Photographer: Victor J. Blue/Bloomberg

EPA Strengthens Greenhouse-Gas Efficiency Goals for Big Rigs

Updated on
  • Transportation has eclipsed power plants for carbon pollution
  • Truckers had fought proposal that will drive up truck costs

The U.S. Environmental Protection Agency, resisting lobbying from the trucking industry, unveiled tough new regulations to reduce carbon emissions from tractor-trailers and other long-haul trucks in support of a key policy goal of President Barack Obama’s administration.

The EPA and the U.S. Transportation Department on Tuesday issued regulations that require trucks become more efficient through 2027. The final rules achieve 10 percent more carbon emission and fuel-consumption reductions than last year’s proposed rules, likely raising the price tag price for such vehicles but cutting operating costs. A big part of the greenhouse-gas reductions are expected to come from engine improvements, cutting fuel consumption by up to 5 percent, benefiting companies like Cummins Inc.

“We expect this will drive innovation as well as clear the air that we breathe,” EPA Administrator Gina McCarthy said on a call with reporters Tuesday. “These standards are ambitious but achievable.”

The truck rules are one of the last major opportunities for Obama to address climate change through regulation. The EPA and the Transportation Department are near the mid-point of a program expected to raise the average fuel economy of passenger cars to more than 50 miles per gallon by 2025. It has also tackled emissions from power plants and the electrical grid.

Click here for Bloomberg Intelligence on the fuel-efficiency rule for trucks

The truck rules will cut approximately 1.1 billion tons of carbon pollution through 2027, according to a White House fact sheet. This would save truck owners nearly $170 billion in fuel costs and reduce oil consumption by as much as 84 billion gallons.

When fully implemented, the rules mean that 2027 model-year heavy-duty trucks will be 25 percent more carbon efficient than those sold in the 2018 model year. Big pickup trucks and vans will become 2.5 percent more efficient each year between 2021 and 2027.

The program will apply to truck trailers for the first time, reducing emissions and fuel consumption attributable to aerodynamic drag by up to 9 percent.

Regulators felt comfortable mandating tougher carbon-emissions goals based on their reading of how much technology is becoming available, including more efficient diesel engines, more aerodynamic trailers and ways to reduce idling for work trucks, McCarthy said.

Data, Science

“There were technological advances that were available to us that we could take advantage of to achieve reductions that were cost-effective,” McCarthy said. “It was data. It was facts. It was science.”

Transportation recently surpassed power plants as the leading U.S. source of carbon pollution, said Hal Harvey, chief executive officer of Energy Innovation, a San Francisco-based energy and environmental policy firm. Heavy-duty trucks such as big-rig tractor-trailers and work vehicles, like garbage and utility trucks, are seen as an increasingly important target for emissions reductions.

“Efficiency buys you time, reducing emissions while you develop new technology,” Harvey said before the release of the regulations. “You should do the most you can do cost-effectively.”

‘Washington Bureaucrats’

Some industry groups balked at the new rules, saying they will only make it more expensive to do business in the U.S.

"The heavy-duty truck rule is another example of Washington bureaucrats thinking they know how to run a business better than America’s business owners,” Thomas Pyle, president of the energy-industry funded Institute for Energy Research, said in a statement. “These sorts of heavy-duty trucks are owned and operated by companies that have every incentive to save money on fuel.”

Cummins has been a supporter of the EPA rules, in part because they will drive the market for advanced technologies, like a system it’s developing to use excessive heat produced by working engines to run electric motors.

The regulations “provide a long-term road map to make sure we develop the technology we’ll need in the marketplace,” said Brian Mormino, executive director of environmental strategy and compliance at the Columbus, Indiana-based engine maker. “That’s a positive for us.”

Environmental groups were pushing the EPA to go beyond the proposal the agency released last year, which reduced carbon emissions 36 percent off a 2010 baseline by 2027. The Union of Concerned Scientists said a 40 percent reduction was possible based on an analysis of trucking technology.

12% Rise

The cost of tractors that pull freight trailers could rise 12 percent, according to Bloomberg Government. This will impact truckmakers such as Paccar Inc., Navistar International Corp., Daimler AG and Volvo AB, raising costs for their products. Companies with big private fleets, like FedEx Corp. and PepsiCo Inc., will likely benefit through lower fuel costs.

The adoption of fuel-efficiency technologies will grow significantly in coming years, Stifel Nicolaus & Co.’s Transportation and Logistics Research Group analyst Michael Baudendistel said in a note published Tuesday. WABCO Holdings Inc. would be one of the clear beneficiaries as more companies adopt its trailer skirts, tire pressure monitoring systems and predictive cruise control, he said.

Even with cheaper diesel prices, fuel is one of the top operating expenses for trucking companies, the American Trucking Associations said in a statement Tuesday. Regulators responded to many of the industry’s concerns on lead time, creating one set of national standards and providing flexibility, it said.

Fleet Impact

“While the potential for real cost savings and environmental benefits under this rule are there, fleets will ultimately determine the success or failure of this rule based on their comfort level purchasing these new technologies,” said Glen Kedzie, the Arlington, Virginia-based trade group’s vice president and energy and environmental counsel.

Truckers can have the biggest influence on fuel economy with proper training, said Norita Taylor, a spokeswoman for the Owner-Operator Independent Drivers Association.

“Forcing a standard which can lead to problems with reliability and maintenance ultimately has no benefits to the environment if no one wants to buy the product,” Taylor said.

The regulations will mitigate the effects of climate change, reduce U.S. reliance on foreign oil and save both truckers and consumers money, according to Fred Krupp, president of the Environmental Defense Fund.

“Strong, protective clean-truck standards will be a gold-medal win against climate change,” Krupp said. “Freight trucks use almost 120 million gallons of fuel every day, and emit hundreds of millions of metric tons of climate pollution each year.”

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