A big win-win on big trucks

Today the U.S. Environmental Protection Agency and the National Highway Traffic Safety Administration released the final rulemaking (FRM) for heavy-duty vehicle fuel-efficiency and greenhouse gas standards. This regulation is the final version of the proposed standards that were published in June 2015. This is “Phase 2” of the regulation; Phase 1 was finalized in 2011 and went into effect for model year 2014 vehicles and engines.

As with the proposed standards, the entire package of regulatory materials—including preamble, FRM, Regulatory Impact Assessment, Technical Support Document, and other supporting info—comes in at over two thousand pages, so we’ll have plenty to keep us busy as we comb through the details. We will release a detailed summary within the next week. For quick reactions, see our press release here, and our take on some of the highlights of the regulation below.

Overall, the final rule is almost the same as proposed. There appears to be a nearly imperceptible change in stringency: The agencies estimate that the final Phase 2 rule will result in 1.1 billion tons of CO2 reduction, up from 1 billion tons in the proposal, over the regulated vehicles’ lifetimes.

Here’s a link to our blog from last June on the 5 numbers everyone ought to know about the Phase 2 HDV efficiency regulation as it was proposed. In a nutshell, what we noted then and what’s still true is:

  • 46 regulatory categories and unique efficiency targets for engines, trucks, and trailers. Since they were not included in Phase 1, trailers are the big deal new addition in Phase 2.
  • Up to 30% reduction in fuel use from Class 8 tractor-trailers vs. the 2017 baseline and smaller but still substantial reductions from vocational vehicles (14%–19%) and commercial pickup trucks and vans (16%). The chart below shows how vehicle efficiency is expected to improve as a result of the combined impact of Phases 1 and 2 of the regulation.

Fuel savings will be over half a million barrels of oil per day in 2035, and by 2050, when the rule is fully phased-in, these savings increase to over 800,000 barrels per day. Together with Phase 1, the increased efficiency of heavy-duty trucks and buses will cut fuel use by over one-third by 2050, as shown in the chart below.

  • Attractive payback times for all vehicle categories. For these tractor-trailers, the agencies project an average payback period within 2 years (similar to our own findings), which is less than half of the 4 to 6 years that these vehicles are held by their first owner, on average. For the other two major vehicle categories—commercial pickups and vocational vehicles—the estimated payback periods of 3 and 4 years also fall well within the typical first ownership cycle, meaning that through the fuel savings first owners can expect to more than make up the increase in new-vehicle purchase price attributable to efficiency technologies.

The agencies are to be commended for a very rigorous stakeholder engagement and regulatory development process, which has produced the most comprehensive and technically ambitious regulation for commercial vehicle efficiency in the world. This far-sighted regulation will continue to drive the development and deployment of cost-effective fuel-saving technologies. Over the lifetime of all the 2018–2027 vehicles impacted from this rule, the agencies estimate over $200 billion net societal benefit for the trucks, trailers, and engines affected by this regulation. Of that, the largest part of the benefits are about $160 billion in fuel savings. Rippling through the economy, this would mean hundreds of dollars per household per year. And we will reap all of these fuel savings and economic benefits while keeping over 1 billion metric tons of greenhouse gases out of the atmosphere. Talk about a big win-win on big trucks!