Yesterday the White House, or more specifically President Obama, announced new fuel economy standards for heavy duty trucks. The full summary report of the announcement and the White House’s summary position on what this means is located here – White House Fuel Economy Report on Heavy Duty Trucking. Unlike passenger cars that have been subject to CAFE requirements for fuel economy since 1975, heavy duty trucks have not been subject to an efficiency standard, only an emissions standard covering pollutants.
That last word, “pollutants” is the key here, as now that carbon dioxide has been classified by the EPA as a pollutant they are asserting that they can now regulate carbon emissions. That is a much larger topic impacting nearly all of our energy production, but for now let’s just focus on the trucking requirements. The main point of all this is that the heavy duty trucking segment produces a disproportionate amount of emissions despite the overall numbers of vehicles being far less than automobiles. The graphic below from the report shows just 4% of registered vehicles emitting 20% of the GHG’s from transportation.
So a few obvious questions? What will this do fuel demand? What will this do to truck prices? What will this do to operating costs of the fleets running thees trucks? Let’s start with fuel demand. In the graph below from the report, the expected reduction in future fuel demand is 10 billion gallons a year in 2050.
Well using 10 billion gallons less than current path we are on sounds like a good idea. However on to those other questions, truck costs and operating costs. The administration claims that these fuel savings will result in fleets saving substantial operating costs.
That seems like a great proposition, but what is left out of this story, and what remains to be seen is how much these “SuperTrucks” will cost. If I’m saving $20,000 a year per truck, but paying $100,000 more for the truck then it is not going to be very much fun for truckers or their customers.
Most fleets and truck operators today require a 1 to 2 year payback on their incremental investments in new truck technology. This is the hurdle that natural gas powered trucks are now clearing, which is why we are seeing many more of them on the road. So before we all hail the arrival of the SuperTruck that is going to save us 10 billion gallons a year I think we have to know more about the price to get there.
It’s always easy to bash something new, the fact of the matter is that while allot of the proposed changes add cost, they are either meant to reduce weight or improve aerodynamics….In the trucking industry any reduction in weight means an increase in payload capacity while improvements in aerodynamics go to reducing fuel consumption….so a “Super Truck” the benefit is two fold…hauling more freight for less money…..individual truck costs more but you can haul the same amount of freight on fewer trucks, and save fuel on the trucks you are running…..companies are all over CNG as a fuel because it is cleaner, cheaper, domestic with fewer price fluctuatons, reduces maintenance costs, (mostly due to the elimination of the Diesel Particulate Filters and DEF fluids)…it doesn’t reduce consumption, but it does decrease imports thus having a direct effect on our trade deficit.
More info from Cummins here – http://investor.cummins.com/phoenix.zhtml?c=112916&p=RssLanding&cat=news&id=1900870