Printer Friendly

Expenditures for abating pollutant emissions from motor vehicles, 1968-84.

MOTOR vehicle emission abatement spending has been a major part of total pollution abatement and control spending in the United States. By 1984, U.S. residents spent almost $18 billion to abate pollutant emissions from motor vehicles (table 1 and chart 1). In real (that is, price-adjusted) terms, spending for motor vehicle emission abatement increased at an average annual rate of 22 percent, from less than $0.5 billion (1972) dollars in 1968 to $8.0 billion in 1984, and thus contributed substantially to the upward trend in total real spending. Further, spending for emission abatement devices had a significant effect on the price of vehicles and noticeably affected the cost of their operation.

This article presetns estimates of spending to abate emissions from cars and trucks, which are the major mobile sources recognized in the environmental statutes. Spending for motor vehicle emission abatement became widespread with the purchase of 1968 model year vehicles in late 1967, when Federal exhaust emission standards went into effect for passenger cars and light-duty trucks. Federal standards for heavy-duty trucks were in effect beginning with the 1970 model year vehicles.

The series presented for 1972-83 are revised estimates, based on new methods, of those previously available as part of ths summary estimates of spending for pollution abatement and control. The estimates have been extended forward to 1984, including additional detail by type of spending, and back to 1968 in order to cover the full period in which Federal exhaust emission standards were in effect.

The estimates are of two major types: spending for motor vehicle emission abatement devices and spending for operating the devices and related costs. For passenger cars and light-duty trucks, this spending is almost exclusively for gasoline-powered vehicles; for heavy-duty trucks, spending is sizable for devices on both disesl- and gasoline-powered vehicles. These estimates are discussed in the first and second sections of this article. The third section describes the approach that underlies the estimates and summarizes the method and sources used in preparing the detailed estimates.

Real Spending for Devices

The 1965, 1970, and 1977 Amendments to the Clean Air Act led to the selection and implementation of specific Federal exhaust emission standards (in grams per mile) and resulted in the spending reported in this article. These amendments, together with energy conservation legislation that stipulated fuel economy levels, were important elements of the problem that faced manufacturers: How to design and market a product with characteristics optimized for consumer satisfaction, but with constraints on exhaust emissions and on fuel consumption.

Fedeal exhaust emission standards and the emission control strategy of the vehicle manufacturers are summarized in table 2, along with unit sales of cars and light-duty trucks. As indicated in the table, the emphasis of the control strategy shifted over time; three periods are identifiable: 1968-74, when various engine modifications were used; 1975-80, when oxidation catalysts were electronic, computer-like devices along with three-way catalysts have begun to used widely on passenger cars. The devices used since 1975 reflect a concern for fuel economy as well as control of pollutants.

Passenger cars

The first Federal exhaust emission control standards for passenger cars applied to the 1968 model year, and successively more stringent standards were introduced for the 1970, 1972, 1973, 1975, 1977, 1980, and 1981 models. Two factors directly affect annual spending for emission abatement devices: (1) choice of emission control techniques and devices, and (2) unit sales of new vehicles. Real spending in response to the standards is discussed below with reference to these factors and is organized by the three periods just discussed.

1968-74. --Real spending for emission abatement modifications to cars was small in 1968 (table 1). The 7- and 25-percent increases for 1969 and 1970, respectively, reflect small cost increases for devices and declining sales of passenger cars. The first major increase in spending occurred in 1971, when spending approximately doubled due to additional regulatory requirements and a 22-percent increase in care sales. In additiont to the exhaust emission control standards, Federal regulations also prescribed evaporative fuel-emission controls beginning with the 1971 model year, and fuel evaporative systems were installed on all new cars from 1971 forward.

Spending in 1972 mainly reflects continued strong sales of cars, because cost increases for exhaust emission controls were small. The 43-percent increase in spending in 1973 reflects both continued strong sales of cars and a relatively sharp increase in costs for controls as the standard for oxides of nitrogen was tightened. The 21-percent decrease in real spending in 1974 for noncatalytic controls was due mainlyi to a 23-percent drop in cars sales. Because emission control standards were unchanged from the previous year, manufacturers needed to make only minor modfications to existing devices, and corresponding cost increases were small.

1975-80. --Spending for catalytic devices began in the fourth quarter of 1974 with the introduction of the 1975 model year cars, which were subject to tightened standards for emission of hydrocarbons and carbon monoxide, and carried over to 1975 with continued sales of catalyst-equipped cars. The choice of catalysts by manufacturers to meet the 1975 standards reflects economic as well as regulatory conditions: 1975 model year cars could have met the new standards without catalytic devices, but their fuel economiy would have been poor compared to cars with the devices. Consumers, sensitive to fuel economy after the 1973-74 oil embargo, were willing to pay for a more expensive catalytic emission abatement system if the system gave better fuel economy. The near doubling of spending in 1975 for all devices (catalytic and noncatalytic) reflects the high cost of catalytic devices, while the slight decline in spending for noncatalytic devices reflects a slight decline in car sales.

In 1976, spending for all devices increased by 23 percent, largely due to a 17-percent increase in car sales from a trough in 1975. Spending in 1977 was boosted by another 17-percent increase in car sales and was dampened in 1978 and 1979 by small declines in car sales. Cost increases for devices for the 1976-79 model years were minor and were mainly for noncatalytic devices.

Tightened standards for hydrocarbons and carbon monoxides for the 1980 model year required improvements to catalytic and noncatalytic devices. As a result, spending for catalytic and noncatalytic devices jumped in 1980 by 21 and 23 percent, respectively, despite plummeting sales of cars, as costs for devices increased sharply over those for the previous 4 years.

1981-84. --Spending for noncatalytic devices jumped by 51 percent in 1981 despite a continued decline in car sales. The increase was due to the addition of expensive computer-like devices to meet the tightened standards for carbon monoxide and oxides of nitrogen for ther 1981 model year. Spending for catalytic devices increased 18 percent due to widespread use of three-way catalysts.

Spending for 1982-84 was mostly affected by sales of cars, which increased from their trough in 1982. Because the emission standards were maintained at the level of the 1981 model year, cost increases for devices were very small. Accordingly, spending decreased in 1982 and increased thereafter.

Trucks

Light-duty.--Federal exhaust emission standards for light-duty trucks are the same as those for passenger cars for the 1968-74 model years, and from 1975 forward, they are less stringent. The emission control techniques and devices used for light-duty trucks are similar to those used for passenger cars until the 1981 model year, when more complex and expensive devices were required for passenger cars. The trends in real spending are similar for the two vehicle types until 1978, when spending for light-duty truck emission abatement was augmented by fourth-quarter sales of 1979 model year trucks in the 6,000-8,500 pound GVW class, which was reclassified as light-duty. Spending jumped by 50 percent in 1979 due to the reclassification, and dropped by 31 and 9 percent in 1980 and 1981, respectively, due to decreased sales of vehicles. The 14-percent increase in spending in 1982 reflects an upturn in sales of vehicles, and the 37- and 65-percent increases in 1983 and 1984, respectively, reflect accelerating vehicle sales and the use of more expensive devices as emission standards were tightened for the 1984 model year.

Heavy-duty.--The first Federal exhaust emission standards for heavy-duty trucks applied to the 1970 model year, and successively more stringent standards were introduced for the 1974 and 1979 model years. New regulations have also been introduced for the 1985 and later model years, which have a small effect on 1984 spending.

Real spending for heavy-duty truck emission abatement during 1969-1978 was for gasoline-powered trucks; spending for diesel-powered trucks began in 1979. Spending increased annually through 1978 and decreased sharply in 1979 due to the regulatory reclassification of trucks by weight class described above. Annual spending decreases during 1980-81 and increases during 1982-84 reflect trends in vehicle sales.

Real Spending for Operation of Devices

Real spending for operation of emission abatement devices consists of three categories: spending due to decreased fuel economy (fuel consumption penalty), spending for added maintenance (maintenance cost), and spending for the increased cost of unleaded fuel (fuel price penalty). Spending in each of the three categories is affected by manufacturers' emission control strategies as well as vehicle usage patterns. Annual changes in spending for the operation of emission control devices were similar to changes in spending for devices prior to the introduction of catalysts. Catalytic devices made possible improved fuel economy (thereby decreasing the fuel consumption penalty) and maintenance benefits accompanying use of unleaded gasoline and long-life exhaust systems.

Spending for operation of devices began in the fourth quarter of 1967 with the introduction of 1968 model year vehicles and carried over into 1968 with continued sales of controlled vehicles. The period 1968-74 is characterized by rapid growth in spending, mostly for added maintenance. The noncatalytic devices employed during this period--various engine modifications affecting the carburetor, ignition system, and combustion chamber, as well as the introduction of exhaust-gas recirculation with the 1973 model year--increased the cost of engine maintenance and adversely affected fuel economy. The fuel consumption penalty, modest or immeasurable through 1969, picked up in 1970 with widespread use of retarded ignition timing, jumped in 1971 with the introduction of reduced compression ratios, and continued to increase rapidly through 1974.

Both composition and growth rates in spending changed dramatically after 1975. This period is characterized by a general downward trend in spending: the increasing fuel price penalty is generally outweighed by the decreasing fuel consumption penalty and maintenance spending. The new pattern is due to the introduction of catalytic devices beginning with the 1975 model year. Catalytic devices require the use of unleaded fuel, which costs more, but is beneficial to the engine in terms of allowing extended intervals between carburetor adjustments, spark plug replacements, and exhaust system component replacements. The decreased spending for added maintenance from 1975 forward reflects estimated maintenance benefits for new cars; spending declined at an increasing rates from 1975 to 1982 and became negative in 1983 as pre-1975 model years cars were replaced. The fuel consumption penalty increased slightly in 1975 (due to continued sales of 1974 model year cars) and decreased thereafter at an increasing rate as pre-1975 model year cars were retired from use. The fuel price penalty increased in most years, as the number of catalystequipped cars increased.

Trucks

Light-duty.--Trends in spending for light-duty trucks are similar to trends for passenger cars: during 1968-74, the fuel consumption penalty and maintenance cost increased rapidly, and from 1975 forward, spending in these categories decreased while the fuel price penalty increased.

Heavy-duty.--Spending for heavy-duty trucks consists of the fuel consumption penalty and maintenace cost. The spending increased annually through 1980 and decreased thereafter as pre-1979 model year trucks in the 6000-8500 pound class were retired from service.

Method and Sources

The approach used in this article to estimate spending on motor vehicle emission abatement is to compare the costs associated with a hypothetical basic vehicle equipped and tuned to operate with emission abatement devices with one equipped and tuned to operate without the devices. The approach is implemented by reference to studies of vehicle usage, engineering cost studies, and engineering tests of fuel economy in combination with information on retail prices, unit sales, and vehicle registrations.

This section outlines the method used to prepare the estimates, indicating the relationship and assumptions that underlie them, and then describes the specific data sources that are used. As in the first two sections of the article, the descriptions for devices are followed by the descriptions for operation of devices and related costs, each separately for passenger cars and trucks.

Devices on passenger cars.--Annual estimates of spending for emission abatement devices for gasoline-powered passenger cars are computed as the product of a "price" of devices per model year vehicle and number of vehicles sold. The computation assumes that all vehicles sold in the fourth quarter of a calendar year are the following model year's vehicles.

The price of devices is estimated as the sum of annual resource costs allocable to pollution abatement, identified by comparing the same basic vehicle with and without devices. The estimated prices are adjusted downward for imported vehicles, which are generally smaller and require less or cheaper emission abatement devices. The price of devices for diesel-powered vehicles is assumed to be negligible and is set equal to zero through the 1984 model year; it is estimated as $100 per vehicle for the 1985 model year.

Devices on trucks.--Annual estimates of emission abatement spending for devices for trucks are computed by the price-times-quantity method just described. The price of devices for light-duty trucks is estimated by the price-estimation method just described. The estimation method differs in the treatment of imorted and diesel-powered heavy-duty trucks: the price of devices for imported and domestic vehicles is assumed to be equal, and, for diesel-powered vehicles, is assumed to be significantly greater than zero from the 1979 model year forward.

Operation of devices on passenger cars.--Spending for operation of emission abatement devices consists of three categories: the fuel consumption penalty (FCP), fuel price penalty (FPP), and maintenance cost (MC). The FCP, FPP, and MC represent, respectively, the additional spending for gasoline due to emission abatement (devices and/or engine modifications), the leaded-unleaded gasoline price differentail, and added maintenance. For the 1975 model year forward, it is assumed that the added maintenance cost is negative, i.e., a benefit due to the use of catalysts.

The FCP is computed as the product of an average price per gallon of gasoline and an estimate of additional gasoline consumption due to emission abatement. Additional gallons of gasoline consumed are computed, by model year, as the product of a mid-year stock of vehicles, an estimate of average annual miles driven per vehicle, and an estimate of the average per-vehicle gasoline consumption (gallons per mile) differential between controlled and uncontrolled vehicles. The FCP is estimated for 1968-74 model years.

The FPP is computed as the product of an average price differential between leaded and unleaded gasoline and gasoline consumption of catalystequipped vehicles. Gasoline consumption is computed, by model year, as the product of the midyear stock of vehicles equipped with catalytic devices, an estimate of average annual miles driven per vehicle, and an estimate of gasoline consumption. The FPP is estimated for the 1975 model year forward.

The MC is computed on the model year basis described above, i.e., as the sum of estimates for each model year in operation. The MC for a particular model year is equal to the product of a midyear stock of vehicles, an estimate of average annual miles driven per vehicle, and a per-vehicle maintenance cost or benefit estimate. The benefit estimate, used from 1975 forward, is multiplied by the same stock data used in FPP estimation, i.e., stocks adjusted to include only vehicles equipped with catalytic devices.

Operation of devices on trucks.--Spending for light-duty trucks is estimated by the same methods used for passenger cars. For heavy-duty trucks, the FCP and MC are estimated as they are for cars. No FPP or maintenance benefits are estimated because catalytic devices are not required on heavy-duty trucks through the 1984 model year.

Data sources

Devices on passenger cars.--Data used in estimating the price of emission abatement devices per vehicle for passenger cars are from Bureau of Labor Statistics (BLS) reports of quality changes for modely year paswenger cars. Since 1968, part of the annual quality change adjustment is generally attributed to redesign of emission control systems. Each model year's adjustment is in addition to adjustments for previous model years and is based on evaluation of data for similarly equipped cars of the current and previous model year.

For certain years, the quality chance adjustment for emission control systems is not shown separately. for instance, for the 1981-84 model years, BLS publishes a combined adjustment for quality changes due to emission control standards and Federal corporate Average Fuel Economy (CAFE) Standards. For the 1981 model year, 70 percent of the BLs adjustment of $466.65 has been allocated to emission controls because the tightened emission control standards for passenger cars required widespread use of three-way catalysts in conjunction with expensive computer-like devices. The absence of these devices on Canadian and European cars indicates that their use on U.S. cars can be attributed mainly to the emission control standards. The $326.66 allocated is within the range of estimates of the cost of emission controls on 1981 gasoline-powered automobiles estimated by EPA (see EPA, Office of Mobile Source Air Pollution Control, "The Cost of Controlling Emissions of 1981 Model Year Automobiles", mimeographed June 1981).

Discussions with BLS indicate that the 1981 adjustment mainly represents computer-like, i.e., noncatalytic, devices, while a part of it represents modifications to catalytic devices. Accordingly, 70 percent to the $326.66 has been allocated to noncatalytic devices, and the remainder to catalytic devices.

For the 1982-84 model years, CAFE standards were tightened while emission control standards were held at the level for the 1981 model year. Discussions with BLS and the Department of Transportation indicate that only a small amount of improvement to hardware due to emission abatement is reflected in the BLS adjustments for these years. Accordingly, $10 of each year's adjustment has been applied to emission controls.

For the 1985 model year (which is reflected in spending for the fourth quarter of calendar year 1984), a negative $10 and a positive $100 for emission controls have beeen applied to gasoline- and diesel-powered vehicles, respectively. The estimates are based on discussions with BLS and EPA; the negative $10 reflects the use of less hardware for meeting emission control standards, and the $100 reflects an average cost of hardware used to meet the 1.0 gram-per-mile standards for oxides of nitrogen. Most diesel vehicles were able to comply with the 1982 particulate standard (0.6 grams per mile) through the use of engine modifications rather than hardware modifications. The waiver of 1.0 gram-per-mile standard for oxides of nitrogen expired with the 1985 model year, and special devices were required to meet the standard.

There are no cost data for emission abatement devices on imported vehicles, and the downward adjustment to the estimated cost for domestic vehicles is based on expert opinion and inferences from studies such as the 1981 EPA cost study referred to above.

Annual retail sales data for passenger cars are from Ward's Automotive reports.

Devices on trucks.-- For light-duty trucks, the per-vehicle cost of devices and engine-modifications is based on the same sources as for passenger cars. The BLS data are used in estimating the price of controls on light-duty trucks as well as passenger cars because emission control techniques and devices for the two vehicle types are similar through about the 1980 model year. The quality adjustment for the 1981 model year, which mainly represents expensive computer-like devices needed to enable passenger cars to meet their more stringent standards, is not used in estimating the price of controls for light-duty trucks. For heavy-duty trucks, the per-vehicle cost of emission controls estimate is from EPA's Cost of Clean Air and Water Report to Congress, 1984. Separate cost estimates are given for gasoline- and diesel-powered vehicles.

For domestic and imported light-duty trucks, annual retail sales data are from the Motor Vehicle Manufacturers Association (MVMA) and Ward's, respectively. Sales data for heavy-duty trucks are from the MVMA. The MVMA lists retail sales of trucks in the 0-6,000 pound GVW class (class I) and in the 6,0001-10,000 pound class (class II). To obtain the 0-8,500 pound category, class II sales data are split into 6,001-8,500 and 8,500-10,000 pound groups using sales data drom the Documentation for the New Highway Fuel Consumption Model, a study done for the Department of Energy by Energy and Environmental Analysis, Inc. The 6,001-8,500 pound group is then added to class I sales. Because retail sales data for heavy-duty trucks by gasoline and diesel category are not available, total retail sales data for heavy-duty trucks are split into gasoline and diesel categories using corresponding factory sales data from MVMA.

Price indexes.-- Bls prices indexes are used to convert current-dollar spending estimates to constant (1972) dollars: the Consumer Price Index for new autos is used for passenger cars and light-duty trucks, and the Producer Price Index for trucks greater than 10,000 pounds GVW is used for heavy-duty trucks.

Operation of devices on passenger cars.-- Data on passenger car registrations by model year from R. L. Polk and Company are used to represent stocks of cars. Estimates of average annual miles per car are from Federal Highway Administration national personal transportation studies for 1969 and 1977. The studies show a shift in the pattern of vehicle usage with age. Results of the studies are interpolated at a linear rate for intervening years, and the 1977 usage pattern is continued for subsequent years. Fuel consumption estimates are derived from sales-weighted fuel economy estimates for city driving from EPA's Motor Vehicle Emissions Laboratory. For FCP estimation, a fixed-weighted (sales weights for the 1974 model year are used for each year's fuel economy estimate) fuel economy series is used in order to eliminate the effects of weight changes. Gasoline price data are from BLS, and per-vehicle maintenance cost/benefit estimates are from EPA's 1984 report. EPA publishes are per-vehicle maintenance benefit from 1975 forward, reflecting the use of unleaded gasoline in vehicles equipped with catalytic devices. Studies have shown that the use of unleaded gasoline lengthens the maintenance interval for such items as park plugs and exhaust systems, thereby reducing lifetime engine maintenance costs. Cost/benefit per vehicle is converted to a per-mile basis on the assumption that passenger cars have a 100,000 mile driving lifetime.

Operations of devices on trucks.-- Data representing stocks of trucks are from R. L. Polk and Company. Extensive adjustments have been made to the Polk data, which are described below. Estimates of average annual miles per truck for trucks less than 10,000 pounds GVW are from the 1972 and 1977 truck inventory and use surveys by the Census Bureau. Data on pickup trucks for 1972 and 1978 were interpolated to obtain estimates for intervening years, and the 1978 data were used for years from 1978 forward. For trucks greater than 10,000 pounds GVW, estimates are from an EPA study. Fuel consumption estimates for light-duty trucks are derived from EPA sales-weighted fuel economy estimates for city driving, which are available from the 1975 model year forward. For FCP estimation, a fixed-weighted (sales weights for the 1978 model year are used for the entire series) fuel economy series is extrapolated to 1967 using a corresponding series for passenger cars. Fuel consumption estimates for heavy-duty trucks are derived from EPA fuel economy estimates by GVW class. Gasoline price data are those used for passenger cars, and per-vehicle maintenance cost/benefit estimates are from EPA's 1984 report. Cost/benefit per vehicle is converted to a per-mile basis on the assumptions that trucks greater than and less than 10,000 pounds GVW have 110 and 120 thousand driving lifetimes, respectively.

The Polk data, representing stocks of trucks, consist of aggregate truck and bus registrations by model year. Adjustments were made that disaggregated the data by weight and fuel type categories. It was assumed that (1) initial model year registrations by weight class and fuel type are distributed according to factory sales, and (2) trucks greater than and less than 10,000 pounds GVW have different survival rates.

Initial model year registrations were split into weight class and fuel type categories using factory sales data from the MVMA. Surviving vehicle registrations at the disaggregated level were then estimated for each calendar year using survival rates for trucks of greater than and less than 10,000 pound GVW categories from a Department of Energy report, and Polk registration totals.

Price indexes.-- BLS price indexes are used to convert current-dollar spending estimates to constant (1972) dollars: the Consumer Price Index for gasoline is used for the FPP and FCP, and the Consumer Price Index for auto repair service is used for the MC.
COPYRIGHT 1985 U.S. Government Printing Office
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1985 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:with related article on environmental regulatory requirements
Author:Kappler, Frederick G.; Rutledge, Gary L.
Publication:Survey of Current Business
Date:Jul 1, 1985
Words:4185
Previous Article:Business situation.
Next Article:Fixed private capital in the United States.
Topics:


Related Articles
Pollution abatement and control expenditures; revised estimates for 1972-83; estimates for 1984.
Pollution abatement and control expenditures, 1983-86.
Pollution abatement and control expenditures, 1984-87.
Pollution abatement and control expenditures, 1972-90.
AIR & WASTE MANAGEMENT ASSOCIATION: AIR POLLUTION MONITORING TO BE DISCUSSED AT MEETING
EPD PROPOSES EXPANSION OF VEHICLE EMISSION INSPECTION PROGRAM
Pollution abatement and control expenditures, 1987-91.
GM STATEMENT ON VEHICLE EMISSIONS RECALL
Pollution abatement and control expenditures, 1972-94.
Panel Rejects Challenge to EPA-Approved Air Quality Plan. (Policy and Legislation).

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters