Why Medium & Heavy Duty Trucks Received New Fuel Standards

Posted on September 14th, 2011 by

Carol Lee Rawn, Senior Manager of the Transportation Program for Ceres, discusses the impact of the new fuel-efficiency standards that the Administration passed for heavy and medium-duty trucks.

Full Transcript:

Ben Lack: The Obama Administration has recently passed some new fuel-efficiency standards for heavy and medium-duty trucks that are really going to impact the transportation sector.  I would like to get your thoughts on how you think these new standards are going to play out?
Carol Lee Rawn:  We’re very pleased to see this announcement since these are the first fuel-efficiency and global warming pollution standards for this sector.  And it’s obviously a very important sector to address - transportation accounts for approximately 71%  of U.S. petroleum consumption; and medium and heavy duty trucks account for more that 20% of that consumption. So, it’s high time that we looked at the medium and heavy truck sector.  As you know, the Obama Administration recently announced new standards for passenger vehicles for 2017 through 2025 as well, which is another positive step in the area of vehicle efficiency.
Ben Lack:  There’s a lot of touting of fuel saving costs, and the amount of oil savings that these new standards are going to create; the range is around 50 billion in cost and 500 million barrels.  Do you guys come to the same numbers?  Or do you have different analysis on what this announcement is going to do for the industry?
Carol Lee Rawn:  No, we agree with that.  Under this new rule, businesses save money, and in turn, those benefits accrue to the greater economy.  As the operating costs come down, due to more fuel-efficient trucks, business owners and consumers can invest that money in goods and services across the economy.  CalStart and the Union of Concerned Scientists conducted excellent analyses of the results of higher standards, and while they didn’t look at these particular standards, the general trend is that the higher the standards, the greater the economic benefits for the economy.
Ben Lack:  Do you see businesses retrofitting or upgrading their existing infrastructure?  Or do you see them replacing the trucks with more fuel-efficient vehicles based on what this announcement is going to do?
Carol Lee Rawn:  It will come about through replacement, and strong standards are obviously in the interest of the truck manufacturers, since their customers want more fuel-efficient trucks Another important part of this is that it will reduce our dependence on oil and that’s an issue that our investors are very interested in as well.  The long-term trend is clearly going to be an increase in oil prices, as we reach peak oil and it becomes more and more difficult to find and produce oil. So, that’s all the more reason to move to more efficient vehicles.
Ben Lack: Is it your view that the truck manufacturers are well-positioned to handle these new restrictions?
Carol Lee Rawn:  Yes and I think there is a lot of support from the industry, as well.  The Administration worked closely with the industry on this.
Ben Lack:  What do you think is the next step now that the new standards have been put in place and are official?
Carol Lee Rawn:  One area that the standards didn’t address was trailers and you can actually get significant savings in fuel use by improving the trailers themselves, so that’s an area of opportunity.  I would  point out, as well, that right now another benefit of the standards is that it will help us retain the US leadership position in the manufacture of efficient and hybrid trucks.  We are currently the world leader, and now that we have strong standards in place, companies and investors will have the requisite certainty to invest in the development and production of these new technologies, and that in turn will help us to retain our leadership position.
Ben Lack:  Now that these regulations are in place on the Federal level, do you see anything that the states should be doing to further enhance fuel economy and put money back in the pockets of these businesses?
Carol Lee Rawn:  I think that is a very timely question, actually. New England and the Northeast and Mid-Atlantic states are, at this moment, developing a Clean Fuel standard and have issued an economic analysis finding positive impacts from a Clean Fuel Standard on the regional economy. So, fuel is obviously another very important piece of the transportation emissions strategy to address.  If you think of transportation emissions as a three-legged stool; you have to address vehicles, you have to address fuels, and you have to address infrastructure.  Obviously, we are making progress on CAFE standards; proposed standards will be out in October.  Similarly, the truck standards addressing the vehicles themselves. But no matter how efficient you make the vehicle, you also have to address the carbon intensity of the fuels.  A  recent economic analysis shows that a Clean Fuel Standard would actually have positive economic impacts on the region; creating jobs, increasing the gross regional  product,  and fostering a domestic alternative fuel industry.  I don’t know if you’re familiar with the clean-fuel standards at all…
Ben Lack:  I am a little bit, but I by no means am an expert.
Carol Lee Rawn:  Basically, it requires that fuel providers gradually ratchet down the carbon intensity of the fuels they sell, so that life cycle emissions are taken into account; from production all the way to combustion. So a Clean Fuel Standard would require fuel providers to decrease the carbon intensity of their fuels over time by mixing with advanced biofuels, or by purchasing credits for low carbon electricity that’s fueling electric cars for example, or natural gas.
Ben Lack:  Natural gas is actually for you guys is considered a clean fuel?
Carol Lee Rawn:  We consider it cleaner than petroleum, assuming that it’s produced responsibly and that fugitive emissions are addressed. Production and fugitive emissions present significant challenges, and assuming those challenges are met, natural gas can serve as a bridge fuel  as we move toward cleaner alternative fuels. So a Clean Fuel Standard would help that transition by driving investment toward alternative fuels. Obviously, we have to do something about our dependence on oil, and more companies are recognizing that. For example, I think the fact that the truck industry stood solidly behind the Administration’s new truck standards is very telling and shows the industry recognizes the benefits of greater vehicle efficiency, as well as the importance of reducing our dependence on oil.

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