EPA and DOT Final Fuel Efficiency Standards for Trucks

On Tuesday the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) jointly announced the final emission standards for medium- and heavy-duty vehicles. According to EPA the final standards will lower CO2 emissions by approximately 1.1 billion metric tons, save vehicle owners fuel costs of about $170 billion, and reduce oil consumption by up to two billion barrels over the lifetime of the vehicles sold under the program. Factoring in the cost of CO2 to society the EPA claims that the truck fuel efficiency standards will provide $230 billion in net benefits to society.

The engine fuel standards phase in beginning in model year 2021 and culminate in standards for model year 2027. For the first-time this rule will regulate greenhouse gas and fuel efficiency standards for trailers starting in 2018 for EPA and in 2021 for NHTSA. The fully phased-in standards are supposed to reduce CO2 emissions and fuel consumption by 25% compared to the Phase 1 standards by imposing these standards on “glider vehicles.”

The term “glider vehicle” is used in the heavy-duty vehicle industry to describe a new chassis and cab assembly into which a third party installs a used engine, transmission, and/or rear axle to complete assembly of the vehicle. Historically, gliders have been used as a means to salvage valuable components, such as used engines, transmissions, and axles, from vehicles that were badly damaged in collisions.

Since 2010 when EPA’s current NOx and particulate standards for heavy duty engines took effect, glider sales have increased nearly 10-fold since 2004-2006, and reflects an attempt to avoid using engines that comply with EPA’s 2010 standards, and is an attempt to circumvent the Phase I regulation requirements. Most gliders manufactured today use remanufactured model year 2001 or older engines. Typically these engines have NOx and particulate matter emissions 20 to 40 times higher than today’s clean diesel engines.

In the Phase 2 of the fuel standards EPA is “clarifying” that gliders are “new vehicles” under the Clean Air Act, and are subject to EPA’s current Phase 1 greenhouse gas emission standards for new vehicles in 40 CFR part 1037, with some exemptions for small businesses that have been narrowed in the Phase 2 of the regulations. EPA intends to grandfather only existing small businesses that currently install the used engines and other used parts into gliders and limit their production.

Existing small businesses would be allowed to continue their production up to 300 assembled gliders per year without complying with Phase 1 requirements. Any additional gliders an existing small business produces beyond their existing production rates or 300 per year whichever is less would need to meet the new proposed requirements for both engines and vehicles. EPA states that these grandfathered  existing small businesses would  produce enough gliders to address legitimate purposes (e.g., salvaging engines and other parts from damaged vehicles); but an unintended consequence is it also creates what is in essence a marketable value.

In perpetuity, a limited number of businesses can produce 300 gliders each and the business name become a marketable license to produce those 300 gliders. All other businesses will need to meet the tractor standards through improvements in the engine, transmission, driveline, aerodynamic design, lower rolling resistance tires, extended idle reduction technologies, and other accessories of the tractor.

Heavy-duty trucks are the second largest segment of the U.S. transportation sector in terms of emissions and energy use. These vehicles currently account for about 20 % of greenhouse gas emissions and oil use in the U.S. transportation sector. Through the Paris climate agreement and other commitments, the United States is working to increase fuel economy standards, and reduce energy use. The final Phase 2 program promotes a new generation of cleaner, more fuel efficient trucks by encouraging the development and deployment of new and advanced technologies that the EPA reports will be cost effective.