, due to slowed accu- 0%
mulated production volume. Typically, Time from base direct manufacturing cost (illustrative)
as cumulative production volumes
increase, unit costs decrease as manu- Figure 8. Full learning rates and reduced learning rates of fuel-efficiency technologies
facturers learn to improve processes,
Table 5. Percent increase in technology cost due to a North American market split
use less expensive materials, and sim-
plify or improve component parts. Percent OMEGA estimated OMEGA estimated
Generally, the newer the technology, change in 2025 penetration, 2025 penetration,
the lower the cumulative production, Technology cost in 2025 EPA assumptions ICCT assumptions
and the less experience manufactur- Turbo-downsizing 3.6% 39.3% 15.1%
ers have with it. Atkinson cycle 4.9% 23.0% 61.8%
GDI 3.6% 67.9% 80.8%
Through numerous studies contained
Stop-start 9.2% 28.3% 14.3%
in, and since, the initial 2012 rulemak-
Cylinder deactivation 4.9% 46.1% 48.3%
ing for the U.S. 2017–2025 greenhouse
gas standards, the EPA refined its MHEV* 6.4% 17.2% 0.0%
learning curves and where technolo- Transmissions 3.6% 92.8% 92.3%
gies lie on these curves (EPA, NHTSA, Mass reduction 5.8% 7.6% MR fleet-wide 8.4% MR fleet-wide
CARB, 2016). Weighted average cost change 4.9% 4.7%
Figure 8 illustrates this concept with * MHEV costs are a weighted average of battery and non-battery component costs. (EPA, NHTSA,
CARB 2016) estimates battery costs to be 36% of total MHEV costs.
key f u e l - ef f icie n c y te ch n olo gies
required to meet the 2025 targets. The
Several technologies are located on their original value by 2020 and drop
solid blue curve represents a technol-
the curves based on EPA’s assumed to about 64% of their original value
ogy that is already fully learned out by
rate of learning. For instance, EPA by 2025.
manufacturers. The cost in the year it
is introduced (100%) does not change estimates that, in 2020, non-hybrid,
As the figure shows, manufacturers
dramatically over many years, and it Atkinson-cycle engines and cylinder
have significant experience with a
decreases by about 1.5% annually. The deactivation will fall on the blue curve
majority of technologies, and these
solid brown curve illustrates a tech- at about 90% of their original cost. By
technologies fall on the blue line.
nology that undergoes more learn- 2025, the cost of these two technolo-
ing after its introduction. Its costs gies will have fallen to about 85% of The dotted blue and brown lines illus-
decrease rapidly at first, then the rate their original costs. Similarly, on the trate how the learning curves shift
of decrease slows to about the same brown curve, EPA estimates that stop- assuming production volume in a
rate as a fully learned technology. start costs will fall to about 75% of bifurcated market is reduced to 40%
WORKING PAPER 2018-23 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION 11ASSESSING CANADA’S 2025 PASSENGER VEHICLE GREENHOUSE GAS STANDARDS: TECHNOLOGY DEPLOYMENT AND COSTS
of full learning rates (solid lines). The 18%
dotted lines decrease at a rate 40% as SS
Percent increase in 2025 estiamted cost
16%
fast as the solid lines, indicating the MHEV
rate of production volume accumula- 14% WR,ASSESSING CANADA’S 2025 PASSENGER VEHICLE GREENHOUSE GAS STANDARDS: TECHNOLOGY DEPLOYMENT AND COSTS
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