In the last week of April, California state regulators approved a ban on the sale of new big rigs and buses that run on diesel by 2036. The rule contains intermediate goals for government organizations and private companies to decrease their use of diesel trucks. The rule would reduce emissions from heavy trucks used to transport goods through ports and require companies to disclose their use of drayage trucks by 2024. Drayage trucking refers to moving freight from a port to another area or transport facility, such as rail. The ban must be approved by the federal government, which is unlikely to be a detrimental factor as President Biden’s EPA has approved other California bans as it sees California as a model for the rest of the country. While the ban on diesel truck sales would be the only one of its kind in the world, many other states and, eventually, the federal government could enact similar policies, which could in turn influence global policies, since trucks are manufactured and driven around the world.
California is the nation’s largest car and truck market and its policies have a major impact on the rest of the nation and even the world. One only has to look at the backlog at California ports after the coronavirus lockdowns to see California’s impact on merchandise reaching other areas in the nation. Now, rather than moving goods, big trucks will be spending hours at charging stations within the state so that they can drive a few more miles toward their destination. Further, California and the nation’s roads will begin deteriorating due to the heavy weight of the enormous batteries in these vehicles, requiring more federal and state money to remain drivable. The thousands of pounds of additional weight would also limit the amount of goods that truckers can haul.
American trucking companies see the California ban having unrealistic targets with unachievable timelines that will increase costs for American consumers. While some large companies have begun to use heavy-duty vehicles that emit little to no carbon dioxide, the latest plan would require a complete transition in new truck purchases by 2036 that is unrealistic. Prices for electric trucks start at about $100,000 and can reach the high six figures. While the Inflation Reduction Act offers up to $40,000 in tax credits to purchasers of all-electric trucks (paid by taxpayers), the transition will be expensive for trucking companies and therefore consumers as prices will increase to cover the costs.
Trucking companies are concerned that limiting manufacturers’ lead time to produce compliant vehicles will also present significant unachievable challenges. For manufacturers to develop, build, and sell customer-acceptable and effective products capable of meeting the mandate, adequate lead time, regulatory stability, and the necessary zero-emission recharging and refueling infrastructure are imperative, but non-existent today.
The California truck rules are starting to push truck drivers out of the state. Drivers do not want to work in California because they are skeptical of the rapid timeline to transition to electric trucks and whether they can get a charge that will take them on a highway for two or three days or even whether the technology is ready for prime time. For men and women who have chosen truck driving as their career, it is easier to simply move to another venue.
Background
In April, the U.S. Environmental Protection Agency proposed new regulations that would make two-thirds of new passenger cars and a quarter of new heavy trucks sold in the United States be all-electric by 2032. The EPA proposals were designed to complement a 2022 California rule banning the sale of new gasoline-powered cars after 2035, as well as a 2020 California rule requiring that half of all garbage trucks, tractor-trailers, cement mixers and other heavy vehicles sold in the state to be all-electric by 2035, which recently received EPA approval. In December, the EPA finalized new rules limiting tailpipe emissions from trucks that would cut nitrogen oxide from the vehicles by 48 percent by 2045–the first time in 20 years that it had tightened tailpipe emissions from trucks. That rule was influenced by a 2020 California rule intended to reduce those emissions by 90 percent by 2045.
Six other states have already adopted truck rules modeled after California’s 2020 rule but had been waiting for federal action in order to enforce them. When that California rule takes effect next year, it will pertain to sales of trucks ranging in size from delivery vans to big rigs. By 2035, 55 percent of delivery vans and small trucks, 75 percent of buses and larger trucks, and 40 percent of tractor-trailers and other big rigs sold in the state would have to be all-electric. The mandate that half of all heavy trucks sold be electric by 2035 is so ambitious as to be nearly impossible, given that fewer than 2 percent of heavy trucks sold in the United States last year were all-electric. The latest rule, if approved by EPA, would ban the sale of all new diesel trucks by 2036.
Legal Challenges to the 2020 California Rule
Attorneys general from 17 states are challenging California’s ability to enact state emission standards that are tougher than federal standards. Ohio vs. EPA is set to be heard in the United States Court of Appeals for the District of Columbia Circuit later this year. Regardless of the decision in that case, it is expected to be appealed to the Supreme Court. At contention is that requiring manufacturers to sell a certain percentage of electric vehicles goes beyond regulating emissions from tailpipes that is allowed under the Clean Air Act. California’s regulation would force automakers and truck manufacturers to change the types of vehicles they produce, which effectively imposes those restrictions on the rest of the nation. Further, there is no business case that has proven that battery-operated heavy trucks are viable in the market.
Conclusion
The cost and difficulty of complying with California’s the new regulations on trucks would be overwhelming. Further, requiring that trucks be electric, as one of the state’s rules mandates removes the ability of trucking companies to choose the “clean” technologies that work best for their operations and puts an enormous strain on the nation’s electric grid. Currently, 60 percent of our nation’s electricity is produced from fossil fuels. It is inconceivable that wind and solar power, the preferred generating technologies of the Biden administration, can replace all of the coal and natural gas power produced and generate enough electricity to meet the new demand that would come from these mandates and their timelines. The Annual Energy Outlook 2023 produced by the Energy Information Administration confirms that this is highly unlikely under current laws and regulations. Changing those laws and regulations would only increase costs for Americans.
As we have learned from ongoing problems, government inattention to supply chain issues causes huge economic dislocation. Now that governments are exacerbating that problem, we can expect further inefficiencies to emerge within the economy.
