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Phase 2 GHG regs will add $10-12K to cost of new trucks

Cost increases expected to be recouped within two years by 2027, regulators claim


WASHINGTON, D.C. — The long-awaited proposal for Phase 2 of the joint NHTSA/EPA greenhouse gas/fuel economy standards for heavy trucks was unveiled Friday, and will pursue an ambitious target of improving fuel economy by 24% by 2027 compared to 2018 model year trucks.

The new standards will reduce CO2 emissions by about a billion metric tons and slash fuel costs by US$170 billion over the lifetime of the vehicles sold under the program. The fuel saved will be equal to a year’s worth of OPEC imports to the US, according to Janet McCabe, EPA’s acting associate administrator, who spoke on a conference call Friday.

The bad news is, Class 8 trucks are expected to climb in cost by $10-12,000 under the Phase 2 rules, which will affect model years 2021 to 2027 vehicles. However, officials insisted that by 2027, the cost increase will be recouped within two years of operation, thanks to reduced fuel consumption.

“Once upon a time, to be pro-environment you had to be anti-big-vehicles. This rule will change that,” said US Transportation Secretary Anthony Foxx. “In fact, these efficiency standards are good for the environment – and the economy. When trucks use less fuel, shipping costs go down. It’s good news all around, especially for anyone with an online shopping habit.”

The good news is that the Phase 2 rules won’t take effect until 2021 model year trucks are introduced, giving OEMs more time than expected to develop viable methods of reaching the new standard. Phase 1 rules cover model years 2014 to 2018 trucks and were mostly met using off-the-shelf technologies already widely in use.

As expected, trailers will be covered by the regulations for the first time. EPA’s trailer rules will begin to take effect as early as the model year 2018 while the NHTSA regs focusing on fuel economy will take effect in 2021, with credits awarded for voluntary participation before then.

Separate standards have been proposed for engines and trucks, to the dismay of some OEMs such as Volvo and Daimler, which had been pushing for a single vehicle standard they say would better reward integration.

The Phase 2 proposal does not endorse specific technologies, but instead sets performance objectives which truck, engine and trailer manufacturers can meet however they choose.

Vehicles affected will include: semi-trucks; trailers pulled by semi-trucks; heavy-duty pick-up trucks and vans; and vocational vehicles.

EPA’s McCabe said regulators are expecting a US$230-billion net benefit to the US economy, with the trucking industry shelling out about $25 billion in additional acquisition costs over the lifetime of the vehicles sold under the program. This is assuming all fuel savings are passed on to consumers, who in that case would stand to save about $150 a year per household due to lower shipping costs, according to NHTSA’s Mark Rosekind.

McCabe said more than 300 meetings were conducted with industry stakeholders and that “the proposed standards are grounded in rigorous technical data and analysis.”

The projected fuel savings would translate to a 50-90% improvement in freight efficiency by 2027 compared to a 2018 model year baseline.

Once the Phase 2 proposal is published in the Federal Register, there will be a 60-day comment period. NHTSA and the EPA say they’ll also be hosting public hearings to solicit input.

Some organizations weren’t waiting to voice their opinions. The American Trucking Associations said it supports the new standard and noted 14 of 15 ‘guiding principles’ tabled by the association appear to have been adopted.

“Fuel is an enormous expense for our industry – and carbon emissions carry an enormous cost for our planet,” said ATA Ppesident and CEO Bill Graves. “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.”

Cummins, which advocated separate standards for trucks and engines – and got its wish – lauded the proposal.

“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 Dave Crompton, vice-president and president, Engine Business, Cummins. “We are pleased that the new proposal builds upon the Phase 1 framework that aligns technological advances and industry success.”

However, the National Automobile Dealers Association (NADA) and American Truck Dealers (ATD) objected to the proposal; specifically to the cost increases they will entail.

“Affordable transportation is the bedrock of the American economy, and adding – by the Administration’s own estimate – an average of just under $12,000 to the cost of a new truck through mandates based on potentially untested technologies is a great risk to a still-fragile economy,” The organizations said in a statement.

“Recent history has shown that mandates with underestimated compliance costs result in substantially higher prices for commercial vehicles, and force fleet owners and operators to seek out less-expensive and less fuel-efficient alternatives in the marketplace. The costs could even drive small fleets and owner/operators out of business, costing jobs and only further impeding economic growth. While supportive of affordable fuel-economy improvements, ATD is closely reviewing the proposal and the many potential impacts it will have on truck dealerships and their customers.”

The complete proposal – all 1,329 pages of it – can be viewed online. That and other facts about the proposal can be found here.

 


James Menzies

James Menzies

James Menzies is editor of Truck News and Truck West magazines. He has been covering the Canadian trucking industry for more than 15 years and holds a CDL. Reach him at james@newcom.ca or follow him on Twitter at @JamesMenzies.
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1 Comment » for Phase 2 GHG regs will add $10-12K to cost of new trucks
  1. Chris Schmidt says:

    nothing mentioned about the cost to the owner for compliancy
    but that’s not important-as usual, he will just absorb it. No problem

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