DC Velocity - June 2016

20 DC VELOCITY JUNE 2016 www.dcvelocity.com
Shipper group, EDF urge stricter truck fuel-economy standards

Over the next nine years, can America’s heavy-duty truck fleets cut 40 percent of their fuel consumption and carbon emissions? A consortium of 12 food and apparel companies, all of which have rich environmental pedigrees, thinks they can. So does the nonprofit advocacy group the Environmental Defense Fund (EDF).

The founder of startup trucking information website Trucks.com, who cut his teeth as CEO of online car-pur-chasing site Edmunds.com, said it’s economically impractical even if the technology is available to do it. The American Trucking Associations (ATA), which represents the nation’s big fleets, thinks it’s somewhat ridiculous to look out that far ahead because no one has a crystal ball on available technology and economic activity.

In an April 1 letter, the shipper consortium urged the Environmental Protection Agency (EPA) and the Department of Transportation (DOT) to require big rigs to meet even tougher standards for fuel and greenhouse gas (GHG) reductions than the Obama administration has proposed for a new phase of vehicle environmental standards set to begin in 2018. EPA and DOT are expected to publish final rules in late summer or in the fall.

According to the shipper letter, a 40-percent cut in fuel use would raise a loaded big rig’s efficiency to 11 miles per gallon by 2025. Currently, the most efficient heavy-duty truck gets about 7 mpg. Fleets would experience lower lifecycle costs as soon as the new fuel-efficient trucks entered service, the group said, citing test results from the Department of Energy’s “Smart Truck” program. By 2040, the typical big truck would save 21 cents per mile in fuel costs and the industry in total would save about $25 billion a year, according to the letter.

Among the group’s members are Minneapolis-based General Mills Inc.; Waterbury, Vt.-based Ben & Jerry’s Homemade Inc.; Londonderry, N.H.-based Stonyfield Farm Inc.; and Ventura, Calif.-based apparel manufacturer Patagonia Inc.

EDF has proposed a more aggressive fuel-consumption cut for big rigs, calling for a 40-percent reduction spread across all truck asset classes. However, because EDF’s formula is a weighted average based on the volume of fuel consumption, the heavy-duty trucks that are the biggest guzzlers would be required to cut fuel use by 46 percent.

PUSHBACK FROM TRUCK INTERESTS

Jeremy Anwyl, CEO of Trucks.com, doesn’t buy the push
for tougher fuel-economy standards. If the payback were
so robust and rapid, fleets and independent drivers alike
would rush on board, borrowing capital with confidence
they would be repaid in spades, Anwyl said. In addition, the
fact that such a change would need to be regulated rather
than dictated by market forces indicates the math behind
the industry and EDF proposals simply doesn’t work, espe-
cially with diesel fuel prices still hovering near multiyear
lows, he said.

The shipper group should instead focus on the environmental benefits, which are more clear-cut, and on who should ultimately pay for the investments needed to reach GHG-reduction goals, Anwyl said.

Jason Mathers, senior manager of EDF, said strict measures are in the best interests of shippers because they require the trucking industry to stay the fuel-efficiency course and not be swayed by short-term ener-gy-price fluctuations. “As this industry learned just a few years ago, it takes time to improve fleet fuel efficiency,” Mathers said. Efficiency practices aren’t “something that can be flipped on when diesel goes north of $4 gallon,” he said. Mathers’ comments were echoed by Ben & Jerry’s CEO Jostein Solheim, who wrote on Trucks.com’s site in mid-May that “efficiency gains don’t come on their own” and will require long-term policies that spawn lasting change.

Glen Kedzie, who heads energy and environmental issues at ATA, said it can’t evaluate the group’s proposal because no one knows what technology will be available nine years out to support the objective, or whether the technology would be effective. Kedzie said it’s easy for outsiders to make projections when they’re not in the shoes of the fleet owner. Unless fleets are reasonably certain they can achieve a solid return on investment, they won’t commit, Kedzie said.

The proposed EPA-DOT regulations would run until 2027, making this one of the longest rule-implementation cycles in trucking history. The administration projects that, by 2027, big truck fuel consumption and GHG emission levels will be cut by 32 percent from 2017 levels. The rules will be imposed on truck, trailer, and engine manufacturers, but fleets will foot much of the bill as those costs get passed on.

Complying with the tougher standards will end up costing an owner of a typical “Class 8,” or heavy-duty, truck about $16,800 by 2027 compared with 2017 levels, according to administration projections. Kedzie said, however, that the government’s estimate is dramatically understated because it doesn’t include the higher costs of maintenance, warranties, and driver and vehicle downtimes.