Overreaction on Global Warming Could Prove Costly for Trucking
May 1, 1998 12:00 PM, Mary Davis
Government overreaction to concerns about global warming could cost the trucking industry billions of dollars if rigid emission regulations are established for carriers and their shippers, say industry officials.
The focus on global warming intensified in December 1997 after US negotiators met with other nations' representatives in Kyoto, Japan, and brought home a treaty proposal that calls for a 7% reduction in greenhouse gas emissions by 2012. The percentage would be based on 1990 levels. China, India, Brazil, Mexico, Indonesia, and 120 other countries refused to accept any limits on their emissions.
Policies that are being considered to reduce carbon dioxide emission are likely to constrain petroleum usage through Btu, gasoline, diesel, and other fuel taxes, increased alternative fuel mandates, and possible fuel economy mandates for heavy-duty vehicles, according to the American Trucking Associations Inc (ATA).
The controversy springs from the theory that the earth is warming, a situation that could precipitate havoc in the form of a melting icecap, which could spawn worldwide coastal flooding. In addition, abrupt changes in the earth's climate could challenge present agriculture production and reduce the food supply through drought or flooding. Scientists contend that diseases could escalate in rapid atmospheric changes.
At the same time, some scientists speculate that interruption of the natural action of atmospheric gases could interfere with the earth's natural heating. For example, the warm Atlantic Ocean stream that helps heat Europe despite its northern location could be affected. Scientists speculate average temperatures could drop 10 degrees to 20 degrees in northern regions.
The ATA has urged its members to contact congressional leaders in an effort to oppose legislation that would endorse unnecessary or hasty regulations without extensive scientific agreement on the issue. It also wants assurance that policies would be voluntary, cost-effective, involve trucking trading partners, and take into account all greenhouse gas sources.
American Jobs Environmental proposals would hurt the economy by costing Americans jobs, raising energy prices, and putting businesses at a competitive disadvantage with other countries, ATA predicts. The US could experience a massive flight of industry to less regulated countries.
Industry leaders have been so concerned about government overreaction to global warming effects that in 1989, they formed the Global Climate Coalition (GCC) to coordinate business participation in the scientific and policy debate.
The GCC estimates that diesel fuel costs will rise by 25 cents per gallon by 2005 and 75 cents per gallon by 2020 if some government propositions are enacted. Energy-intensive industries such as petroleum, chemical, and their allied companies can expect significant production declines and possible shutdowns if emission standards are drastically increased.
The trucking industry has a high profile as an emissions reduction target because the number of miles traveled by trucks has grown faster than those by cars, according to a study conducted by the Transportation Research Board (TRB). The TRB is an extension of the National Academy of Sciences and the National Academy of Engineering, and is overseen by the National Research Council (NRC).
Between 1965 and 1980, heavy-duty tractor-trailers in the national fleet nearly doubled. Total travel per year grew almost as quickly as passenger car travel, in itself a burgeoning growth.
Miles Traveled Medium- and heavy-duty trucks, predominantly freight-carrying and service-oriented vehicles, account for 7% of annual miles traveled and about 20% of petroleum consumed by all highway vehicles. The global warming issue involves all aspects of transportation-produced emissions due to the industry's interrelated aspects, including vehicle manufacture, construction of transportation facilities, and production of motor fuel.
"Depending on how broadly one defines the transportation system and its constituent elements, these sources can be quite extensive, encompassing the entire motor fuel production and distribution system (including construction and operation of refineries and tank vessels)," the TRB report states. The system also includes activities involved in transportation infrastructure, construction, and maintenance, and the large sector of the US economy that supplies automobiles and automotive parts and materials.
Ways being considered to reduce emissions include stricter regulations governing related characteristics, such as truck size and weight.
Deep reductions in carbon dioxide emissions between 2000 and 2010 are being considered. In the United States, energy use will have to be cut by 25 percent or more, according to Global Climate Coalition estimates.
One solution to growing truck traffic, "probably the most commonly discussed," calls for shifting the traffic to rail, which consumes nine times less fuel per-ton mile than trucking, according to the TRB. Consideration also is being given to the water transportation mode.
Reducing truck weight and size might divert some shipments to rail, but would only affect longhaul shipments of high-density commodities, which account for a small portion of truck traffic, according to the report. The fuel savings from this deviation may be largely or entirely offset by the reduced fuel efficiency of smaller trucks that would still be on the road.
At the same time, many truck shipments are not suited to alternative modes of transport. Trucks are essential for shorthaul freight pick-up and delivery, including the necessary connections with rail or water transport. "Consequently, more restrictive truck size and weight limits could cause many of these shipments to be moved in a larger number of smaller trucks, each using more fuel per unit of cargo moved," according to the report.
The report concludes that the potential for shifting truck hauling to other modes of transportation by taxes or regulatory mechanisms is limited and does not take into consideration the varying cargo that must be moved, as well as the needs of shippers and customers.
The TRB report quotes another study conducted by L O'Rourke and M Lawrence of the University of California. A key point in the study: Any analysis of freight movements must take into account that transportation and logistical decisions are made in a complex business environment where service, delivery time, and inventory management are important considerations for choice of mode. Price comparisons between modes can also be misleading since the type of freight hauled by each mode often differs.
An evaluation by the congressional Office of Technology Assessment determined that the amount of truck traffic that would qualify for diversion to rail or water is too small to have an appreciable effect.
Legislation Opposition Opposition to extreme legislation also is coming from north of the US border where the Canadian Trucking Alliance says imposing a carbon tax on the trucking industry won't reduce air pollution, but will put Canada at a serious disadvantage in the global marketplace. The association represents more than 2,000 motor carriers in that country.
"Truck transportation occupies an irreplaceable socio-economic position linking supply and demand," says David Bradley, chief executive officer of the Canadian alliance. "It is an essential link between various industrial sectors. Trucking delivers most of the goods produced and consumed in Canada to their final destinations."
In the United States, Tom Parker of the Chemical Manufacturers Association (CMA), a member of the Global Climate Coalition, predicts that the least efficient facilities will be forced to shut down, causing companies to locate new investment and jobs in countries with fewer stringent regulations. China, India, Mexico, and Brazil have opted out of the international treaty. Fewer facilities mean fewer products for shipping and subsequent loss of business for trucking companies.
Various studies, including one by the Department of Energy, indicate the chemical industry would be hard hit by proposed government regulations, says Parker. Along with product price increases, the reports estimate 100,000 jobs would be lost in the chemical industry. "A $100-per-ton carbon tax would cost the chemical industry billions of dollars each year," he says.
"These costs of compliance would be passed on to us and then to our customers," says Tom Finnigan, director of government relations for Praxair Inc. The company is involved in the controversy as a worldwide supplier of carbon dioxide. "We have an interest in anything that would affect supply and demand and the cost of the product. We also have trucks operating on diesel and gasoline that would be affected."
Draconian Proposals David Morehead, director of the Petroleum Marketers Association of America, calls the emission cuts proposals "draconian."
Labor organizations also are turning a cold shoulder to what may be unfounded and overly aggressive regulations. Chuck Harple, legislative affairs liaison of the International Brotherhood of Teamsters, says, "It should be a non-political issue." The threat of job losses by companies because of environmental regulations would also be a point of contention in labor-management negotiations, he adds.
The American Federation of Labor and Congress of Industrial Organizations (AFL/CIO) has voiced alarm at the prospect of hurried legislative action that would have severe penalties for the workforce. "We want to be absolutely assured that no American worker will suffer as a result of what could be the largest policy-driven transition ever attempted by a modern society," said Richard Trumka in a letter to Daniel Tarullo, the Clinton administration's deputy assistant on the National Economic Council.
Teamsters Comment Harple says the Teamsters union has not endorsed a specific policy statement on the treaty, but agrees the issue requires study. "A global treaty doesn't make sense when it has teeth for us, but other countries don't have to comply," he says.
CMA has declared its concerns through letters to President Clinton and members of Congress. "The United States shouldn't agree to the Kyoto treaty that would make new commitments on us, unless agreements include developing countries," says Parker. "We shouldn't agree to something that would cause serious harm to the economy of the United States."
"We are expressing concern on this subject," says Lew Freeman, director of transportation issues for The Society of Plastics Industry Inc. "Before you even get to the science of global warming, the debate must involve developing countries, any measures that would restrict manufacturing of products, and the use of petrochemicals in the United States."
The ATA, a member of another advocacy group, the Global Climate Information Project (GCIP), participated with GCIP in a television, print, and radio campaign to increase public awareness of the treaty. At the same time, the ATA has expressed concern about Clinton administration proposals to reduce greenhouse gases.
"Because of mounting opposition from business and consumer groups, the administration has stated that it will not bring the treaty before the Senate for ratification until next fall. However, the administration may seek to implement strategies to reduce greenhouse gas emissions without Senate approval of the treaty," says the association.
No Action No official action has been taken by the US government on the treaty, or to establish or fund specific regulations. President Clinton has submitted a budget request to Congress in the form of a $6.3 billion environmental research and development program, says Harlan Watson, staff director for the US House of Representatives subcommittee on energy and environment. Hearings are underway to consider the request, which includes ways to produce more efficient vehicles and improve energy technology.
Because the subject has appeared in the budget, those who are concerned about the issue are paying a lot of attention. "They are trying to see that the White House doesn't implement global climate proposals through the back door with regulations," says Watson.
The subcommittee heard more testimony on the issue in March, including comments from Undersecretary of State Stuart Eizenstat, who led the US negotiating team during the Kyoto treaty conference, says Watson.
Eizenstat told members of the Senate Foreign Relations Committee in February that emissions-trading, a possible proposal, would be a main tool to attract developing nations' support for the treaty, according to a Wall Street Journal report. The trading would occur after a cap is imposed on the level of a pollutant. A company that has less pollution could sell its savings in the form of a certificate to a company that wishes to offset its greater incidence of emissions.
Trumka, AFL/CIO union secretary-treasurer, warns that if the administration attempts to push through legislation that does not meet with goals of labor, the AFL/CIO will be put in a position to "just say no to the entire effort." At the same time, he agrees that safe and sensible environmental practices are warranted.
"We hope we can, together, fashion a plan that does protect the global environment, does keep jobs here, and does provide for a just transition," he says.
Greenhouse Gases Leading the adherents' list of global warming causes are greenhouse gas emissions such as carbon dioxide, nitrous oxide, and methane. The Sierra Club, an advocate of the global warming theory, estimates that carbon dioxide emissions affect more than half of the global warming trend. In addition, the organization says that 10 pounds of carbon dioxide is pumped into the atmosphere by each gallon of gasoline burned, and seven more pounds are released during the refining process.
"Most atmospheric scientists and climate experts agree that rising concentrations of carbon dioxide and other greenhouse gases in the atmosphere will cause average surface temperatures on the earth to rise. The timing and magnitude of this warming and the subsequent effects on climates and other natural systems are more controversial," the Transportation Research Board reports.
Carl T Johnson, president of the Compressed Gas Association Inc, points out that although carbon dioxide contributes to the greenhouse effect, it is an essential part of the life cycle and has many beneficial uses. "Nevertheless, many nations are moving toward a treaty with ambitious targets for reduced emissions of greenhouse gases," he says. "These targets will have a major impact not only on emitters, but very possibly on the producers, distributors, and users of carbon dioxide."
Praxair's Finnigan says, "The Clinton administration is at a mindset that global warming is here, or right around the corner. Having said that, I don't think that most people debunk the global warming theory as a whole, but question whether it is the work of man or nature."
The production of carbon dioxide requires tremendous energy use, including electricity from coal-driven generators, another process in which emissions are expected to be heavily regulated.
While discussing serious harm to the economy, the debate continues on the scientific validity of harm to the environment. "Scientific evidence of global warming is not conclusive," the ATA argues. "Most predictions of global warming are based on incomplete computer modeling."
Also voicing misgivings is the Petroleum Marketers Association. "We think it's based on shaky scientific evidence and are very concerned about the impact that the Kyoto issue may have," says Morehead. The association's board of directors has committed $25,000 to help defeat efforts to ratify the treaty.
Natural Event The Global Climate Coalition contends that climate cycles are a natural part of weather and that NASA satellite data indicate no net warming over the past 18 years. "In fact, they show a slight cooling trend since the 1990s," argues the GCC. "On the other hand, surface temperature readings show an increase in temperature of one degree Celsius over the past century. Most of that increase occurred before 1940 and before the large majority of human-caused emissions occurred, suggesting that the increase may have been due to natural variability."
The TRB study points out that "there is incomplete knowledge and active debate within the scientific and social science fields about the extent to which humans are changing the natural environment and whether these changes are irreparable and threaten the well-being of future generations."
Nevertheless, it does not discount the theory that if emissions continue and escalate, and greenhouse gases build up in the atmosphere, the earth's surface could warm during the next century. "Although the effects of such a warming are uncertain, they could include marked changes in climate and related natural systems, influencing sea level and ocean currents, the location and composition of biological communities, and the fertility and productivity of the world's agricultural lands."
The study also indicates that there is enough evidence to show that risks from global warming may exist, and that more research and public policy attention are indicated.
"We need a better understanding of both science and economics before adopting mandates for the private sector," says Parker. "Manmade emissions are a legitimate basis for concern, but have not reached the point where we can say that we believe climate change is occurring at the moment."
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