Alliance Response to EPA and DOT Proposed Fuel Economy Labels

This letter responds to the Environmental Protection Agency and Department of Transportation proposed fuel economy labels for new vehicles. The proposed labels provided two suggestions for the redesign of the fuel economy label.

Our comments address the need to highlight fuel consumption metrics most accurate and useful to consumers, make comparisons across all vehicles, recognize the role of a vehicle label in a broader context of energy labeling, present lifecycle environmental impacts in a way that is meaningful and familiar to consumers and consider the long-term development of the label in considering the design of the label today.

Alliance Letter - Full Text

November 22, 2010

U.S. Environmental Protection Agency 
1200 Pennsylvania Ave., NW 
Washington, DC 20460

SUBJ: Revisions and Additions to Motor Vehicle Fuel Economy Label (Document ID EPA-HQ-OAR-2009-0865-0005)

The Alliance to Save Energy welcomes this opportunity to comment on the proposed EPA and DOT labels for new vehicles, and commends your efforts to solicit the views of industry stakeholders and the public.   We hope that both agencies will provide further opportunities for dialogue in order to assure continued improvement of the labels with the advance of vehicle technologies, evaluation standards, and public awareness of energy issues.

The Alliance to Save Energy is a non-profit coalition of business, government, environmental and consumer leaders that supports energy efficiency as a cost-effective energy resource and advocates energy-efficiency policies that minimize costs to society and individual consumers, and that lessen greenhouse gas emissions and their impact on the global climate. The Alliance has worked extensively to communicate energy use and energy disclosure issues to the general public, including work on efficiency labeling for vehicles, appliances, commercial buildings, and homes.

On the whole, the Alliance views both of the proposed labels as significant improvements over the existing label and believes their implementation will help consumers choose more efficient and environmentally friendly vehicles from a variety of vehicle types.  Our main recommendations, detailed in relation to each topic area below, are that the EPA/DOT vehicle label should:

• Focus on metrics that provide the most relevant and accurate comparisons for consumers by emphasizing fuel consumption rather than fuel economy or environmental performance in prominent comparative metrics, such as slider bars or rating systems.     In particular, the A-D letter grade in the proposed label one should reflect each vehicle’s fuel consumption per 100 miles, a metric that EPA and DOT find enables more accurate comparisons of fuel use and expenditure. In addition, the fuel consumption metric is more accurate across all regions than the other proposed metrics, which are limited by regional variability in fuel cost or emissions based on electricity fuel source.
• Make comparisons across all vehicles, not solely within a vehicle class. We support the proposed EPA/DOT stance on making comparisons across all light-duty vehicles in both prominent metrics and other information on the label. As noted in the EPA/DOT literature review, consumers often consider several vehicles classes when making purchasing decisions, and in addition, comparing only within a vehicle class would skew the magnitude of comparisons among various vehicles. We strongly believe that future iterations of the label should preserve these comparisons across the entire fleet.
• Recognize the role of a vehicle label in a broader context of energy labeling and, where possible, harmonize the design to match existing and proposed labels for appliances, light bulbs, and homes. In particular, we recommend using familiar units that are comparable with other energy-related labels, such as fuel costs or annual GHG emissions. We also recommend that the EPA and DOT take steps to develop a consistent design with other energy labels, as seen in the European Union labeling format. 
• Present environmental information in a way that is meaningful and familiar to consumers. In particular, we recommend using lifecycle, not tailpipe, greenhouse gas emissions and displaying emissions amounts in familiar units, such as lbs. or tons of CO₂ per year.
• Consider the long-term role of the label by including information that will become more relevant as vehicle technologies and public understanding advance, even if not central to consumer decision-making today. In particular, we support the decision to introduce the fuel consumption metric, in gallons per hundred miles, but not at the expense of eliminating the fuel economy metric.  We commend the efforts to find accurate comparisons for the growing number of advanced technology vehicles.

Responses to Issues in the RFI

Goals

The Alliance supports the primary goal of designing new labels to help consumers choose more efficient and environmentally friendly vehicles from a variety of vehicle types.  The request for comment also suggests that the EPA and DOT seek to design the label to anticipate factors that may be more important in the future, as vehicle technologies, evaluation protocols, and public awareness of energy issues advance. This may include information on fuel consumption which is not yet familiar to many consumers and information addressing advanced vehicle technologies. EPA and DOT should also consider the manner in which consumers get their information in the future as well. We commend the EPA and DOT for anticipating these advances and support this goal, so long as it does not supplant the overriding goal of making the label easily understood by consumers today.

In addition, we recommend that the EPA and DOT consider a secondary goal to design labels that facilitate understanding of all energy-related purchases.  Consumers face an increasing number environment and energy-related labels on appliances, equipment, lighting, consumer electronics, and even buildings.These labels together shape how consumers understand energy-related purchases, so if the benchmarks and design of one label conflict with other labels, consumers may be less likely to understand or act on any of them.  Consistency across labels will also increase the familiarity of each, A key recommendation cited in the RFI is to increase simplicity. As some of the most prominent and long-standing energy labels on the market, vehicle labels can play an important role in building familiarity and raising public awareness of energy issues.

Fuel Economy and Fuel Consumption

We support EPA and DOT’s decision to display both fuel economy and fuel consumption on the new labels. As your research demonstrates, consumers seek fuel economy as a primary metric for comparing vehicles, so the label should continue to display prominently a combined fuel economy rating.

We understand the concerns of EPA and DOT, however, that fuel economy alone does not present the most meaningful comparison of vehicle efficiency. The RFI provides a comprehensive review of the MPG illusion and suggests that a fuel consumption metric, such as gallons per 100 miles, would allow for better comparisons of projected fuel use and cost across vehicles.  We agree with this conclusion. In addition, we point out that the fuel consumption metric is more consistent with other energy-related labels, such as the prominent kWh per year on EnergyGuide label.  Again, we believe that developing a consistent vocabulary will increase the familiarity and usability of all energy-related labels. For both of these reasons, we support the inclusion of fuel consumption metrics in the vehicle label.

Energy cost is also an effective proxy for fuel consumption that shares the advantages of the gallons-per-100-miles metric proposed in the RFI with the added benefit of enabling comparisons across fuel types.  With the introduction of advanced, alternative-fuel vehicles, we see this comparison across fuel types as increasingly important, and we recommend that EPA and DOT consider elevating energy cost information as a primary metric of comparison among vehicles. As noted in the EPA and DOT final report, consumers like and are attached to MPG. The report further acknowledges that if fuel consumption was to make it to the label, it would need to be a slow transition process occurring over time and in conjunction with retaining MPG information in the prominent position.

Greenhouse Gas Emissions

We strongly disagree with the preliminary decision to display tailpipe emissions, not fuel lifecycle emissions, on the label.  We recognize the numerous challenges associated with displaying lifecycle GHG emissions, but believe that tailpipe emissions alone are an insufficient – and even misleading – measure of the climate impacts.

The EPA and DOT have identified a number of challenges in using lifecycle GHG emissions in two broad categories: 1) developing the relevant information and 2) providing it to consumers in a manner that is accurate and meaningful, especially in the context of a label.  In both cases, we believe that, rather than resolving the issue, presenting tailpipe-only emissions only shifts the onus to the consumer: in order to make accurate and meaningful conclusions about tailpipe-only emissions, an informed consumer would have to develop some of the same calculations that make lifecycle emissions difficult, but with considerably less expertise.  The outcome is worse for the uninformed consumer: while lifecycle emissions may misrepresent the variability in emissions for electric vehicles, tailpipe-only emissions may appear systematically-skewed towards electric vehicles, potentially threatening the credibility of the entire label.

To provide the most meaningful GHG emissions information to consumers, we recommend several ways to address the challenges raised by EPA and DOT:

Developing Relevant Information

Calculating Emissions Rates presents a number of challenges. For electricity, the range in regional emissions rates renders a national average emissions estimate imprecise for most buyers. In addition, time-of-day variability, long-term changes in the fuel mix, and the difference between average and marginal impacts of the electric grid further complicate an accurate and meaningful greenhouse gas emissions estimate.  Despite these challenges, for simplicity, and in recognition of the national market for vehicles, we recommend using national average emission factors to calculate lifecycle GHG emissions for labels. For the informed consumer, regional estimates and comparisons, and perhaps consideration of other factors, could then be provided on the website.  For the uninformed, we believe that the benefits of providing an accurate but variable measure of overall climate impacts are greater that the precision, but systematic bias of tailpipe emissions.

Defining Lifecycle emissions: EPA and DOT seek comments on how to define lifecycle emissions for electricity and other fuels.  In particular, the request for comment seeks input on whether lifecycle includes the extraction, refining, distribution and combustion of each fuel and whether the lifecycle emissions of the vehicle itself ought to be similarly considered.  All these emission sources are relevant. They should be estimated and included to the extent that they 1) are significant, 2) differ between vehicles, and 3) can with reasonable effort be estimated more accurately than the null assumption of neglecting them.  

Given these parameters, the current label should be designed to convey the information available today with the flexibility of providing more comprehensive lifecycle information as it becomes available.

Providing the information to consumers in a manner that is accurate and meaningful

Communicating Variability: EPA and DOT cite the difficulty in communicating the range of possible emissions rates in an accurate and meaningful way. While we appreciate the difficulty, we point out that this issue is not unique to emissions, and has been addressed sufficiently in other areas:  Annual fuel cost, for example, is a staple metric in most energy labels. In each case, individual usage variability and fluctuations in energy prices will have a marked effect on the label’s ability to predict any individual user’s experience. Even so, annual estimated fuel costs remain prominent, in large part because the generalizations make the accurate (but hard to interpret) numbers more meaningful. 

In presenting global warming impacts, the agencies should similarly accept some variability. Lifecycle emissions will provide the most relevant information to consumers, even if not accurate to all consumers.  As with annual fuel costs, the number should be accompanied by a short explanation of the assumptions, such as “Emission estimates are based on average emission rates for each fuel.”

Providing Additional Information on a Website:  EPA and DOT seek comment on the role of the website for providing information on global warming impacts.  We commend the agencies for proposing this comprehensive website and believe that the personalized information it provides will be of major use to interested consumers. Even so, we believe the label should house the most relevant information and, as stated above, lifecycle emissions are more relevant than raw tailpipe emissions values.  The website should house tailpipe-only emissions estimates, personalized regional information and comparisons calculators for inquisitive consumers.

Tailpipe-Only Emissions Language

If the agencies uphold the proposed tailpipe emissions on the label, we believe they should change the “tailpipe only” language to better communicate the weight of the qualification.  At a minimum, the labels should provide some estimate of how tailpipe emissions contribute to the overall emissions for each fuel type.  For example, gas vehicles could carry the note “Tailpipe emissions typically include 80% of all greenhouse gas emissions for gasoline,” while electric vehicle labels could read “Tailpipe emissions do not include the emissions from electricity generation, which could be near zero or, in some cases exceed tailpipe emissions from gasoline vehicles, depending on the fuel used to generate the electricity.” We believe that this change will make the information more useful to consumers by providing them some basis for understanding tailpipe greenhouse gas emissions.

Greenhouse Gas Emission Units

EPA and DOT seek comment on the proposed GHG emissions units, grams CO₂ per mile. We recommend that the agencies use a more widely-used metric that can be applied to a broader set of activities beyond vehicle purchasing decisions.  We see this as an important opportunity to educate the public more broadly about carbon emissions and believe the grams CO₂ per mile metric is unnecessarily limited to vehicle travel distances. A better option may be pounds CO₂ per year for an average driver, calculated using the 15,000 miles per year estimate already used elsewhere on the label and in EPA’s individual emissions calculators online. We recognize that some accuracy will be lost in making this assumption, but believe that the resulting emissions estimates will still meet the primary goal of accurate comparisons across vehicles while also providing a reference point for other greenhouse gas-emitting activities.

Fuel Economy and GHG Rating Systems

The agencies seek comment on the proposed fuel economy and greenhouse gas rating systems, including the A-D letter grade on proposed label 1. Overall, we are supportive the presentation of a predominant primary metric in a categorical ranking, as research in appliance labeling has shown that categorical labels are generally easier for consumers to understand than continuous scales, and they motivate manufacturers to make improvements to achieve a new category.  We do have several suggestions for the proposed approach, however:

• The primary metric should be both accurate and meaningful to consumers. Fuel consumption could be considered as a primary means of comparison.  The other candidate metrics present several unanswered challenges: For the environmental metric, the EPA and DOT focus group research suggests that most consumers do not consider environmental impacts in the vehicle-purchasing process. In addition, as discussed above, the regional variability in electricity rates means that neither lifecycle nor tail-pipe emissions can present estimates accurate and precise enough to serve as the primary point of comparison. With regard to fuel economy, the EPA and DOT studies accurately depict the challenge of the “mpg illusion” and suggest that the metric does not provide the most meaningful comparison for consumers.
• The gradations should balance specificity with simplicity.  EPA and DOT should ensure to define narrow enough categories (e.g. letter grades, number of stars, etc.) to distinguish among models but a sufficiently small number of categories allow memorable comparisons.  We believe the proposed rating system achieves that balance: As discussed in the RFI, most consumers seriously consider more than one vehicle-class in their purchasing process and, for the minority that does not, the proposed system would assign at least three grades to each vehicle class, a sufficient starting point for comparison. We believe that EPA and DOT should maintain at least this level of distribution across vehicle classes in the next and final iterations of the label.
• The rating system should be consistent with other energy-related purchases. We believe that the agencies should design the fuel economy label to create consistency across a variety of energy-related purchases. Using similar designs and metrics with other labels will increase the “familiarity” of each new label, a key concept recommended by the expert panel in the RFI. The European Union, for example, uses the same label design for a variety of energy-related purchases, including appliances, cars and buildings. The label features a prominent, color-coded A-G rating system and similar metrics of energy consumption, efficiency and carbon emissions.  We believe that the EPA, DOT and DOE should take similar steps to harmonize U.S. energy labels. As a first step, the vehicle label should prominently display the same information featured on the EnergyGuide label, such as annual fuel cost and energy consumption. In addition, we recommend that the agencies consider designing the rating in a way that, like the color-coded bars in the European labels, could be consistent across all energy-related labels in the future.

Other Emissions

The agencies seek comment on the separate display of other criteria pollutants. While we do not anticipate consumer demand for two separate pieces of environmental information, GHGs and criteria pollutants, on each label, we recognize that the regulations may require the separation of GHGs and, more importantly, we stress the importance of being able to make comparisons across labels. If the agencies anticipate the introduction of stand-alone GHG emission data on other labels or cannot determine a rational way to combine criteria pollutants and GHG emissions for buildings or appliances, we recommend keeping the information separate. Otherwise, combining criteria pollutants with GHG emissions would simplify the amount of information contained on each label, and reduce the amount of questionable environmental information.

Other Forms of Comparison

The agencies seek comment on the effectiveness of the slider bars to demonstrate the highest fuel economy/lowest GHG emissions vehicles, and to show the range of comparable vehicles. Overall, we support the use of slide bars to demonstrate ranges. In particular, we believe that including all vehicles, not only vehicles in the same class, in the scale will allow consumers to more easily make comparisons across vehicle classes, an underappreciated need, as demonstrated in your research.

As currently proposed, however, the slide bars could misrepresent the relative distribution of vehicles in each metric, hindering accurate comparisons. The fuel economy rating bar, for example, does not clearly depict whether the majority of cars rate near the 103 MPGe upper limit or if an outlier is skewing the comparison while most would rate much lower.  

To address this issue, we suggest that all slide bars display metrics as a non-inverse functions, such that the main variable (gallons of gasoline, GHG emissions, other emissions, etc.) is in the numerator and the normalizing variable (miles or hundreds of miles) is in the denominator. This approach would reduce the magnitude of the outliers and the curtail range growth over time.  For example, rather than using the proposed fuel economy slide scale, which ranges from 10 to 103 MPGe, with a median around 22MPGe and the maximum set by an outlier electric vehicle, we recommend that the slider display fuel consumption information. Current fuel consumption ratings would fall between 1 and 10 gallons per 100 miles, with the minimum bound at zero and the upper limit set by existing fuel economy standards.

We believe that this approach would reduce the skew of high efficiency vehicles while presenting fuel consumption information that is more relevant to consumer comparisons, as addressed earlier in our comments.  In addition, the non-inverse functions would mean that lower numbers are always better, increasing consistency across the label.

To complement our primary recommendation, above, we suggest two additional approaches to better represent vehicle distribution:

1. The slider needle could be positioned to reflect the relative position of that vehicle against all models for a given year, rather than by the unit measure.  As an example, a 25 MPG vehicle would fall to the left of the EPA/DOT proposed fuel economy slide bar, which ranges between 10 and 103 MPG, but would fall closer to the middle of a distribution-weighted slide bar.
2. The slide bars could contain a small line graph representing the distribution of vehicles along the measurement. As such, each slide bar would not only display the range of the measure, but would also graphically illustrate the proportion of vehicles that fall at each point along that range. This approach, which has been favorably received in other applications, may provide enough information to allow for meaningful comparisons without overcomplicating the label. Consumer testing would be necessary to test this approach.

Either approach, in our view, would provide valuable information by allowing the consumer to make better comparisons across the whole vehicle fleet without overcomplicating the label.

Annual Fuel Cost and Relative Fuel Cost Savings

The agencies seek comment on the effectiveness of presenting information on annual fuel cost information, as required by statute, and relative cost as compared with a ‘typical’ vehicle over five years, as proposed by the expert panel.  While we agree that the relative fuel savings metric is more closely aligned with the interests of consumers than fuel cost and that the five-year timespan is a better reflection of long-term purchasing decisions, we are concerned about the amount of information that a single label can clearly convey. We believe that the presentation of both the relative and absolute costs could provide too much information and that the differing numbers would lead to consumer confusion.  Unless consumer testing reveals otherwise, we believe that a better solution would be to include the absolute annual fuel cost information on the label, as required by statute, and to provide the relative fuel cost information on the additional website.

Sincerely,

Floyd DesChamps

Sr. VP, Policy and Research

Alliance to Save Energy