It is increasingly likely that auto manufacturers are not going to be able to meet the fuel efficiency standard for new cars of 54.5 miles per gallon by 2025 set by the U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA). Nevertheless, they are doubling down, and recently jointly adopted new standards for medium- and heavy-duty vehicles forcing improved fuel efficiency, which is designed to reduce carbon dioxide emissions over the next decade by about 25 percent for big tractor trailers and somewhat less for delivery trucks, school buses and other large vehicles. The carbon dioxide reduction required is 10 percent more than when the rules were proposed last year. The rules are intended to improve fuel economy for tractor-trailers and other large vehicles that transport steel, cars, oil, food and other consumer products. The rule will affect engine performance standards for truck model years 2018 to 2027.[i] Engine and truck-tractor makers are to determine how to meet the rule. EPA claims the cost of complying with the new standards is $12,000 a vehicle. [ii] A fine will be issued to those manufacturers that fail to comply.
First Phase of Truck Rule
EPA and NHTSA had an earlier round of fuel-efficiency standards applied to model years 2014 to 2018.[iii] Those regulations began taking effect in 2014 and will be fully phased-in by 2018. The rules are extensive and establish different requirements for different types of vehicles: (1) combination tractors; (2) heavy-duty pickup trucks and vans; and (3) vocational vehicles. The standards also vary depending on whether an engine is spark-ignited (gas) or compression ignited (diesel).[iv] These standards were introduced in 2011 and require a 20-percent reduction in fuel consumption beginning in 2016.[v]
Second Phase of Truck Rule
The phase two rules apply to semi-trucks, large pickup trucks, vans, and buses built between 2021 and 2027. The regulations mandate that heavy-duty pickup trucks and vans must become 2.5 percent more efficient each year beginning in 2021. The rule requires manufacturers to use lighter-weight materials and more aerodynamic designs to improve fuel efficiency. When the standards are fully phased in, tractors in a tractor trailer, for example, will have up to 25 percent lower carbon dioxide emissions and fuel consumption compared to an equivalent tractor in 2018.[vi] For non-compliance, the EPA instituted a fine, allowing those manufacturers who fail to comply to pay to continue their business operations.[vii]
Heavy-duty and medium-duty trucks make up about 5 percent of the vehicles on the road and account for over 20 percent of transportation-related fuel consumption and carbon dioxide emissions. They are the fastest-growing segment of the American transportation sector. Trucking is a $700 billion industry and moves between two-thirds and three-fourths of the nation’s freight.
Whether the industry can meet these regulations or will have to pay a fine is unknown. For example, Ford invested over $1 billion to get the Ford F-150, the most popular pick-up truck on the market, into compliance for 2016, yet the F-150 still does not fully meet the requirements.[ix] While the Ford F-150 is in a different vehicle compliance class than the heavy and medium-duty trucks, this example shows that it is not trivial to meet more stringent standards.
Clearly, the Obama Administration is again making it more expensive to live in America through regulation, and using carbon dioxide emissions as their blunt force instrument. The costs of the new regulations for heavy and medium sized trucks, whether through vehicle upgrades or through the fine, will ultimately be passed along to the consumer, who will be paying more to get the products they need. Reaching their goal of reducing carbon dioxide in order to supposedly affect climate change is proving to be more and more expensive to the American public and our way of life.
[i] Daily Caller, EPA’s Newest Global Warming Reg Targets Big Rigs, School Buses, August 16, 2016, http://dailycaller.com/2016/08/16/epas-newest-global-warming-reg-targets-big-rigs-school-buses/
[ii] New York Times, New Rules Require Heavy-Duty Trucks to Reduce Emissions by 25% Over the Next Decade, August 16, 2016, http://www.nytimes.com/2016/08/17/business/energy-environment/epa-truck-emission-standards.html?_r=0
[iii] Washington Post, White House sets new fuel-efficiency standards for heavy-duty trucks, vans and buses, August 16, 2016, https://www.washingtonpost.com/news/energy-environment/wp/2016/08/16/white-house-sets-new-fuel-efficiency-standards-for-heavy-duty-trucks-vans-and-buses/?utm_term=.7f731917348f
[iv]Natural Gas Vehicles for America, EPA & NHTSA 2017–2025 GHG and Fuel Economy Rules, https://www.ngvamerica.org/government-policy/federal-incentives/ghg-and-fuel-economy-rules/
[v] Slate, A Wheel Deal, June 25, 2015, http://www.slate.com/articles/health_and_science/science/2015/06/epa_fuel_economy_standards_trucks_are_about_to_cut_emissions_drastically.html
[vi] Logistics Management, DOT, EPA issue final rules for heavy-duty trucks greenhouse gas and fuel efficiency standards, August 16, 2016, http://www.logisticsmgmt.com/article/dot_epa_issue_final_rules_for_heavy_duty_trucks_greenhouse_gas_and_fuel_eff
[vii] Conservative Tribune, http://conservativetribune.com/truckers-bad-news-obama/
[viii] Fox News, Administration OKs new fuel-efficiency standards for trucks, August 17, 2016, http://www.foxnews.com/leisure/2016/08/17/administration-oks-new-fuel-efficiency-standards-for-trucks/
[ix] IER, Gasoline Vehicle Purchases On the Rise, July 15, 2016, https://www.instituteforenergyresearch.org/analysis/gasoline-vehicle-purchases-rise/