The race to zero emissions is on and it can be difficult to tell the players without a program — let alone the rules of the game. At this moment, there are legislative, regulatory and judicial efforts at the federal, state and provincial levels in both the U.S. and Canada to either speed the adoption of zero-emission vehicles (ZEVs) or, in some fewer instances, add road bumps to slow the requirements in order to better prepare for ZEVs.
Moving society to ZEVs started with the “carrot” approach of incentives and has firmly moved toward also utilizing the “stick” approach with both manufacturing and sales mandates being proposed.
The legislatures and regulatory agencies at the federal and state/provincial levels in the U.S. and Canada are actively engaged in mandating the eventual manufacture and sale of ZEVs while phasing out internal combustion engines (ICEs). This patchwork government approach to ZEVs can be confusing and complicated for companies in every stage of the industry from chassis manufacturers and upfitters to fleet purchasers.
U.S. Congress
Congress has been very active in the ZEV space over the last couple of years but has a longstanding history of regulating emissions and fuel economy. Typically, Congress will pass legislation that directs regulatory agencies to implement specified regulations. Emissions are the purview of the Environmental Protection Agency (EPA), and corporate average fuel economy (CAFE) standards are promulgated by the National Highway Traffic Safety Administration (NHTSA).
The Bipartisan Infrastructure Law (BIL) passed in late 2021 dedicates billions of dollars to build an infrastructure to accommodate electric vehicles. The Inflation Reduction Act (IRA) of 2022 authorizes $500 billion of new spending and tax credits aimed at energy and health care.
If you combine the investments to which the BIL, IRA and Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act have committed, they total some $2 trillion over the next 10 years in the U.S.
EPA/NHTSA
Once laws are passed, many will require regulatory agencies to conduct rulemaking to implement the various provisions. The rulemaking process allows for public participation — and NTEA is very active in this process. The amount of discretion the agency has in implementing the new laws — and thus how effective interested parties can be in shaping the regulations — depends on how prescriptive Congress was in writing the underlying law.
In 2021, EPA announced the Clean Truck Plan to reduce greenhouse gas emissions (GHG) from heavy-duty trucks through a series of rulemakings. The first rulemaking was the Control of Air Pollution from New Motor Vehicles_ Heavy-Duty Engine and Vehicles Standards, approved in late 2022. EPA states that the two additional rulemakings, the Phase 3 GHG proposal and the proposal for multi-pollutant emissions standards for light- and medium-duty vehicles, are expected to be completed by the end of 2023.
NHTSA has proposed upgraded fuel efficiency standards to align with the EPA proposal. The July 2023 NHTSA proposal would increase fuel economy standards for cars to a fleet average of 58 miles per gallon by 2032. NHTSA’s proposal, which covers 2027–2032 model years, would boost CAFE requirements by 2% per year for passenger cars and 4% per year for light trucks.
Of particular concern to NTEA, NHTSA’s proposed rule includes a 10% fuel efficiency increase per year for commercial pickup trucks and work vans — with gross vehicle weight ratings of more than 8,500 pounds and less than 14,001 pounds — beginning in model year 2030 and ramping up through model year 2035.
California
It’s impossible to evaluate the future of ZEVs without looking to California, which historically has been given the ability to regulate their own emissions standards due to what was, in the 1960s, a unique air pollution situation. The state legislature and the California Air Resources Board (CARB) have been at the forefront of motor vehicle emission regulation.
While California addressed its unique concerns, other states were allowed to adopt the California standards as their own. The law requires that if a state chooses to adopt the California standards, they must be “as is” and not amended by the adopting state. States can opt into either car or truck standards — or both.
In 2021, California adopted the Advanced Clean Trucks Rule, which put in place a requirement for manufacturers to increase the sale of zero-emission trucks.
This year, California adopted an Advanced Clean Fleet Rule, which includes an end to combustion truck sales in 2036. According to CARB, “Under the new rule, fleet owners operating vehicles for private services such as last-mile delivery and federal fleets such as the Postal Service, along with state and local government fleets, will begin their transition toward zero-emission vehicles starting in 2024. The rule includes the ability to continue operating existing vehicles through their useful life.”
As California heads toward a ban on ICE vehicles after 2035, states that have opted into the California standards will need to determine if they will continue following them or revert to the federal EPA standards.
Based on the market power of California — and the other states requiring California standards — many have argued that EPA has relinquished its power, allowing CARB to be the de facto regulator of U.S. motor vehicle emissions standards.
Engine manufacturers California agreement
Coming on the heels of California’s decision to eliminate ICE vehicle sales by 2036, a group of truck engine manufacturers negotiated an agreement with CARB.
The partnership agreement will require the sale and adoption of zero-emissions technology in the state, regardless of whether any other entity challenges California’s authority to set more stringent emissions standards under the federal Clean Air Act. In turn, CARB says “it has agreed to work collaboratively with manufacturers to provide reasonable lead time to meet CARB’s requirements and before imposing new regulations and to support the development of necessary ZEV infrastructure.”
Organizations committed to the agreement include Cummins, Daimler Truck North America, Ford, General Motors, Hino, Isuzu, Navistar, Paccar, Stellantis and the Volvo Group.
In return for not opposing the new rules, CARB has agreed to use the federal emission standards for diesel trucks starting in 2027.
Truck owners were not part of the California agreement. Groups representing truck owners and users have expressed concerns with the agreement and its possible ramifications.
Canada
As the U.S. and Canadian truck equipment markets are similarly aligned, so too are many of the regulations governing the manufacture and sale of motor vehicles. Environment and Climate Change Canada (ECCC) is the equivalent to the EPA in the U.S.
ECCC collaborates with EPA and typically allows EPA to propose new motor vehicle emission standards with ECCC proposing similar requirements shortly thereafter.
At the federal level in Canada, there has been no further advancement of federal government plans to develop regulated ZEV sales targets for medium- and heavy-duty vehicles (MHDVs) that would require 100% of new sales to be ZEV by 2040 for a subset of vehicle types based on feasibility, and will explore interim targets for the 2020s and 2030s.
NTEA is closely monitoring any proposed regulatory requirements for ZEV sales that would apply to MHDVs in Canada and is in contact with officials at ECCC regularly on the issue.
British Columbia
Canada’s west coast population center, British Columbia (B.C.), has started down a path similar to California. In October 2021, the Province released the CleanBC Roadmap to 2030, which committed to a suite of policies to help reach the transportation emission reduction targets. This included a commitment to establish regulated ZEV requirements for MHDVs in line with California and other leading jurisdictions.
Recently, B.C. published a Medium- and Heavy-Duty Zero-Emission Vehicles_ 2023 Consultation Paper. The paper outlines proposed ZEV sales mandates and fleet purchase requirements for MHDVs similar to California’s Advanced Clean Trucks and Advanced Clean Fleets regulations.
The B.C. proposal would eventually phase out ICE MHDVs. The proposal is currently in the early consultation phase. If the proposed requirements are published as regulations, B.C. would phase in sales targets for Class 3–8 trucks from model year 2026 to 2036. By 2036, all new vehicles would need to be zero-emission.
Moderating and differing views
As the ZEV movement accelerates, more organizations are joining NTEA in voicing their industries’ concerns over the timing and preparation for such mandates.
For instance, the Biden Administration has granted California waivers to adopt more stringent emission standards while EPA has begun issuing more of its own tailpipe standard upgrades. Recently, however, 25 Republican state attorneys general requested that the Administration not continue cutting emissions. A counterpart group of 20 Democrats called for increased standards.
Bipartisan Congressional opposition to EPA’s recent proposals has surfaced. Lead sponsors of the repeal efforts on the federal excise tax (FET) for heavy-duty trucks Congressmen Doug LaMalfa (R-CA) and Chris Pappas (D-NH) led 30 Members of Congress in sending a letter urging the EPA “to reconsider the disastrous ramifications of their new Phase 3 Heavy Duty Truck Rule.”
NTEA continues to monitor the developments in the movement to zero-emission trucks. We continuously interact with legislators and regulators in the U.S. and Canada to educate them on the important role truck equipment and vocational trucks play in the economy and how regulatory proposals could affect the manufacture, purchase and use of work trucks.