As a California-based freight forwarder, Approved keeps close tabs on the state’s environmental initiatives. Three new regulations have emerged that will directly impact truck and engine manufacturers as well as fleet owners, with wide-ranging implications for the transportation industry as a whole.
To keep you in the loop, we’ve summarized these initiatives below. We’ll share what they’re about and how they might affect the way you do business. We’ll also discuss the environmental impact of these regulations, which have the potential to significantly improve air quality in California. Finally, even if you’re not operating in California, some of these initiatives have already been adopted by other states—and could be coming to your state soon.
In addition to these three regulations, there are two others on the books in California: the Clean Trucks Program and WAIRE, the Warehouse Actions and Investments to Reduce Emissions Program. Read more about these two regulations. Like the three listed above, both have implications for air quality, public health, and transportation companies operating in California.
#1: California’s Advanced Clean Trucks (ACT)
Background – To reduce air pollutants and protect the public health of the state’s residents, California has set a series of aggressive climate change targets, including:
- A 40% reduction in greenhouse gases by 2030
- An 80% reduction in greenhouse gases by 2050
- A 50% reduction in petroleum use by 2030
According to the California Air Resources Board (CARB), trucks cause a disproportionate amount of air pollution. Only two million of the state’s 30 million registered vehicles are trucks (6.6%), yet they are responsible for:
- 70% of the state’s smog-causing pollution
- 80% of carcinogenic diesel soot
To mitigate this outsized impact, the California Air Resources Board proposed the Advanced Clean Trucks (ACT) Regulation.
What Is the ACT Regulation?
California’s Advanced Clean Trucks (ACT) Regulation is designed to accelerate a large-scale transition to zero-emission medium- and heavy-duty vehicles.
The ACT requires manufacturers of trucks in California to sell increasing percentages of zero-emission trucks, starting with model year 2024. By model year 2035, zero-emission truck/chassis sales are required to be at:
- 55% for Class 2b-3 truck sales
- 75% of class 4-8 straight truck sales
- 40% of truck tractor sales
Environmental Impact
Considering that trucks and buses are responsible for significant emissions, transitioning these vehicles will create significant results in the areas of air quality and public health.
Additionally, if other states follow California’s lead, the effects of Advanced Clean Trucks rules will only multiply. Massachusetts New York, New Jersey, Oregon, and Washington have all adopted the Advanced Clean Truck rule. Those states account for 20% of the medium- and heavy-duty fleets in the U.S. Vermont joined this group in late 2022, and Connecticut, Maine, and Maryland are working on adoption.
California also introduced a second regulation designed to complement the Advanced Clean Trucks Regulation.
#2: California’s Advanced Clean Fleets (ACF) Regulation
Background – The Advanced Clean Fleets (ACF) Regulation was developed in support of the Advanced Clean Trucks (ACT) Regulation to accelerate the market for zero-emission trucks, vans, and buses. In other words, ACT incentivizes manufacturers to build and sell zero-emissions trucks, and ACF incentivizes fleet owners to purchase these vehicles.
What Is the ACF?
The proposed Advanced Clean Fleets regulation requires medium- and heavy-duty fleets to transition to zero-emission vehicles (ZEV), with the goal of 100% zero-emissions heavy-duty truck fleets, where feasible, by 2045. This regulation, currently in the draft phase, impacts:
- Fleets performing drayage operations
- Fleets owned by state, local, and federal government agencies
- High-priority fleets, which are those that that either:
- Generate $50 million or more in gross annual revenue and that own, operate, or control at least one vehicle with a gross vehicle weight rating (GVWR) greater than 8,500 pounds.
- Own, operate, or control a total of 50 or more vehicles with a GVWR greater than 8,500 pounds.
- Smaller fleets, in terms of their ability to purchase only ZEVs, starting in 2040
The main provisions of the proposed ACF Regulation include:
- A manufacturer sales mandate, stating that manufacturers may sell only zero-emission medium- and heavy-duty vehicles starting in 2040.
- Requirements for state and local agencies to ensure 50% of vehicle purchases are zero-emission beginning in 2024 and 100% of vehicle purchases are zero-emission by 2027.
- Requirements for drayage fleets, starting in 2024, that only zero-emission trucks may be added, with legacy vehicles removed at the end of their useful life. By 2035, all drayage trucks must be zero-emission.
- Requirements for high-priority and federal fleets to comply with the Model Year Schedule below or the optional ZEVMilestone Schedule to phase in ZEVs into their fleets:
- Model Year Schedule: Starting in 2024, fleets must purchase only ZEVs and must remove internal combustion engine vehicles at the end of their useful life.
- ZEVMilestone Schedule: Instead of the Model Year Schedule, fleets may elect to meet ZEV targets as a percentage of the total fleet, based on a phased schedule.
Environmental Impact
Once implemented, CARB anticipates that the Advanced Clean Fleets regulation will result in significant reduction in emissions from 2024-2050. The regulation will prevent the release of:
- 419,000 tons of NOx
- 8,640 fine particulate matter (PM2.5)
- 307 million metric tons of CO2
As a result of these reductions, CARB estimates a savings of $57.8 billion in statewide health benefits. Additionally, in combination, ACT and ACF are projected to result in 1.59 million ZEVs on the road in California by 2050.
#3: The Heavy-Duty Omnibus (HDO) Rule
Background – Heavy-duty vehicles are one of the largest contributors to NOx emissions in California, comprising approximately 31% percent of the statewide total. These vehicles are also responsible for 26% percent of total statewide diesel particulate matter (PM) emissions.
Sources of NOx Emissions in California
(source)
What Is the ADO Rule?
This omnibus regulation from CARB updates standards and test procedures for heavy-duty engines and vehicles of model year 2024 and beyond. The Omnibus rule lowers the NOx and PM emission standards, with the goal of cutting NOx emissions by 75% below current standards by 2024 and 90% by 2027.
Environmental Impact
Looking ahead to the benefit from 2024-2050, CARB estimates a total of $36.8 billion in statewide health benefits, due to avoiding ~3,900 premature deaths and ~3,150 hospitalizations statewide. The Omnibus will significantly impact communities with high volumes of truck traffic, including those adjacent to ports, warehouses, and railyards.
As with the Advanced Clean Trucks rule, other states are following suit where the Heavy-Duty Omnibus is concerned. Massachusetts and Oregon have adopted the rule, with implementation scheduled for 2025.
Finally, let’s take a look at how these three rules are poised to impact the transportation industry as a whole.
Looking Forward: The Impact of ACT, ACF and the HDO Rule
Although two of the regulations discussed above are directed at engine and truck manufacturers, all of them could have significant ripple effects on the industry as a whole. Additionally, as states across the country consider and adopt similar regulations, the effects will only multiply.
While these regulations were designed to positively impact air quality and public health, they could present some challenges for the transportation and logistics industry, including:
Higher Upfront Costs
Zero-emissions vehicles will initially cost more to purchase than internal combustion vehicles. However, the California Air Resource Board argues that operating and maintenance costs will be lower in the long run, delivering a net savings of $22.2 billion to fleets. However, higher purchase costs will still require a shift in the way fleet owners manage their cash flow.
Questions About Availability
Medium- and heavy-duty electric vehicles are still so new to the market, with many models currently in production and not yet on the road. As such, future availability isn’t clear, nor is speed to production. Looking ahead to when these regulations come into effect, questions still remain as to how robust future supply will be—and whether full compliance will even be possible.
EV Limitations & Lack of Infrastructure
Fleet owners and managers are also concerned with some of the limitations of electric vehicles. Their range can be limited, and the available charging infrastructure isn’t yet as strong as it will need to be. Additionally, the ease of charging an EV pales in
comparison to the ease of refueling an internal combustion engine. While it takes only a few minutes to fill a truck with diesel fuel, charging an electric vehicle takes significantly longer. This means that fleet managers will need a completely new game plan for how these vehicles are routed and “refueled.”
Changes for Fleet Operations & Maintenance
Finally, as they transition their fleet to ZEVs, fleet owners and managers will have to rework their operations, including the way they charge, manage, and maintain their fleet vehicles. In some cases, it might mean building a completely new charging infrastructure at their home base. For fleet owners who lease their land, this can mean whole new set of challenges.
The Future of ZEVs—and the Transportation Industry
Even though the Heavy-Duty Omnibus and the Advanced Clean Trucks rule have been adopted by the state of California, the future is far from set in stone. Because these California regulations differ from federal standards, the state needs a waiver from the EPA for both. California has received significant support from several other states on this matter. Attorneys general from 14 states and the District of Columbia added their signatures to a letter from Rob Bonita, California’s Attorney General, urging the EPA to grant the waiver. For now, the ball is in the EPA’s court.
However, many in the transportation industry believe the writing is already on the wall. As a result, they’re already creating a plan to transition their fleets and even their warehouse equipment toward zero-emissions solutions. As more states adopt legislation similar to California’s—and manufacturers ramp up production of medium- and heavy-duty ZEVs—it seems clear that changes are coming down the pike for the transportation industry, with significant benefits for the environment and global public health.
If you have any questions regarding the impact of these initiatives—or any others—on your shipments, don’t hesitate to reach out to us. You can call us at (626) 693-3524 or email [email protected]. We’d be happy to discuss your particular situation and any potential impacts you might see as a shipper.
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