California Air Resources Board

I. Objective

This study aims to develop a comprehensive methodology for estimating auto operating costs (AOC)1by analyzing the fuel cost, fuel efficiency, and non-fuel cost for alternative fuel technologies.2  As part of this process, the study should explore the possible methods and criteria to integrate the varying AOC results for different alternative fuel technologies into travel demand models (TDMs) to capture travel behavior changes and forecast travel demand across California. In addition, it should estimate the rebound effects of fuel cost and fuel efficiency in the short- and long-term of fuel technology changes. 

II. Background

In California, the legislative and regulatory landscape in transportation planning and policy is shaped by two pivotal frameworks: Senate Bill 375 (SB 375) and the Advanced Clean Cars (ACC) regulations. SB 375, the Sustainable Communities and Climate Protection Act, advances the reduction of greenhouse gas (GHG) emissions through coordinated land use and transportation planning. The bill requires regional metropolitan planning organizations (MPO) to develop sustainable community strategies (SCS) that align transportation, housing, and land use planning with GHG emissions reduction targets. Alongside this, the ACC regulations represent a bold step towards decarbonizing the transportation sector by requiring the sales of zero-emission vehicles (ZEV)3and conventional vehicles with lower GHG emissions.

AOC is a critical component linked to these policies as it is a key input for TDMs used by MPOs to forecast vehicle miles traveled (VMT) and assess transportation choices' economic and environmental impacts. The shift towards ZEVs, driven by the ACC regulations, introduces new elements into AOC calculations, such as alternative fuel prices, vehicle efficiency for varying ZEV technologies, and related maintenance costs. The question has arisen whether the shift in operating costs of ZEVs compared to internal combustion engine vehicles (ICEV) will encourage owners to drive more, partially offsetting the energy savings achieved through higher efficiency. This offset is often described as a potential “rebound effect,” where fuel efficiency improvements lead to increased travel (VMT) due to lower per-mile costs. It is challenging to accurately quantify the rebound effect for AOC estimation as it requires a nuanced understanding of consumer behavior and the factors influencing vehicle use decisions. For instance, the quantification factors of ZEVs may include the impact of charging infrastructure availability, electricity pricing variations, and ZEV range psychological effects on driving patterns. 

Currently, MPOs across California utilize various methodologies to estimate AOC, primarily focusing on direct costs (fuel cost and maintenance) and fuel efficiency of gasoline-fueled ICEVs. However, these methodologies do not appropriately account for different fuel technologies. MPOs generally use some form of off-model adjustments for the AOC input, assuming travel behavior for drivers of alternative vehicle technologies does not differ from that of ICEVs at the household level. As ZEV ownership rises in California, there is an immediate need to develop a robust AOC estimation methodology, focusing on multiple factors, including fuel cost, vehicle efficiency, maintenance costs, and rebound effects associated with different fuel and vehicle technologies. The estimation method should be practical for immediate use by California MPOs and robust in anticipating future developments.  

The proposed study on developing an AOC methodology is expected to provide valuable insights for CARB and other agencies by offering a more reliable estimation method of AOC that captures a range of factors, including fuel cost, vehicle efficiency, and rebound effects associated with alternative fuel technologies. Further, the study may enhance the predictive accuracy of travel forecasting across the California regions. The researchers should leverage both traditional data sources and new big data to capture a comprehensive overview of how the adoption of alternative fuel technologies influences travel patterns, preferences, and operating costs.

III. Scope of Work

The project aims to address several specific research questions critical to developing a robust AOC methodology, particularly in the context of rebound effects and their implications for travel demand modeling. These research questions include:

1. In what ways do alternative fuel technologies affect the estimation of AOC with respect to fuel cost, vehicle efficiency, and maintenance costs, and how can these variations be incorporated into the proposed method?
2. What is the magnitude of the rebound effect for alternative fuel technologies, and how does it influence VMT and overall travel demand in the context of improved fuel efficiency and lower operating costs? Additionally, how can the behavioral responses of vehicle users be accurately modeled and integrated into AOC estimations?
3. What are the best practices for integrating the proposed AOC methodology into existing TDMs used by MPOs to ensure consistency and reliability in forecasting travel demand?

By addressing these research questions, the researchers should seek to provide a comprehensive understanding of the factors influencing AOC and develop a methodology that can be incorporated into TDMs to estimate more accurate travel forecasting and behavioral changes. This should support informed decision-making and policy development to achieve California's transportation sustainability and emissions reduction goals. The research team should complete the following tasks to answer the research questions.  

Task 1 - Project Advisory Committee

The contractor should work with the CARB contract manager to recruit CARB program staff, staff from relevant public agencies (e.g., Caltrans, MPOs), and non-governmental organizations (NGOs) to serve on the Project Advisory Committee. The committee will provide expert guidance to ensure the study approach and findings are contextualized appropriately from the policy (SB 375, ACC) perspective. Specifically, the committee will review and provide feedback on Task 3 (Data Collection), Task 4 (Quantifying the Rebound Effect), and Task 5 (Integration of AOC methodology into TDMs), and interim and final reports.

Task 2 - Literature Review

The purpose of this task is to conduct a comprehensive literature review to establish an understanding of the current state of AOC methodologies, with a particular focus on the rebound effects of fuel price and vehicle efficiency improvement of vehicles with alternative fuel technologies. The review should explore the relationship between fuel cost and vehicle efficiency elasticity for alternative fuel technologies. The non-fuel costs, including maintenance and repair costs for different fuel-type vehicles, should be a part of the review process. Finally, the review should examine the policy and regulatory frameworks influencing AOC, such as federal fuel economy standards, ZEV purchase incentives, and carbon pricing mechanisms that affect fuel prices. The literature review task should serve as the foundation for the subsequent tasks in the project, informing the development of a more comprehensive and accurate AOC methodology that accounts for rebound effects and aligns with the goals of the SB 375 program.

Deliverables:

• A detailed report summarizing the current methodologies for estimating AOC, highlighting the strengths and weaknesses of existing approaches. In addition, this task should also document fuel price and non-fuel cost estimation approaches that are used in the AOC calculation.

Task 3 - Data Collection

In Task 3, the researchers should gather a comprehensive data set necessary for analyzing and developing the AOC estimation methodology in consultation with CARB staff. The dataset should consist of vehicle operating costs, usage patterns, fuel prices, and vehicle efficiency for vehicles with alternative fuel technologies. The data needs to be specific to each type of alternative fueled vehicle and should at least include battery electric vehicles (BEVs); plug-in hybrid electric vehicle (PHEV) and fuel cell electric vehicle (FCEV) data should be included if time and resources are available.

The research team should leverage existing national and regional surveys to collect relevant data for alternative fuel technologies at the household level. In addition, researchers should explore passively collected big data to understand trends and relationships among various factors. For instance, the EV-related data may include charging patterns, electricity rates, battery efficiency, etc. The research team should also collect information on consumer behavior related to vehicle purchase decisions, sensitivity to operating costs, and preferences for different fuel-type vehicles. Alternatively, researchers could propose a new data collection approach to answer the questions identified in this scope of work.

Overall, in this task, the researchers should compile all relevant data on alternative fuel technologies from different sources to develop an accurate and reliable methodology for AOC estimation.

Deliverables:

• A report that includes detailed information on the relevant data collected on operating costs, vehicle usage patterns, fuel price, energy consumption, and consumer behavior for a broad spectrum of alternative fuel technologies. All the relevant data sets should be submitted with this task.

Task 4 - Quantifying the Rebound Effects

This task aims to quantify the rebound effect associated with alternative fuel technologies. This involves estimating the extent to which improvements in energy efficiency will lead to increased VMT, potentially offsetting the anticipated environmental benefits. 

The researchers should analyze vehicle usage data collected in Task 3 to determine changes in travel behavior associated with the adoption of different fuel technologies. Researchers should compare VMT and usage patterns before and after the adoption of these technologies to identify any significant increases in travel that may constitute a rebound effect depending on the availability of data. If individual household data are not available before and after the adoption of the technology, researchers should attempt to compare aggregate fleet-level patterns before and after the adoption of the technology.

The research team should develop econometric models to estimate the rebound effect, using variables such as changes in energy costs, vehicle efficiency, consumer travel behavior, etc. The models should incorporate cost factors that capture the psychological and economic influences on vehicle use and ownership decisions, such as perceived value, environmental concerns, access to alternative fuel infrastructure, and the impact of social norms on the adoption of alternative fuel technologies. Researchers should utilize these models to isolate the rebound effect from other factors that may influence VMT, such as changes in fuel prices or broader economic trends. 

The researchers should also investigate the rebound effects by examining how consumers reallocate spending from cost savings (due to lower spending on fuel and maintenance) to other goods and services. The team should assess economy-wide rebound effects by analyzing broader market responses to increased energy efficiency, such as changes in energy prices and overall demand. Finally, the researchers should generate scenarios based on varying rates of technology adoption, energy pricing, and policy interventions to forecast the potential magnitude of the rebound effect under different conditions. The research team should conduct sensitivity analyses to understand the robustness of the rebound effect estimates and identify the most influential factors. 

This task should generate the comprehensive AOC estimation methodology by quantifying the possible rebound effects based on relevant behavioral and economic factors for alternative fuel technologies.

Deliverables:

• A report with quantified estimates of the rebound effects of alternative fuel technologies with an explanation of how these effects vary across different vehicle types. The report should also describe the econometric models that can be used to predict the rebound effect under various scenarios. It should also include insights into the key behavioral drivers and barriers affecting the adoption of alternative fuel technologies and their implications for vehicle use and the rebound effect. 

Task 5 - Integration of AOC methodology into Travel Demand Modeling

The objective of Task 5 is to integrate the newly developed AOC methodology, which includes rebound effects and behavioral dynamics, into the existing TDMs used by California MPOs. This task aims to ensure that the updated AOC methodology is directly incorporated into the TDMs, enhancing their ability to accurately forecast travel behavior and VMT, considering evolving vehicle technologies and changing operating costs.

The research team should evaluate the current TDM types (e.g., trip-based or activity-based models) utilized by California MPOs to determine their compatibility with the updated AOC methodology. This involves assessing the models' structures, inputs, and capabilities to handle new data and parameters. The team should identify any necessary modifications or enhancements to the TDMs to accommodate the integration of the new AOC methodology. Then, the team should develop a detailed process for integrating the AOC methodology into the TDMs, including data preparation, parameterization, and calibration procedures. They should create guidelines and protocols to ensure the integration process is consistent, transparent, and replicable across different TDMs. Finally, the team should carry out a batch of pilot tests in consultation with CARB staff of the integration process with equivalent models of select MPOs to validate the methodology and identify any issues or challenges that arise during implementation. Finally, the research team should refine the integration process based on feedback from the pilot tests, making adjustments to improve the accuracy and reliability of the TDMs with the new AOC inputs. This task should generate a comprehensive guideline for any MPOs to incorporate the accurate and reliable AOC estimation methodology into the TDM.

Deliverables:

• A report describing how the AOC methodology should be fully integrated within California MPOs' TDMs that can appropriately account for fuel prices, fuel efficiency improvements, rebound effects, and behavioral dynamics in forecasting travel demand. The reported process should be standardized and replicable to integrate the AOC methodology into TDMs, ensuring consistency and transparency across different types of TDMs.

IV. Deliverables

The project pre-proposal must include but is not limited to the following deliverables:

During Active Contract Period

• The creation of a 1-page plain-language outreach summary for the public describing the project’s goals, process, and planned deliverables (available in multiple languages, template will be provided), developed in consultation with CARB at the beginning of the project.
• Quarterly Progress Reports, including public-facing updates, are to be posted on CARB’s website.
• Quarterly Progress Meetings.
• Informal monthly progress update meetings with CARB contract manager (if applicable).

Prior to Contract Close

• Literature review.
• A summary report that includes detailed information on the relevant data collected.
• A report with quantified estimates of the rebound effects of alternative fuel technologies.
• A report on the possible techniques of integrating AOC methodology within California MPOs' TDMs.
• Final report.
• Presentation summarizing findings (may be public).​​​​​​​

Additional deliverables are to be determined in consultation with CARB staff. 

The contractor will be responsible for ensuring their documents comply with the Americans with Disabilities Act.

V. Timeline

It is anticipated this project will be completed in 24 months from the start date (start date is estimated to be Spring 2025). The estimated budget for this project is up to $350,000.

Scoring Criteria

1. RESPONSIVENESS TO THE GOALS AND OBJECTIVES OUTLINED IN THE PROPOSAL SOLICITATION (20 POINTS)

The proposal should explain—in adequate detail and clear, understandable language—how the proposed project satisfies the project objectives.

2. WORK EXPERIENCE AND SUBJECT MATTER EXPERTISE (20 POINTS)

The proposal should demonstrate that the proposers have a team with the work experience or subject matter expertise required to successfully carry out the proposed project as described in the varying tasks. Additionally, the proposal should describe how the project will build upon previous relevant work that was funded by CARB, other regional, state, and federal agencies.

3. EXPANDING EXPERTISE (10 POINTS)

The proposal should explain how the project team expands expertise by incorporating multidisciplinary expertise or perspectives, including members from various public universities, non-academic institutions, or community-based organizations, or providing opportunities to build skills and expertise for individuals from underrepresented groups. Reviewers will consider if key personnel contributing significantly to the project (i.e., a principal investigator, co-principal investigator or co-investigator, contributing 25 percent or more of their time to the project) have not worked with CARB in the past five years.

4. EXPLANATION OF TECHNICAL OR METHODOLOGICAL APPROACH (20 POINTS)

The proposal should clearly explain the logic and feasibility of the project’s methodology, spell out the sequence and relationships of major tasks, and explain methods for performing the work. The proposal should include a clear description and plan for how each task will be completed.  

5. LEVEL AND QUALITY OF EFFORT AND COST EFFECTIVENESS (15 POINTS)

The proposal should describe how time and resources will be allocated and demonstrate how this allocation ensures the project’s success. Proposal reviewers will evaluate, for example: if the objectives of the project can be met given this allocation, if there is adequate supervision and oversight to ensure that the project will remain on schedule, if time and cost are appropriately divvied up across different project tasks and stages.​​​​​​​

• 1Auto Operating Cost (AOC) refers to the expenses associated with operating a vehicle, including fuel costs and non-fuel costs (maintenance, repair, and tire wear).
• 2Alternative or different fuel technologies refers to different types of vehicles powered by gasoline, diesel, electricity, and hydrogen. The different type of vehicles includes ZEVs, PHEVs, and ICEVs.
• 3Zero Emission Vehicle (ZEV) refers to both battery-electric vehicles and hydrogen fuel cell vehicles powered by electricity and hydrogen.