Overview of the Structure of CAFE and GHG Regulations for NGVs

In general, the new 2017–2025 light duty vehicle Corporate Average Fuel Economy (CAFE) and greenhouse gas (GHG) regulations are structured similarly to the MY 2012–2016 regulations: a combined CAFE standard expressed in miles per gallon (mpg) administered by NHTSA and a GHG standard expressed in grams per mile (g/mi) administered by EPA. Importantly, no single vehicle is required to meet these standards.

Instead, OEMs are evaluated on the production-weighted average fuel economy (FE) and GHG emissions of their entire fleet of vehicles sold in a given year, with each OEM required to meet its own individual overall target determined by the aggregated vehicle footprints of their fleet.

Because the primary means to reduce GHG emissions is to improve fuel economy, these standards have been developed and promulgated jointly. However, while these standards have been coordinated to a significant degree, they are separate standards with two different sets of targets, rules, and types of incentives. This is particularly relevant for alternative fuel vehicles (AFV), and especially for natural gas vehicles. Natural gas fuel yields different benefits for fuel economy (and, more specifically, petroleum reduction) and for GHG emissions:

  • NGVs under CAFE: Since the CAFE standard emphasizes the reduction of petroleum consumption in addition to increasing fuel economy, NGVs are treated extremely favorably due to their ability to directly replace most (in the case of dual-fuel vehicles) or all gasoline use for a given In fact, the calculated FE of NGVs is so high under these rules—over 100 mpg in most cases—that today’s NGVs can far surpass the national required average FE for 2025 of 49.2 mpg.
  •  NGVs under GHG Program: The GHG regulation sets targets based on vehicle tailpipe emissions, which for NGVs are typically 20–25 percent below an equivalent gasoline vehicle. Since the cumulative GHG improvement required for most vehicles between 2017 and 2025 is about 33 percent and full size pickup trucks are only required to improve emissions performance by 20 percent, the addition of a natural gas fuel system can meet most or all (in the case of pickup trucks) the cumulative improvements required over the duration of the Moreover, as discussed below, there are additional incentives available under the GHG rule to further enhance the compliance value of NGVs.

The following sections will walk through the process of determining the compliance value of NGVs under the two rules to provide a deeper understanding and comparison of the benefits provided by NGVs under the two programs.


Part 1: Base FE and GHG Calculations under Each Rule

The use of compressed natural gas (CNG) generates notable benefits compared to gasoline under both standards, due to the inherent qualities of this cleaner, non-petroleum fuel.  However, as discussed below these benefits are temporarily limited for dual-fuel NGVs under the CAFE program, and change over time under the GHG program.

Fuel Economy

For FE calculations, a gasoline gallon equivalent (GGE) of natural gas is counted as just 0.15 gallons of gasoline—a calculation known as the Petroleum Equivalency Factor (PEF). Thus, a dedicated NGV with a real world fuel economy of 15 mpg is treated as a 100 mpg vehicle for CAFE compliance (15 / 0.15 = 100). This calculation allows NGVs to far exceed the fuel economy improvements required for the duration of the program, which targets an average fleet-wide fuel economy between 48.7 and 49.7 mpg in 2025.

This PEF calculation applies to all alternative fuels (CNG, electricity, and E85) equally. It is based on a statute and applies to the current regulatory period (MY 2012–2016) as well as for the post-2025 period, assuming no changes are made to the underlying law. However, as discussed in “Part 2: CNG Fuel Use for Dual-Fuel NGVs,” dual-fuel NGVs are currently prevented from taking advantage of the PEF calculation until 2020 due to outdated statutory restrictions contained in the Energy Independence Security Act. Dedicated NGVs are unaffected by these restrictions and use the PEF.

Greenhouse Gases

Unlike the CAFE standard, the base GHG calculation for a vehicle changes significantly between the current period and period covered by the new rulemaking. Under the previous rulemaking, it was determined that the GHG calculations for NGVs would initially be based on the PEF calculation (i.e., natural gas emissions = the emissions of gasoline) through 2015 in order to ease the transition to the joint CAFE/GHG This is effectively an 85 percent reduction in emissions—a very strong incentive.

Beginning in MY 2016, NGVs will instead have their emissions calculated according to the real-world tailpipe value of the particular vehicle model. This is estimated to be a roughly 20 percent reduction compared to gasoline for today’s NGVs, which run on engines optimized to run on gasoline. NGVs optimized to run on natural gas have the potential for a reduction in GHGs of up to 25 percent.

Years GHG Emissions Compared to Gasoline
2012–2015 -85 percent (0.15x gasoline)
2016–2025+ -20 to -25 percent (Actual Tailpipe)


1.1 Changing Treatment of NGV Emissions Over Time

While this 20–25 percent reduction is not as strong an incentive as the PEF calculation (an 85 percent reduction), it is still a significant advantage for NGVs compared to gasoline-fueled vehicles. In fact, the 20– 25 percent reduction in GHGs that can be achieved with CNG alone can meet the large majority of the total cumulative GHG reductions required for most vehicles between 2017 and 2025. The reduction will satisfy the 20 percent cumulative improvement required for the largest pickup trucks, which have significantly less stringent targets due to the need to preserve the unique functionality of these vehicles, and the reduction will satisfy most of the 33 percent improvement required of smaller vehicles.


Part 2: CNG Fuel Use for Dual-Fuel NGVs

Dedicated NGVs can by definition only operate on natural gas. However, in the case of dual-fuel NGVs, regulators must first determine an assumed value for the amount of time the vehicle will operate on natural gas relative to gasoline in order to calculate appropriate FE and GHG values.

One of the most notable improvements in the new rules is the new “Utility Factor” calculation for dual-fuel NGVs and PHEVs, which assumes that drivers will use alternative fuels the vast majority of the time due to much lower fuel costs compared to gasoline. Under previous rules, dual-fuel NGVs were assumed to operate 50 percent of the time on natural gas. The new utility factor (i.e. the percentage of time a vehicle operates on natural gas) is determined by the vehicle’s CNG-only range and can potentially be much higher than 50 percent, as illustrated in the table below for selected ranges.

CNG Range (Miles) 80 100 120 140 160 180 200
Utility Factor (% CNG Use) 81.8 86.5 89.6 91.7 93.2 94.4 95.4


2.1 Selected Utility Factors for Dual-Fuel NGVs

Design Requirements

Not all dual-fuel NGVs may be eligible to use this new utility factor calculation. In order to qualify for use of utility factors, a dual-fuel NGV must:

  1. Have a 2:1 ratio of CNG range to gasoline range; and
  2. Only operate on gasoline if the CNG tank is empty (with the exception of vehicles that start with a small amount of gasoline, then switch to CNG).

Dual-fuel NGVs that do not meet these requirements simply use the calculation from the previous rules noted above, under which the vehicle is assumed to operate on natural gas for 50 percent of the time.

Dual-Fuel Weighting

After determining the applicable percentage of CNG use, dual-fuel NGVs calculate their base FE and GHG values as a weighted average of their CNG and gasoline operation. For instance, a dual-fuel NGV with a 180-mile range (and a gasoline range of less than 90 miles) calculates its FE and GHG on natural gas, multiplies this by the 94.4 percent utility factor, then calculates FE and GHG on gasoline, and then multiplies this by the remaining 5.6 percent of vehicle operation. The weighted CNG and gasoline numbers are then added.

Early EPA Adoption

These rules will go into effect immediately (in 2012) for GHG regulations, instead of waiting until 2017 (when the rest of the new rules take effect).

NHTSA Cap Until 2020

Unfortunately, statutory restrictions included in the Energy Independence and Security Act of 2007 have had the unintended effect of causing dual-fuel NGVs to be effectively treated as dedicated gasoline vehicles— effectively a “utility factor” of zero—under the CAFE standards until MY 2020. This statute groups dual-fuel NGVs with ethanol flex-fuel vehicles (FFVs) and limits the combined credits these vehicles can receive through MY 2019. Since automakers are already receiving the maximum CAFE credits from existing FFV production, there are effectively no credits left for dual-fuel NGVs.

In the Notice of Proposed Rulemaking (NPRM) for the current standards, EPA and NHTSA themselves referred to the treatment of dual-fuel NGVs as dedicated gasoline vehicles as an “absurd result,” but they do not have the authority to override the underlying statute. However, NHTSA will allow dual-fuel NGVs to receive full CAFE credits for natural gas based on the PEF and fuel use to be determined by the utility factor approach as soon as possible—currently, when existing statutory restrictions expire in 2020.

The purpose of the proposed legislation is to remedy this situation and allow NHTSA to mirror the actions of EPA from the present through the duration of the regulations, which is currently 2025.


For more information please contact:

Paul Kouroupas
Vice President, Regulatory & Government Affairs VNG.Co

Jeff Clarke
General Counsel, NGVAmerica

Paul Kerkhoven
Director, Government Relations, NGVAmerica