On Friday, the US Environmental Protection Agency (EPA) released a Manufacturers Performance Report that assesses the automobile industry’s progress toward meeting greenhouse gas (GHG) emissions standards for cars and light trucks in the 2012 model year—the first year of the 14-year program.

The report shows that automakers’ combined calculated overall GHG performance was, on average, 286 grams of GHG/mile, 9.8 grams of GHG/mile better than what the 2012 standards of 296 grams/mile required. This industry-wide over-compliance means that consumers bought vehicles with lower greenhouse gas emissions than the 2012 model year standards required. Because of the program’s multi-year structure, EPA will not make formal compliance determinations for the 2012 model year until 2015.

More specifically, because a 2012 model year deficit can be carried forward into the 2015 model year, compliance with the 2012 model year standards can’t be fully assessed until the end of the 2015 model year. Compliance with the 2012 model year may depend on performance in each of the 2013-2015 model years as well as on credit purchases made in those model years.

There are a number of inputs—and a multi-year process—to determine manufacturer compliance with the light-duty vehicle GHG emission standards. The 2012 performance of manufacturer includes the following:

• CO₂ exhaust emission performance, including credits for flexible fuel vehicles, relative to a fleet average CO₂ standard (resulting in credits or deficits);
• GHG reductions (credits) from improvements to air conditioning systems that reduce refrigerant leakage or improve system efficiency;
• “Off-cycle” CO₂ emission reductions (credits) from technology improvements that can’t be sufficiently measured by EPA test procedures; and
• GHG deficits from meeting alternative methane or nitrous oxide standards.

The aggregation of all of these elements represents a manufacturer’s 2012 model year performance.

Once the 2012 model year performance is determined, a manufacturer can apply credits available from prior model years (in the case of the 2012 model year, these are credits from the 2009-2011 optional early credits program). In addition, a manufacturer may purchase credits from another manufacturer. When credits from these two sources are added to credits (or deficits) resulting from 2012 model year performance, the result is the status at the conclusion of the 2012 model year.

Companies are using the optional flexibilities including credit transfers across years and between fleets (within a manufacturer), credit trading between manufacturers, and credits for air conditioning improvements, which allow greater emissions reductions, lower compliance costs, and more consumer choice, as well as temporary incentives for flexible-fueled vehicles.

Looking at the 2012 model year performance only (i.e., what manufacturers did with 2012 models, half the manufacturers had a net deficit. However, the early optional credits from the 2009-2011 model years and credit purchases enabled all but one manufacturer (Jaguar Land Rover) to offset 2012 model year deficits and have credits remaining to carry forward to use in a future model year. JLR is still considered to be in compliance because of the multi-year nature of this regulation.