All national industry sectors are evolving as new technologies and regulations alike enter the market, and transportation is no exception. Some of the clean technology and carbon reduction mandates already in place or being introduced on a state by state basis will have massive implications for how logistics and transportation organizations operate. In this content piece, we have summarized blueprint legislation currently in place in California, taken a look at the states following in California’s footsteps with similar policy, outlined the motivations and impacts of the growth of EV across traditional operations, and made some recommendations on how transportation organizations can get ahead of what is to come and benefit from making infrastructure changes.
In March 2021, the Advanced Clean Truck (ACT) Act was approved. In order to decrease emissions, ACT implemented a requirement for original equipment manufacturers (OEMs) of medium and heavy-duty vehicles. Truck makers must progressively increase the sale of zero-emissions vehicles (ZEVs) or near-zero-emissions vehicles (NZEVs) like plug-in electric hybrids as a portion of their total annual sales between 2024 and 2035. This regulation operates on a cap-and-trade system, which sets a limit on the number of fossil fuel vehicles that can be sold by specifying sales percentage targets each year. To comply with this rule, manufacturers can earn compliance credits by selling ZEVs or NZEVs, or by engaging in credit trading.
California in the Lead
On April 28, 2023, the California Air Resources Board (CARB) sanctioned the Advanced Clean Fleet (ACF) regulations. The ACF rule follows the state’s Advanced Clean Truck Act. It is also aimed at buyers and addresses the types of vehicles that can be sold into the state. With the goal of eventually phasing out diesel-powered trucks, these rules set forth the objective of transitioning all truck fleets to full electric power by either 2035, 2040, or 2045, depending on the truck’s size or type. The Advanced Clean Fleets (ACF) program’s goal is to accelerate the deployment of zero-emission vehicles (ZEVs) and advanced technologies in commercial fleets to reduce greenhouse gas (GHG) emissions and improve air quality. This includes privately owned fleets, (for services such as last-mile delivery), federal fleets (including the Postal Service), as well as state and local government fleets. The rule allows provisions for fleet owners to obtain exemptions based on available technology, ensuring that they continue replacing their older, more polluting trucks with the cleanest engines available nationwide. Currently, there are approximately 150 commercially available medium- and heavy-duty zero-emission truck models in the United States. The projected impact of this rule includes substantial health benefits, with an estimated $26.6 billion in savings from reduced instances of asthma attacks, emergency room visits, and respiratory ailments. Additionally, fleet owners are expected to save approximately $48 billion in operational costs by transitioning to zero-emission vehicles by 2050.
The State of the Market
Following California, there are currently 14 states and the District of Columbia participating in the Advanced Clean Trucks Act (ACT). These states include Connecticut, Hawaii, Colorado, Maine, Maryland, Massachusetts, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington. New Jersey, New York, Massachusetts, Oregon and Washington together represent around 20% of national medium- and heavy-duty vehicle sales. The timing of their adoption is notable, as enacting the regulation in 2021 allows these states to start implementing the zero-emission truck sales requirements for manufacturers by the model year 2025. States adopting the ACT in 2022 or later will have to wait until model year 2026 to join. Since the sales requirements under the ACT increase annually, any delay in joining enhances difficulty for states. Of these markets, New York, New Jersey, and Massachusetts are considered favorable environments for zero-emission truck sales. New York has had a leading clean truck purchase incentive program since 2014, while New Jersey and Massachusetts introduced similar point-of-sale incentive schemes in the previous year. These states have also prioritized the needs of medium- and heavy-duty vehicle fleets in utility regulatory proceedings, providing funding and support for charging infrastructure and fleet advisory programs.
Rhode Island has also joined several other states in adopting California’s Advanced Clean Trucks emission standards. On May 10, 2023, Governor Dan McKee announced the state’s decision to implement these strict standards, known as Advanced Clean Cars II and Advanced Clean Trucks. The Advanced Clean Trucks emission standards require manufacturers certifying Class 2b-8 chassis or complete vehicles with combustion engines to sell an increasing percentage of zero-emission trucks as part of their annual sales in Rhode Island. This requirement will be phased in from 2024 to 2035. By 2035, the sales of zero-emission truck/chassis should reach 55% of Class 2b-3 truck sales, 75% of Class 4-8 straight truck sales, and 40% of truck tractor sales. The implementation of these standards aims to decrease smog across the state, particularly in environmental justice communities, while ensuring sufficient consumer choice for electric vehicles in the future. Importantly, the Advanced Clean Trucks standards only apply to manufacturer sales and do not affect used cars or local dealerships and customers.
More efforts are needed to support truck fleets in transitioning from diesel trucks to zero-emission platforms in the Northeast states. Stable funding for purchase incentives, long-term transparency, and increased budgets for utilities’ make ready programs all necessary. Additionally, these states should explore fleet purchase requirements, similar to those adopted in California. This will provide manufacturers market certainty for their zero-emission products. Zero-emission trucks are becoming increasingly available, offering the opportunity to eliminate hazardous pollution associated with freight movement. As manufacturers expand their commitments to zero-emission truck models, the availability of these models will improve, facilitating mass-market adoption.
For Colorado, the ACT rule will take effect for trucks with model year 2027. The sales standard percentage will gradually grow through 2035. The rule applies to manufacturers of medium to heavy duty trucks. Colorado businesses and consumers are not required to buy a zero-emission truck. The ACT will encourage manufacturers to have more models and give fleet owners more choice. According to a report by the Environmental Resources Management and the Colorado Energy Office, the implementation of the ACT rule in Colorado is projected to have positive effects on both the state’s economy and its residents’ finances. By 2050, these standards are expected to reduce the upfront costs of electric vehicles by thousands of dollars, resulting in significant savings. The report also indicates that the rule would lead to cumulative public health savings of $5.4 billion by mitigating air pollution. Furthermore, utility bills are expected to decrease for all Coloradans, including those who do not own electric vehicles. Colorado’s ACT proposal outlines a gradual implementation of the rule to allow manufacturers to scale up production and ensure an adequate supply of vehicles to meet growing demand as consumer preferences shift towards electric options. Additionally, research on older federal emissions standards for trucks found no substantial impact on production, employment, or sales, leading to the conclusion that there is no concrete evidence for claims that such standards affect sales or employment.
Additionally, Connecticut, Maryland, Maine, North Carolina, Pennsylvania, and Virginia have signed memorandums of understanding indicating their intention to adopt California’s truck emission standards. However, not all stakeholders are supportive of these stricter standards. The Owner-Operator Independent Drivers Association (OOIDA), the Rhode Island Trucking Association, and the Truck and Engine Manufacturers Association have expressed concerns about the practicality and cost-effectiveness of implementing such regulations. They argue that while they support environmental goals, the technology and infrastructure for electric commercial motor vehicles (CMVs) need further development to be viable for the trucking industry. In the past, the Truck and Engine Manufacturers Association filed a lawsuit arguing that the Clean Air Act mandates at least four full model years of lead time before new emission standards take effect for heavy-duty on highway engine and vehicle manufacturers. However, the association dropped the lawsuit in August. These concerns and legal disputes highlight the ongoing discussions and challenges surrounding the implementation of stricter truck emission standards.
Challenges and Recommendations
As electrification takes hold, there are a number of new challenges that emerge. Installing electric chargers at a facility will dramatically change demand profiles and how much power is used and when it is used. Fleets also must strategically prepare for powering travel – not unlike needing to refill on fuel – but in a different capacity, mapping routes based on charger availability and trip proximity. Before embracing fleet electrification, there are a number of upgrades facilities and logistics coordinators can make that will ease the transition and garner the most value possible from integrating EVs.
When looking to California as a blueprint for what is coming in these other states, it is important to use lessons learned to ensure preparedness as similar regulations roll out. As EVs flood the market in California, fleet and facility operators are experiencing power issues. As owners and operators with facilities in the states discussed above and any other locations around the county with favorable conditions strategically plan for the future, upgrading energy infrastructure to prepare not only for EV mandates and programs, but also for power and demand shifts, will put you in the perfect position to succeed and not scramble once more regulations are formally announced. It is our recommendation that logistics and transportation owners and operators create and get ahead of fleet electrification plans, including upgrading onsite infrastructure and including renewable generation and storage to balance changing demand profiles.
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