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This Week’s Top 10: Feds release phase 2 of commercial truck emissions rules, National Research Council issues study on 54.5 mpg rules

by Jon LeSage, editor and publisher, Green Auto Market

Here’s my take on the 10 most significant and interesting occurrences during the past week…….

Phase 2 of commercial truck rules: A long-awaited ruling on medium- and heavy-duty trucks on greenhouse-gas emissions and fuel economy has been released by federal agencies. The US Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) are proposing emissions and fuel economy improve by up to 24% through 2027, and federal efficiency standards for new trailers have been included for the first time. The proposed second-phase rules on vehicle and engine standards would run from 2021 through 2027 and apply to semi-trucks, large pickup trucks and vans, and all types of buses and work trucks. Emissions and fuel consumption from heavy-duty pickups and vans will need to be reduced by 16% between the 2021 and 2027 model years, according to the federal standards. As for feedback on the ruling, American Truck Dealers voiced concern that’s been heard for years from truck makers and suppliers – about the higher costs of compliance and economic impact if prices for commercial trucks rise. Fiat Chrysler’s FCA said it “supports and commends” the coordinated approach taken by the federal agencies. NGVAmerica and its member companies commend the rule, as does CALSTART. The Consumer Federation of America released results of a survey conducted in mid-May with more than 1,000 US consumers; 71% favor increasing fuel efficiency mandates for heavy-duty truck, while 24% oppose it.
As for federal rules on light-duty passenger vehicles: The National Research Council (NRC), an 18-member committee nonprofit group that advises federal policymakers, found that the federal 54.5 mpg by 2025 model year standards are based on sound assumptions on its technological progress and costs – even if electrified transportation doesn’t hit high sales volumes. The NRC study also expressed concern over how much consumers will be willing to pay for the fuel-efficient vehicles. The report comes out during a time when automakers, environmental groups, and regulators are determining the final federal fuel economy standards from 2022 through 2025. This midterm review process was demanded by automakers before they make the investment in retooling to reach the high mpg and emissions targets.
Fisker Karma coming back: Fisker Automotive and Technology Group will be working out of a manufacturing plant to relaunch its Karma plug-in hybrid electric vehicle in Moreno Valley, located in California’s Riverside county. Fisker will create 150 new jobs, with about 100 of them being engineers. The company is also looking into keeping a portion of its former Anaheim headquarters. Chinese owner Wanxiang Group had promised to utilize Fisker’s Delaware plant, but the future of that plant has yet to be determined.
Watch these videos: NAFA’s past president Claude Masters and CALSTART’s Bill Van Amberg talked to Fleet Management Weekly in these video interviews about NAFA’s Sustainable Fleet Accreditation Program and hitting clean transportation targets. Masters talks about the programs being set up to provide data fleet managers need. Van Amberg says that the true role of CALSTART is to build a clean transportation technologies industry – creating jobs that, in turn, create cleaner air.
Hyperloop competition: It’s been nearly two years since SpaceX/Tesla CEO Elon Musk sent out the Hyperloop concept – and now it’s gaining more attention and enthusiasm. The SpaceX Hyperloop Pod Competition asks entrants to design passenger vehicles for the super high-speed Hyperloop train system. It’s intended to appeal to both university students and independent engineering teams, SpaceX says. Hyperloop Technologies, an unrelated startup with proprietary technology based in downtown Los Angeles, pledged on Twitter to support student teams submitting pod designs for the competition. Hyperloop is gaining enough traction to inspire a feature in Popular Science with this intro: “Elon Musk proposed a ridiculously audacious form of transportation. Now, startups are racing to bring the Hyperloop to life.”
Ford land-fill free in Mexico: Ford Motor Co.’s Hermosillo Stamping and Assembly Plant has earned zero waste-to-landfill status, making the automaker landfill-free at all of its Mexico manufacturing facilities. That means Ford’s Mexico plants are diverting 1.5 million pounds of landfill waste this year and going forward. This is part of a global campaign by Ford to reduce waste-to-landfill by 40% per vehicle produced from 2011 to 2016; Ford previously hit that target by reducing global per vehicle waste-to-landfill by 40% from 2007 to 2011.
Toyota might gain more ZEV credits in California: Toyota is not getting out of the plug-in business entirely to focus instead on hydrogen fuel cell cars. Developed with the new 2016 Prius hybrid, the new Toyota Prius Plug-in Hybrid will likely have longer electric range than its 11 miles on battery only in the current version. That will probably help tip the scales a little bit more in the automaker’s favor in California. The state is loosening up on its zero emission vehicle (ZEV) credits, and Toyota will be able to gain more credits if it sells more of these models than it’s been achieving lately. The 2016 model could generate that enthusiasm and sales increase, and could be a way for other companies to meet their targets. Mazda and Subaru, for example, will fall under ZEV requirements for the first time starting in 2018 and might be interested in buying Toyota’s technology for their vehicles to meet the targets – similar to what Toyota had previously done with Tesla Motors in its RAV4 EV.
Nevada wants to see Electric Highway: Nevada Gov. Brian Sandoval announced that five new electric vehicle chargers will be placed on highway US 95 in between Reno and Las Vegas; that will go with the 150 charging stations already in place in the state. State officials are working with Tesla Motors to set up additional fast chargers, Tesla Superchargers, along the Nevada Electric Highway. That’ likely to happen given that Nevada will soon be home to Tesla’s Gigafactory lithium-ion battery plant near Reno.
Biofuels get mixed message in Washington: Fans of biofuels got some “good news/bad news” out of Washington, DC. Last week, Bill Cassidy (R-La.) introduced a bill that would completely recall the federal Renewable Fuel Standard, with its ethanol and biodiesel blends and advanced biofuels provisions. Sens. Dianne Feinstein (D-Calif.) and Pat Toomey (R-Pa.) have made several attempts to remove the ethanol blend mandate, but leave in other biofuels, such as biodiesel. For those in the biofuels business needing funding, the federal government now is offering $100 million in grants under the Biofuels Infrastructure Partnership (BIP). That funding has been made available to support the infrastructure needed to make more renewable fuel options available to consumers. It will be administered by the Farm Service Agency; but those interested need to move fast – applications must be submitted by July 15, 2015.
Continental wants to win electrified turbocharger market: Tier 1 automotive supplier giant Continental AG is throwing down the gauntlet to compete with Valeo SA, BorgWarner, and Honeywell. Similar to Valeo’s 48-volt electric motor that will soon power a new Audi vehicle, Continental is working on an electric motor to pressurize a turbocharger that will eliminate what’s called “turbo lag.” Besides bringing more power, the electrified turbocharger improves fuel economy. BMW already uses Continental turbochargers on its BMW i8 and Mini Cooper.

Phase 2 of fuel efficiency and emissions standards for trucks are central themes at NAFA and ACT Expo conferences

Phase 2 of national standards for fuel efficiency and greenhouse gas emissions from medium- and heavy-duty trucks will be central themes at upcoming industry conferences NAFA 2015 Institute and Expo and ACT Expo. The US Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA), in collaboration with the California Air Resources Board (CARB), are in the planning stages of extending its standards beyond model year 2018. The objectives are to further reduce fuel consumption through the application of advanced cost-effective technologies and continue efforts to improve the efficiency of moving goods across the US. EPA has announced that proposed Phase 2 regulations that were originally planned for publication last month will delayed until June. The new rules are expected to not take effect until 2020.

At NAFA Fleet Management Association’s 2015 Institute and Expo in Orlando, Fla., James Tamm, a top NHTSA official who has been heavily involved in the drafting of proposed regulations rulemaking regarding Phase 2 fuel efficiency and greenhouse-gas emissions, will speak to these issues at a session on Thursday morning, April 16. Tamm’s NHTSA division is also responsible for reviewing and approving manufacturer petitions for alternative CAFE standards. Tamm will make this presentation with Patrick O’Connor, president of the firm Kent & O’Connor, NAFA’s legislative counsel in Washington, DC. Tamm will provide attendees with an overview of the objectives for the Phase 2 standards and urge fleet managers to participate in the rulemaking process.

The 2015 ACT Expo, which takes place May 4-7 in Dallas, is presenting a greater emphasis this year on goods movement efficiency. Trucking Efficiency, a joint effort of The North American Council for Freight Efficiency (NACFE) and Carbon War Room (CWR), has an expanded partnership with the 2015 ACT Expo to provide greater emphasis on trucking efficiency at North America’s largest clean fleet event. Trucking Efficiency is an industry collaboration that aims to double the freight efficiency of North American goods movement.

The four-day ACT Expo event will also feature a dedicated “Trucking Efficiency Showcase” in the expo hall to display heavy-duty efficiency technologies. Speaker workshops include a trucking efficiency track to explore these technologies and discuss the benefits and challenges of their adoption. Speakers will be discussing the role of alternative fuels in work trucks and heavy-duty trucking, aerodynamic improvement systems, idle-reduction strategies, 6×2 axles, tire pressure monitoring systems, and driver training programs among other measures – that will enable fleets to improve productivity, save fuel, and meet emissions standards.

Phase 2 was a topic of discussion at the CALSTART annual meeting and Blue Sky Award ceremony in Los Angeles in December. Keynote speaker Christopher Grundler, director, office of transportation and air quality at the EPA, sees this as a top issue for the clean transportation community to follow.

Advanced vehicle technologies will play a key role in meeting federal standards, as will adoption of next-generation alternative fuels and electrified trucks. Clean diesel and new diesel powertrains were key elements behind the Clean Truck Programs adopted by major ports, but there is concern about what it will take to further reduce emissions – and that it may take a while. Volvo Trucks has been working with Oberon Fuels to roll out trucks powered by the very clean dimethyl ether (DME). However, that will take longer than expected. Last fall, Volvo Trucks announced that it would no longer project a date for commercial availability, citing a slowdown in the pace of the North American alternative fuel market. The truck maker will continue field testing DME-powered vehicle, but it will be closely monitoring “market and stakeholder interest in the fuel.”

California cap and trade sees $1 billion in carbon credits after vehicle tailpipe emissions were added

California’s cap-and-trade program, which began quarterly auction sales in late 2012, hit a benchmark last month. Companies invested $1.02 billion in carbon emissions credits, the largest auction event since it all started. Analysts think that had to do with the state significantly increasing the pool of credits available for sale to meet the 2015 addition of motor vehicle tailpipe emissions into the cap-and-trade program.

The cap-and-trade auctions have become a central aspect of the state’s AB 32 climate change law enacted in 2006. Under the state’s regulatory structure, large polluters buy carbon credits that come from businesses generating surplus allowances. Collected funds from the auctions go toward other emission-reducing endeavors, including sustainable energy projects and rebates for electric vehicles and solar panels. While China and the US are working on an agreement to mutually reduce their greenhouse gas emissions, their governments and those of states across the country and other nations around the world, are tracking how well California’s program may reduce carbon emissions.

In its earliest phase, the state’s cap-and-trade system affected other industries beyond oil companies. The state doesn’t disclose which companies made allowance transactions during the quarterly auctions, but its list of qualified bidders includes Chevron USA, BP Energy Co., and Exxon Mobil Corp. Oil companies, refineries, and retail gas station owners, have warned that adding transportation fuel to the state program will be increasing the price at least 10 cents a gallon. Low gas prices have taken some of the weight out of that argument, but California officials have taken the warning seriously. The California Air Resources Board, which oversees the auctions, dramatically increased the volume of available credits. Credit prices did stay steady with that volume increase – participants paid $12.21 per credit for the right to emit carbon this year, which was similar to prices paid at previous auctions.

Environmentalists, such as a representative from the Environmental Defense Fund, think the market is functioning properly. Oil companies are not as pleased with the regulatory structure that comes from AB 32. In addition the cap and trade, the state has enacted the Low Carbon Fuel Standard (LCFS) that calls for a reduction of at least 10% in the carbon intensity of California’s transportation fuels by 2020. Last month, the California Air Resources Board held a hearing on whether the regulation is working out. A decision is expected to be released this spring or summer. Environmentalists and alternative fuel producers argued that the state should stay its course; oil industry representatives disagreed.

Nick Economides, manager of state fuels regulation at Chevron Corp., said the state’s mandate relies heavily on the development of alternative fuels, many of which haven’t yet panned out. He joined up with other oil industry executives who argued that the LCFS needs to be adjusted. “We have invested heavily (in alternative fuels) and regretfully, we have not been successful,” Economides said.

Others make the argument that oil companies are not taking alternative fuels seriously at all – investments in biofuels, hydrogen, and other alternative energies are being done to “look good” with regulators and the general public, but are only being addressed at superficial levels. Similar arguments are made by electric vehicle advocates who talk about investments made in the past 30 years by major automakers for electric drive and other clean technologies – only to see these projects gathering mothballs.

Will carbon taxes ever be enacted in Washington?

Whether or not Congress and the president will enact a carbon tax occasionally becomes a topic of heated debate with strong arguments made on both sides. Lawrence Summers has stirred the pot lately writing commentaries making the case for enacting carbon taxes. Summers, a Harvard professor and past university president, and treasury secretary from 1999 to 2001 and previous economic adviser to President Obama, says that cheap fossil fuels exacerbate energy overuse. Carbon taxes would help curb that problem and reduce emissions. “Carbon emissions exacerbate the global climate change problem. In many cases they contribute to local pollution problems which immediately harm human health,” Summers wrote in the Washington Post.

The basic idea behind enacting carbon taxes is to raise the price of fossil fuels high enough in the US that it becomes much more expensive. It would be similar to Europe’s high motor fuel prices; that gives incentives to consumers to use less fuel and produce less carbon during transportation. Carbon taxes would also regulate other sectors with high carbon emissions such as energy power plants. Summers says that the issue becomes compelling when oil prices drop dramatically, as we’re seeing now, giving incentive to over-consuming motor fuel and other fossil fuels.

Variations on carbon taxes do exist in the US now through the federal Renewable Fuel Standard (RFS) and California’s cap-and-trade system. Oil importers and refineries pay for and trade Renewable Identification Numbers through the RFS. California’s cap-and-trade market sets a firm limit (or cap) on greenhouse gas emissions (GHG) from the oil industry, utilities, and other carbon producers. Compliance costs are minimized by trading carbon credits on the market, and through reducing their own carbon emissions by changing over to clean, renewable energy.

President Barack Obama has been calling on the world to follow the US and China alliance in reducing GHG – a point made last fall while speaking before the United Nations Climate Summit. The US has not supported the summit’s plan to set a global price on carbon, signed by 74 countries and more than 1,000 businesses and investors. That comes from a lack of support in Washington for carbon taxes now that the majority of both the House and Senate have changed hands – and which had failed to gain any real support in Washington in recent years when Democrats led both branches of Congress. As for now, California has a cap-and-trade system in agreement with the Canadian province of Quebec; other states are considering it. The Obama administration is going the route of enforcing Clean Air Act rules and forming an overseas alliance with China to deal with the carbon reduction challenge.

Steve Cohen, executive director at Columbia University’s Earth Institute, says that it’s time to “abandon the delusion of a carbon tax.” While it makes for interesting cocktail party chitchat and impassioned blogging, it’s not going to gain enough political support with so much at stake. “No political leader responsible for ensuring the material well-being of his or her people in the modern global economy is going to willingly raise the price of something so central to that economy as the price of energy,” according to Cohen. He sees the solution coming from setting up incentives and government-funded research to make renewable energy technologies more advanced and cost efficient. That would mean renewables would become cheaper, more reliable, and more convenient than fossil fuels. The debate would be over.

As for now, the best US trend we’re seeing is corporations and governments choosing to reduce their own carbon/GHG emissions voluntarily. That usually starts out in adopting energy efficiency, waste management, and renewable energy – such as powering a building through solar panels. We’re starting to see fleets become more engaged in those policies – reducing their emissions and fuel consumption through alternative fuel and advanced technology vehicles. Making the business case is a bit challenging with gas prices dropping down so far and acquisition costs for these clean vehicles many times much higher than traditional vehicles. Hats off to those fleets taking on the challenge.