Zero-Emission Vehicle Regulations Get Tougher for 2012 - Feature

Here's an interesting read....
California Dreaming: The new CARB diet.
BY KEITH BARRY, PHOTOGRAPHY BY MORGAN SEGAL, ROY RITCHIE, AND THE MANUFACTURERS, ILLUSTRATION BY SEAN MCCABE January 2011

The California Air Resources Board (CARB) is trying to use a version of a “cap-and-trade” policy to stimulate automakers to build Zero-Emission Vehicles (ZEVs). CARB has mandated that starting in 2012, major automakers will have to produce a certain number of ZEVs. If an automaker can’t build enough to satisfy the regulation, it will be able to purchase credits from those that make more ZEVs than are required, thus covering its own shortfall. While it may sound onerous, it may also sound familiar—the latest ZEV mandate grew out of more than 20 years of CARB regulations. And during that time, CARB learned that the government can’t force engineers to build new technology, just as automakers learned how to use the regulatory process for their own good.

A Mandate With Destiny

Two decades ago, gas was cheap and electric-car technology had languished since the early-Eighties fuel crisis. Aside from a niche market of environmentalists and early adopters, the general public wasn’t interested in a car with a limited range and a high MSRP. Still, California had a pollution problem, and CARB, somewhat speciously, sought to reduce smog by encouraging automakers to build tiny volumes of  ZEVs. In 1990, CARB announced that it would require that ZEVs make up two percent of every automaker’s fleet by 1998, increasing to 10 percent by 2003. As the technology advanced, went the rationale, costs would come down and ZEVs would gain widespread acceptance. Automakers balked, arguing that it was impossible to build that many commercially viable ZEVs in eight years. CARB and automakers spent the better part of  the ’90s in court.

A compromise came in 2003 when CARB replaced the strict mandate with incentives for manufacturers to build ZEVs. Automakers that sold cars in California now had to earn a certain amount of yearly credits by building low-emission vehicles lest they incur fines. By 2008, 10 other states that follow CARB regulations (Connecticut, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Rhode Island, and Vermont) had adopted the incentive-based ZEV mandate.

Automakers earned full credits by building ZEVs and partial credits for hybrids and gas-powered Ultra Low-Emission Vehicles (ULEVs). If an automaker couldn’t earn enough credits with its own product, it could buy credits from a company with an excess of credits, essentially subsidizing the creation of ZEV technology without assuming the risk of developing it in-house. Carmakers that didn’t comply could be fined $5000 per credit not produced, though CARB has yet to levy a penalty. For the past seven years, most manufacturers met the mandate with a mix of hybrids and gas-burning ULEVs, plus a few hydrogen fuel-cell or electric cars. Automakers negotiated the buying and selling price of credits on their own, reporting sales to CARB after the fact.

Cutting Carbs

Starting in 2012, CARB regulations get stricter, requiring large-volume automakers that sell more than 10,000 vehicles in California yearly—currently Toyota, Honda, Nissan, Ford, GM, and Chrysler—to produce among them a total of 7500 ZEVs between 2012 and 2014, a figure that rises to 25,000 for the 2015-to-2017 time frame. Also starting in 2012, each individual automaker must earn a certain number of ZEV credits depending on its sales numbers. A percentage of those ZEV credits must be “pure,” or earned solely from the sale of ZEVs and not from selling hybrids or gas-burning ULEVs. Automakers that don’t sell that many ZEVs must buy “pure” ZEV credits from other manufacturers. Credits expire after three years.
“We want people to earn credits and use them,” says Anna Gromis-Wong, an air-pollution specialist at CARB. “We want to get out of a demonstration phase.”

Currently, only all-electric vehicles such as the Tesla Roadster and the upcoming Nissan Leaf—plus hydrogen fuel-cell cars such as Honda’s FCX Clarity and Mercedes-Benz’s F-cell—meet the ZEV regulation. The much-touted Chevy Volt doesn’t count as a ZEV because it has an onboard internal-combustion engine. Carmakers seem to be tolerant of the new regulations. Whether it’s to reduce airborne pollutants, cut greenhouse-gas emissions, or wean Americans from foreign oil, it seems that this time around—like it or not—ZEVs are here to stay.

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