Transportation emissions remain the largest source of greenhouse gas emissions nationwide. Regulatory actions and policy proposals at the federal and state levels aim to reduce these emissions. The federal government recently announced updated regulations requiring vehicle manufacturers to reduce emissions from the vehicles they produce, and automakers can meet these requirements by producing cleaner gas cars and more electric vehicles. Although meaningful, vehicle regulations alone will not be sufficient to achieve necessary reductions in greenhouse gas emissions and other air pollution.
This blog post explores how complementary policies like clean transportation standards can accelerate emissions reductions by further increasing electric vehicle adoption and lowering emissions from the liquid fuels used in gas-powered cars.
US Environmental Protection Agency announces updates to federal vehicle emissions regulations
This spring, the US Environmental Protection Agency (EPA) announced updated emissions regulations for light- and medium-duty vehicles and heavy-duty vehicles. By limiting vehicle tailpipe emissions, these regulations will reduce air pollution and improve vehicle efficiency, leading to fuel cost savings for Americans. The new rules will apply to vehicles manufactured between model years 2027 and 2032.
(Note: For more information about those regulations, view our blog posts unpacking the rules for light- and medium-duty vehicles and for heavy-duty vehicles.)
The EPA forecasts that the regulations will diversify the vehicle market, with more electric and other zero-emission vehicles replacing conventional vehicles on the roads. According to the projections:
- By 2032, 68 percent of new light-duty vehicle sales will be electric vehicles and medium-duty vehicle sales will be electric vehicles (including plug-in hybrid and battery-electric vehicles).
- Between 25 and 60 percent of larger vehicles (including long-haul tractor trailers, transit and school buses, and public utility trucks) will be zero-emission vehicles powered by electricity or hydrogen.
Beyond the federal emissions regulations, most states are prohibited from setting their own vehicle emission regulations due to federal preemption, with the United States establishing and updating these since 1969. However, California has the unique ability to enforce its own, more stringent regulations through an EPA waiver. This exception exists because California began setting its emissions regulations before the federal government established a national standard.
While other states cannot establish their own emissions regulations, they can either adopt California’s regulations or stick with the federal rule. So far, 17 states and Washington, DC, have adopted California’s regulations—known as “Advanced Clean Cars”—for light-duty vehicles sold within their state. Ten of those states have also adopted stronger regulations for medium- and heavy-duty vehicles, known as “Advanced Clean Trucks.”
California is currently considering updates to Advanced Clean Cars, including a proposed requirement that 100 percent of new vehicle sales are zero-emission vehicles by 2035. The Advanced Clean Truck rule requires an increasing percentage of medium- and heavy-duty vehicle sales to be zero-emission or near-zero-emission vehicles by 2035. Those percentages range from 40 percent for class 7 and 8 tractor trucks to 75 percent for class 4 to 8 rigid trucks.
Clean transportation standards complement vehicle emissions regulations
Although both the EPA and California are increasing the stringency of their vehicle standards to impressive levels, these regulations alone will not be enough to reduce greenhouse gas emissions to the levels needed to address climate change.
Complementary policies like clean transportation standards—which have been implemented in California, Oregon, Washington, and New Mexico and which are being considered in multiple other states—will be necessary to fill the gaps and achieve swifter progress.
About clean transportation standards
A clean transportation standard (CTS)—also known as a clean fuel policy or low-carbon fuel standard—is a technology-neutral, performance-based policy that reduces the use of higher-carbon fuels and increases deployment of low-carbon fuels. The policy sets a declining carbon intensity standard that requires reductions in the average carbon intensity of transportation fuels over time relative to a baseline year.
Under a CTS, all fuels are assigned a carbon intensity score, which incorporates all emissions in the fuel’s “well-to-wheels” lifecycle, from production to transportation to end use. Carbon intensity scores are measured in grams of carbon dioxide equivalent (CO2e) per megajoule of energy provided.
For ethanol, this includes emissions from growing and transporting corn, refining and transporting ethanol, and ultimately burning the fuel in a vehicle. For electricity, this includes emissions from electricity generation and transmission and accounts for the higher efficiency of electric vehicles compared to gas cars.
In the clean fuel marketplace, fuel producers with higher carbon intensity scores generate deficits, while fuel producers with lower carbon intensities generate credits. To comply with the standard, fuel producers with a deficit must reduce their emissions or purchase credits from lower-carbon fuel producers. This results in higher emitters paying into the program and lower emitters earning credit revenue by participating, with the lowest emitters benefiting the most.
Note: CO2e = carbon dioxide equivalent. CI = carbon intensity.
Clean transportation standards provide needed support for electric vehicle charging
Although vehicle policies like the new federal tailpipe emissions regulations can increase the number of electric vehicles available to consumers, it does not ensure that the charging infrastructure is there to support those vehicles.
Current levels of electric vehicle adoption nationwide are still quite low, introducing a “chicken-and-egg” problem for electric vehicle charging: low demand for public charging leads to poor economics for charging station operators, which leads to less investment in public charging stations. This leads to fewer households making the switch to an electric vehicle for fear of unreliable public charging access. Although vehicle regulations can make more clean vehicles available to households, they do not address this lack of public charging.
CTS policies address the need for public electric vehicle infrastructure by providing direct, ongoing funding to charging station operators. Fueling electric vehicles with electricity generates credit revenue under a CTS, improving the economics of installing charging stations. This is true both for public charging stations and privately owned vehicle fleets. California’s CTS—called the Low Carbon Fuel Standard—has provided over $1 billion in credit revenue to date for electric vehicle charging, not including residential charging.
Clean transportation standards also reduce emissions from existing vehicles
Another factor limiting the effectiveness of vehicle-only policies is the relatively long turnover rate for vehicles. With the average American household keeping one vehicle for over 12 years, gas-powered cars will be on the roads for decades, even under the most stringent vehicle standards.
CTS policies not only encourage electric vehicle adoption but also result in the deployment of lower-carbon liquid fuels. The financial incentives created by the policy encourage all fuel producers—including producers of the gasoline and ethanol used in gas cars—to reduce emissions along their supply chains. This means the policy will impact even those vehicles already on the road today. And this is not limited to on-road vehicles—CTS policies also create incentives to use cleaner fuels in other vehicle types, such as airplanes and boats.
On the medium- and heavy-duty side, CTS policies increase deployment of cleaner “drop-in” fuels, which can displace fossil fuels in existing diesel engines. In fact, renewable diesel—a drop-in fuel that can be used in diesel vehicles like buses, heavy-duty trucks, and delivery vans—has seen some of the most significant growth under California’s Low Carbon Fuel Standard. This results in immediate greenhouse gas benefits for existing diesel vehicles while the market for zero-emission heavy-duty vehicles develops.
While on-road vehicles are a major source of transportation-related greenhouse gas emissions, other types of vehicles, like airplanes and marine vessels, also contribute to climate change. Unlike many vehicle-only policies that focus just on cars and trucks, CTS policies also create incentives for other vehicle types—such as airplanes and boats—to decarbonize. For example, fuel producers can earn credits for supplying sustainable aviation fuel, a drop-in fuel derived from renewable or waste feedstocks that can be used in existing aviation engines.
Clean transportation standards can provide financial incentives for electric vehicle purchases
Finally, tailpipe emissions standards require automakers to produce cleaner cars, but they do not make it easier for households to purchase electric vehicles. Although electric vehicles have lower lifetime costs than comparable gas cars, they still tend to cost more upfront. Financial incentives that reduce the upfront costs of electric vehicles can help make them more accessible to all households and more attractive to consumers.
In addition to supporting charging infrastructure as described above, CTS policies can provide ongoing funding for electric vehicle rebates.
For example, California’s Low Carbon Fuel Standard regulation allows electric utilities to generate credits on behalf of their customers who charge electric vehicles at home. Those utilities must contribute a portion of those credits to the Clean Fuel Reward program, which provides up to $750 off the purchase price of a new electric vehicle.
The Clean Fuel Reward program has provided over $400 million to electric vehicle buyers in California since its inception. The program is temporarily suspended, given the high demand for the program’s limited resources, but the state continues to evaluate the program’s future.
Similar CTS policies have been established in Oregon and Washington. In both states, the programs require electric utilities and other entities generating residential credits to reinvest credit revenue into transportation electrification projects, including projects that increase access to electric vehicles, like financial incentives.
Multiple policies are needed to meet climate goals
With the transportation sector accounting for the largest share of total greenhouse gas emissions in the United States, we need to make swift progress to reduce the sector’s climate impact. The federal government’s new tailpipe emissions standards will jump-start the transition to cleaner vehicles. However, complementary policies like a CTS are needed to fund the charging infrastructure for electric vehicles, reduce emissions from vehicles already on the roads, make electric vehicles more accessible to everyone, and ultimately deploy cleaner fuels across all modes of transportation.
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