Sprawling EPA-NHTSA Rule Is Designed to Pare Operators’ Fuel Costs,
‘It’s Been a Year in the Making, Now the Fun Begins,’ Says One Advocate
The federal government has formally proposed its Phase 2 regulations for model year 2021 to 2027 medium and heavy duty vehicles. The sweeping regulation from the U.S. EPA and NHTSA, the National Highway Traffic Safety Administration, is designed to both reduce carbon emissions and slash fuel consumption. updated June 24
The new Phase 2 regulation is projected to save vehicle owners ‘about $170 billion in fuel costs over the lifetime of the vehicles sold in the regulatory timeframe,’ states an EPA-NHTSA summary.
The proposed standards are expected to lower carbon dioxide emissions by approximately 1 billion metric tons, the agencies say, and to cut fuel costs by about $170 billion. They are to reduce oil consumption by up to 1.8 billion barrels over the lifetime of the vehicles sold under the program.
The rule follows a goal set by President Obama in February 2014.
“It’s been a year in the making, now the fun begins,” says one expert, charged with helping clients respond to the proposal. EPA and NHTSA are taking comments until 60 days after publication of the proposal in the Federal Register – expected early in July – and will hold at least two public workshops on the proposal. They are currently expected to be held in late August, in Chicago and Los Angeles.
Engines and Trailers and Vehicles
The massive proposal, which runs to several thousands of pages in multiple documents from EPA and NHTSA, includes sections on engines and trailers as well as overall vehicles. It comes as the Obama administration’s heavy duty vehicle rules effective through 2017 are not yet fully implemented, notes Glen Kedzie, general counsel for ATA, the American Trucking Associations.
“We’re still in the middle of the Phase 1 rule,” he told F&F.
ATA’s principal concern is that while Phase 1 relies on technologies already implemented via the EPA’s SmartWay program, Phase 2 makes reference to advanced technologies, some of which are not yet commercially available. There is the further challenge, Kedzie says, of coordinating technologies pertinent to engines, trailers, and overall vehicles, all with a view to what will be in use in 2027, more than a decade away.
“Lots of things can change,” he says. “That’s the scary part of this regulation.”
‘Ambitious Yet Achievable and Affordable’
The agencies note that the proposed rule does not take effect until model year 2021 (model year 2018 for trailers). The proposed standards, says a fact sheet, “are the product of a comprehensive assessment of existing and advanced technologies and extensive stakeholder outreach.
“The agencies have had well over 300 meetings with manufacturers, fleets, owner-operators, dealerships, suppliers, non-governmental organizations (NGOs), consumer groups, labor unions, and other stakeholders to identify and understand the opportunities and challenges associated with fuel saving technologies…
“In order to significantly reduce fuel consumption and carbon emissions while ensuring the heavy-duty industry continues to meet the diverse needs of our transportation sector, the agencies have carefully designed a set of proposed standards that are ambitious yet achievable and affordable.”
‘Grounded in Rigorous Technical Data’
The proposal is “grounded in rigorous technical data and analysis,” the agencies say. “They do not mandate the use of specific technologies. Rather they establish standards achievable through a range of technology options, and allow manufacturers to choose those technologies that work best for their products and for their customers.”
Numerous organizations reacted to the proposal, most favorably, though often guardedly.
“Fuel is an enormous expense for our industry – and carbon emissions carry an enormous cost for our planet,” ATA president and CEO Bill Graves said in a release. “That’s why our industry supported the Obama Administration’s historic first round of greenhouse gas and fuel efficiency standards for medium and large trucks and why we support the aims of this second round of standards.”
ATA president and CEO Bill Graves
The Industry Needs Time
Kedzie, in the same announcement, sounded a caution: “We believe this rule could result in the deployment of certain technologies that do not fully recognize the diversity of our industry and could prove to be unreliable. This unreliability could slow not only adoption of these technologies, but the environmental benefits they aim to create.”
“To prevent this, truck and engine manufacturers will need adequate time to develop solutions to meet these new standards.”
According to Kedzie, fuel is typically a fleet’s first or second largest operating expense and most fleets seek a return on their investment in new equipment within 18 to 24 months.
Volvo Expresses Concern
“In 2014, trucking spent nearly $150 billion on diesel fuel alone,” he said in the ATA announcement, “so the potential for real cost savings and associated environmental benefits of this rule are there – but fleets will need a wide variety of proven and durable technologies to meet these new standards throughout the various implementation stages.”
Volvo, while supporting the government’s goals, took issue with the structure of then proposal. “In principle, the Volvo Group maintains that a separate engine standard is inconsistent with the Group’s interest in minimizing the complete, real world environmental impacts of its products.”
NGVAmerica president Matt Godlewski
“A separate engine standard is at odds with the reduction of NOx,” Volvo said, “due to the natural trade-off between NOx and CO2 emissions from the engine. It also limits manufacturers’ flexibility to meet the regulated targets for each individual customer in a way that suits their specific needs, and it incentivizes optimization for engine test cell requirements versus real world efficiencies.”
Volvo made clear that it will make its position clear to EPA and NHTSA “within the allotted timeframe.”
In other statements,
- “Today’s proposal has the potential to be a win-win-win that will lower greenhouse gas emissions, reduce fuel costs and reduce our nation’s dependence on foreign oil,” said NGVAmerica president Matt Godlewski. The final rule, he said, could “create new opportunities for fleets to use natural gas to further reduce fuel costs and emissions, while increasing energy security.”
- “These proposed heavy-duty standards will help the nation fight climate change while driving new technology and reducing costs for truckers and fleet managers,” said California Air Resources Board Chairman Nichols. “We support this effort and will be working to ensure the final regulations help California meet our goals for 2030 and beyond.”
- “Making our trucks go farther on less fuel will limit climate change and oil dependency while saving consumers and businesses money, and spurring innovation,” said Natural Resources Defense Council president Rhea Suh. “We will be pushing the administration to require compliance sooner, in order to deliver these benefits more quickly.”
- “When heavy- and medium-duty trucks become more fuel efficient, the U.S. economy will benefit,” said Phyllis Cuttino, director of the clean energy initiative at the Pew Charitable Trusts. “Truckers will pay less at the pump, businesses will have lower shipping costs, and consumers will save on purchased goods – all while pollution is decreased, benefitting public health and the environment.”
- “Cummins welcomes the proposal with its goals to improve fuel efficiency and reduce GHG emissions, creating a win-win for both customers and the environment,” said Cummins VP and engine business president Dave Crompton. “We are pleased that the new proposal builds upon the Phase 1 framework that aligns technological advances and industry success.”
- “As a power management company committed to increased fuel efficiency and reduced greenhouse gases, Eaton strongly supports the next phase of standards for medium and heavy duty commercial vehicles,” said Eaton chairman and CEO Alexander Cutler. “These standards provide important incentives to help deploy the next generation of fuel efficient technologies. Eaton stands ready to provide cost-effective advanced drivetrain technologies that make vehicles more efficient while achieving significant operational savings for our customers’ commercial vehicle fleets.”
“Once upon a time, to be pro-environment you had to be anti-big-vehicles. This rule will change that,” U.S. Transportation Secretary Anthony Foxx said in the EPA-NHTSA announcement. “These efficiency standards are good for the environment – and the economy, he said.
“When trucks use less fuel, shipping costs go down. It’s good news all around, especially for anyone with an online shopping habit.”
Two-Year Payback in 2027
Also according to the announcement, “The proposed standards are cost-effective for consumers and businesses, delivering favorable payback periods for truck owners; the buyer of a new long-haul truck in 2027 would recoup the investment in fuel-efficient technology in less than two years through fuel savings.
“We’re delivering big time on President Obama’s call to cut carbon pollution,” said EPA administrator Gina McCarthy. “With emission reductions weighing in at 1 billion tons, this proposal will save consumers, businesses and truck owners money; and at the same time spur technology innovation and job-growth, while protecting Americans’ health and our environment over the long haul.”
‘Payback periods for truck owners would be favorable,’ the government says: ‘the buyer of a new long-haul truck in 2027 would recoup the extra cost of the technology in under two years through fuel savings.’