ONE of the most critical issues facing the trucking industry — maybe not today, but over the next few years — is climate change and what the federal government plans to do about it, according to Richard Moskowitz, vice-president and regulatory affairs counsel for the American Trucking Associations (ATA).
“The only thing that has delayed passage of a climate bill is Congress' inability to resolve the health-care debate,” Moskowitz said at the Cargo Tank Maintenance Seminar in Nashville in October 2009. “As soon as that is taken off the table, I expect them to address climate change.”
Trucking accounts for less than 6% of US greenhouse gas (GHG) emissions, he said. However, trucking will see a significant impact from any climate-related legislation and regulation.
“Many scientists believe that greenhouse gas emissions are gradually warming the earth,” he said. “Considering the body of scientific evidence, there is an ongoing debate over the significance of man-made carbon emissions. But we may not have the luxury of waiting for a definitive determination as to whether it's a real concern or not because politicians are saying that we need to do something now to address this problem. Elections have consequences. This has consequences. The current occupant of the White House is unlikely to veto this, and there is a question as to how the votes in the Senate will shake out.”
He said one gallon of diesel releases 22 pounds of CO2, and the lifecycle of that gallon of diesel is 27 pounds because of the amount of energy expended to extract oil out of the ground, transport it across the ocean, refine it, and get it to market. Eighty-one gallons of diesel equal one metric ton of carbon (27.09 pounds diesel carbon lifecycle).
The issue took off in 2007 in the US Supreme Court with Massachusetts vs EPA, in which it was ruled that the Environmental Protection Agency (EPA) acted improperly in ignoring greenhouse gases as pollutants that affect human health. EPA was instructed to go back and regulate greenhouse gases.
The next step was for EPA to decide if such pollutants “endanger” public health or welfare and whether emissions of any pollutant from new motor vehicles or engines cause or contribute to this air pollution. If there was an endangerment finding, GHGs would have to be regulated as a pollutant by EPA. EPA issued a Proposed Rule on April 24, 2009, in which EPA found that GHGs from motor vehicles “endanger” public health and welfare. The comment period closed June 23, and the final rule will likely find “endangerment.”
Editor's note: After the NTTC conference, EPA issued the endangerment finding.
“It hasn't been released yet because they want to use it as leverage over the Senate and tell them, ‘If you don't go ahead and pass legislation, we think we have authority to regulate under the Clean Air Act (CAA). And EPA will go ahead and do this unless you curb authority or tell EPA how to do it,’” Moskowitz said.
He said that Cap-and-Trade is sometimes called “Cap-and-Raid” or “Cap-and-Tax,” but it is “an economic-based solution for addressing greenhouse gases.”
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“It places a limit, or cap, on GHG emissions,” he said, “and sources will choose how they will comply with the cap. They either can buy carbon allowances to represent the amount of carbon they are emitting into the air or reduce the amount of carbon they're emitting into the air. And if they're capable of reducing the amount beyond what their facility limit is, they can generate carbon credits and sell them to somebody who is unable to reduce those carbon emissions. If you're wondering why the natural gas and nuclear power industries are so hot to trot on Cap-and-Trade, it's because those industries are low-carbon alternatives, so they essentially will have a windfall. They will get allowances they can sell to power plants that are using coal.”
The American Clean Energy and Security Act's Cap-and-Trade Bill (HR 2454) passed the House by a vote of 219-212 on June 26, setting 2005 as the GHG baseline year for regulated sectors. The goal is to cut carbon emissions 17% by 2020, 42% by 2030, and 83% by 2050.
Moskowitz said the legislation does not directly impact the trucking industry, but it does affect refineries. “Refineries would get only 2% of allowances,” he said. “But the bill says that refineries are not responsible just for the carbon that comes out of their smokestacks. They are also responsible for the carbon emitted from the fuel they refine that is consumed by transportation sources. So they're making refineries responsible for all downstream emissions. Those refineries getting 2% have to go to market to cover virtually 45% of the carbon emissions in the country. You have trucks, cars, farm equipment, and a lot of other industries that consume gasoline, diesel, and jet fuel. As the refineries are forced to purchase carbon allowances, they will raise the price of fuel to cover the costs of those allowances. That's how Cap-and-Trade would operate as a hidden tax on our industry.”
HR 2454 also requires EPA to set GHG standards for new heavy-duty vehicles by December 31, 2010; strips all current DOT efficiency/economy authority applicable to GHGs and delegates it exclusively to EPA; and requires states to develop and submit transportation GHG emission reduction 10-and 20-year goals/plans and update them every four years.
“How states choose to reduce carbon in addition to what the federal government is doing is an open question,” he said. “California already is looking at a low-carbon fuel standard, along with Oregon, Washington, and 13 Northeast states. There's a whole host of things states can do — require aerodynamic fenders on trucks, require you to buy lighter trailers. That is a recipe for disaster, because we will have a patchwork of different standards around the country.”
Requires EPA to establish a GHG registry and reporting system.
The EPA administrator has the discretion to require reporting from vehicle fleets emitting more than 25,000 tons of CO2 equivalents annually. Fleets greater than 125 trucks may have to register with EPA and report emissions, which possibly could affect 2,300 fleets.
Annual reporting will be required from 2007-2010, and quarterly thereafter.
It authorizes funds for EPA's SmartWay program.
It preserves state authority under CAA to regulate GHGs, bars states from implementing/enforcing a cap on GHGs from 2012-2017, and allows states to regulate GHG by other means during this period.
Moskowitz said that under this bill, the trucking industry can expect higher fuel costs, a new-generation of low-carbon fuels, higher equipment costs due to increased costs for energy-intensive industries (steel, aluminum, etc), various state transportation plans designed to further reduce GHGs, and trucking fuel economy/efficiency regulations.
“One benefit might be fuel-economy standards for our industry — maybe a requirement to raise fuel economy from 6 to 10 mpg,” he said. “That would be a good thing, provided it's done in a cost-effective way. There's no doubt that you could replace all steel with titanium, but I don't think anyone wants to spend $300,000 to $400,000 on a truck.”
ATA sent a letter to the House prior to the vote, stating, “ATA cannot support the bill in its present form.” That's because ATA believes the bill will significantly increase the price of fuel and jeopardize the industry's ability to pay for highway infrastructure improvements and congestion mitigation, and new carbon markets will increase fuel-price volatility without adequate reforms to curb excessive speculation in the commodity markets. ATA believes the bill must include incentives for trucking to develop new technologies and alternative fuels.
ATA's Sustainability Plan includes things the industry advocates to reduce carbon emissions:
Set a national speed limit of 65 mph for all vehicles and govern truck speeds at 65 mph.
Incentivize idling-reduction technologies.
Reduce congestion through highway improvements
Allow more productive truck combinations. “I know that is a controversial issue among this segment of the industry, but any serious conversation about reducing emissions and saving fuel has to at least entertain the concept of using larger, heavier trucks.”
Support national fuel-economy standards.
Increase fuel efficiency by participating in SmartWay.