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Truckin’ California Style

Zero emission trucks will play a major role in California freight transport.

While the Trump administration is busy dousing 50 years of environmental regulation with leaded gasoline, setting it on fire and then dancing on its ashes, California continues to push the envelope on designing and implementing regulations to address climate change and local air pollution. The newest adventure unveiled this year is something called “Advanced Clean Truck Rule”. It’s bold and the first of this kind in a major economy. 

So what’s the issue? Large trucks are largely powered by Diesel engines. When you are schlepping around large payloads, torque matters. And the torque a Diesel engine generates is simply much higher than that of a regular gasoline powered combustion engine. You know what else Diesel is good at? Generating a ton of pollution. Heavy duty trucks generate 47% of NOx, 27% of CO2 and 10% of VOCs for the entire transport sector. Particulate matter from these engines, especially if they are not perfectly tuned, is extremely high. These are the Pigpens of the vehicle fleet.

The second reason we worry about pollution from Diesel trucks is that they are not affecting everyone equally. They disproportionately travel on highways. And highways, as has been extensively documented, are more likely to cut through lower income communities, which also generally have a relatively larger share of people of color living in them. So if you are poor and not white, you and your kids will end up with more Diesel pollution in your lungs, suffer short- and long-term health consequences, and that is not fair (or equitable as we call it in fancy speak). If you would like to read more about issues like this, I am a big fan of Julian Marshall’s work. 

California’s New Rule

So what could one do? We could try to pack tons of freight onto rainbow powered unicorns, or we could try to change the technology that powers trucks. Turns out that technology exists! Elon Musk has a truck (that also seems super fun to drive), but there are a number of other companies that produce plug-in trucks of different sizes. And there is a market for these mean new machines! Amazon put in a huge order for Rivian trucks. And personally, I think the Nikola one is pretty sweet looking. The new California rule will require the phase-in of zero emissions trucks in 2024 with 5% for Class 2b-3 trucks (think Ford F-250 or 350) and 9% of Class 4-8 trucks (big and bigger trucks). By 2035, 40% of long-haul trucks, 75% of Class 4-8 and 55% of Class 2b-3 trucks sold must be zero emissions! That is non-marginal change people! The total number of zero emissions trucks sold by 2035 would be 318,837. 

CARB says this rule is a good idea. They estimate about $9 billion in health benefits, 7000+ new jobs, $1.7 billion in avoided CO2, $6 billion in industry savings and a solid addition to state GDP of roughly $300 million. This seems like a win win! High fives all around! 

Asking Questions

Economists have mostly ignored the environmental aspects of trucking. When I tried to look for papers estimating the externalities from freight trucking, a sector that employs 2 million drivers, I found next to no papers (one nice exception is here). When I looked for papers trying to estimate the private and external costs of electrifying the existing truck fleet, I found no papers. So I have been working on this. 

For the record, I am excited and I do think this rule is a step in the right direction, yet I have some questions, because that is what I get paid for:

1)    If I own a Diesel truck, and am thinking about replacing it, do I do a Dylan and go electric, or do I buy another Diesel truck? Unless someone sweetens the deal, which may include the fixed costs of procuring an electric truck, or provides me with a deal on electricity that makes the variable costs competitive with Diesel, I may be inclined to stick with Diesel, the devil I know. From what I understand manufacturers are forced to meet the numbers put forth by CARB. So you still have to have fleet operators buy the zero emission trucks. 

2)    Truckers have real range anxiety. I grew up in a family trucking business. Stuff needs to get to where it needs to get to, and in time. Uncertainty about whether I can get to my delivery point with the existing charge is going to be higher in this population than in the German academics trying to get coffee in their Model 3. There needs to be range in these batteries. Bigger batteries take up more space and are currently heavy. With overall tonnage requirements, this may crowd out payload. Lighter smaller batteries in this sector matter greatly, since there are overall tonnage limits. 

3)    Truck batteries are much bigger than the stuff in your Tesla 3. Which means to Super Charge these, you will need serious capacity. Charging 50 of Elon’s trucks is going to require a small power plant’s worth of generation – 50 MW or so (I think).

4)    What does the load curve in aggregate look like for this sector? If we can charge these things when renewables are producing a lot of cheap or free power, we could possibly do something about that duck curve! This will take some care in dispatch and charging, but with the right pricing incentives, this might be a cool use for battery electric trucks!

But lately it occurs to me that of these the big question is how do we get folks to adopt zero emission trucks. My answer is to pay them. Gulp. Yes. Let’s push out some serious subsidies to get operators to adopt this technology. Since the environmental justice implications of this are non-trivial – much bigger than those of further cleaning up power generation – this is a good use of future cap and trade revenues. The amount of money required here may not be trivial, but I have always been an advocate of cleaning up California’s transportation sector. As the super awesome Catherine Wolfram points out, there could be huge spillovers to the rest of the world, too. Trucking is a large  share of freight transport in the developing and developed world everywhere. I support this serious and ambitious policy, even though I am in good old grouchy econ fashion, skeptical of the benefits numbers used to “sell” the policy. Still, with the absence of solid econ research, these numbers are hard to come by.

Keep up with Energy Institute blogs, research, and events on Twitter @energyathaas.

Suggested citation: Auffhammer, Maximilian. “Truckin’ California Style.” Energy Institute Blog, UC Berkeley, August 10, 2020, https://energyathaas.wordpress.com/2020/08/10/truckin-california-style/

 

Maximilian Auffhammer View All

Maximilian Auffhammer is the George Pardee Professor of International Sustainable Development at the University of California Berkeley. His fields of expertise are environmental and energy economics, with a specific focus on the impacts and regulation of climate change and air pollution.

13 thoughts on “Truckin’ California Style Leave a comment

  1. I’m OK with some subsidy but c’mon ya gotta have carbon fees! (with dividend approach)

  2. Is there a reason for the absence of any discussion and analysis of hydrogen for heavy vehicles?

    Cheers,
    Bob Archer

  3. As usual, nice post, Max! When you say “Economists have mostly ignored the environmental aspects of trucking,” I agree, and here’s an outrageous plug-in of my own work:
    External Effects of Diesel Trucks Circulating Inside the Sao Paulo Megacity
    Jiaxiu He, Nelson Gouveia, Alberto Salvo
    Journal of the European Economic Association, Volume 17, Issue 3, June 2019, Pages 947–989, https://doi.org/10.1093/jeea/jvy015
    https://academic.oup.com/jeea/article/17/3/947/4986466

  4. We may be at a point where we are willing to spend as if we had it. Helicopter money is touted as a way to fund the Trillion-dollar bill from COVID so why not fund electric trucks?
    The problem of range remains however and until there are major breakthroughs in batteries, this constraint can be limiting.
    May I suggest we simply use the English coaches as an example and switch horses (or tractors) every so many miles. Afterall, it is the load that has a place utility.

  5. Thanks for a great post Max – yes, big vehicles spew big pollution, and electrifying them could really help reduce both criteria pollutants (think immediate health effects) and GHGs (long-term effects). For your Question 1, you say that a potential purchaser would want either a subsidy of capital costs or a promise that charging with electricity will be cheaper than filling with diesel. Well, PG&E just happens to have launched a new Business EV Rate this year, which indeed has lower filling costs than for diesel, as long as you don’t charge during that nasty 4-9PM peak. It even beats diesel for government vehicles (e.g. transit), which don’t pay fuel taxes like truckers and perhaps garbage haulers. The rate has two flavors (large and small), with different step sizes for the “subscription rate”, which replaces the much-despised (by the charging community) demand charges. Check it out at https://www.pge.com/en_US/small-medium-business/energy-alternatives/clean-vehicles/ev-charge-network/electric-vehicle-rate-plans.page

    California’s other utilities also have special EV charging rates:
    SCE has three EV rates where demand charges are waived until 2024 (https://www.sce.com/business/electric-cars/Workplace-Charging), and
    SDG&E has an “interim rate waiver” to reduce demand charges for DCFC and Medium-Heavy Duty Vehicle charging stations until their own subscription-based EV rates are made available next year (https://www.sdge.com/interim-rate-waiver)

    Also, EVs are well-known to have lower maintenance costs, which are important for fleet operators. So maybe “serious subsidies” won’t be needed and you can go back to sipping coffee instead of gulping 🙂

  6. Truckers can significantly lower their carbon emissions NOW without going broke or putting themselves in untenable financial circumstances trying to purchase terribly expensive and risky electric trucks—CNG, renewable natural gas, and biogas are great options. Check out Cummins; they have extremely clean options that aren’t nearly so expensive and don’t require waiting for a technology to pan out. CNG, renewable gas, and biogas are available options. Most of those that make all the very expensive rules don’t have to worry about finances. If we’re going to be realistic in California, we need to realize that we should use all available and reasonable options that will help us meet the state’s climate goals. Going all in one direction for fuel leaves us vulnerable, unaffordable, with a dictatorial ‘power’ structure. We will just see more taxpaying job providers and small-to-medium businesses (that could grow into bigger ones) leave this ultra-expensive, unfriendly to business and consumers, state.

  7. Your calculation about 1 MW power plant per trcuck fill neglects the time necessary to charge. Since the comparison has to be MWH not MW, i get about 11 hours for a full 1800 mile, 300 gallon trip if charging from a 1 MW plant. (Somebody has to check my math). Maybe this is why we should be considering hydrogen generated from the electicity which does not need the demand time. For the sake of argument, how about some of the small advanced nuclear schemes which could be put on the truck (maybe)?

  8. In 1994 we reviewed the CARB’s State Implementation Plan (SIP), brought in as an outside reviewer by the Governor’s Office. Among the wide array of proposals that included no-drive days as pushing the federal diesel standard up from 2004 to 2002. The problem was and is that the vast majority of long haul Class 4-8 trucks are in the International Registration Plan, and those trucks are beyond state emission regulations. California’s new truck market is already disproportionately small (for more than just regulatory reasons), so its easy for fleet owners to avoid state regulations and just buy in the national market. In addition, these trucks often descend through 3 or 4 market tiers as they age, moving from interstate when they are new to intrastate to local haul to utility to agriculture.

    The reality is that probably the only way to introduce these trucks widely and get significant market penetration from a state policy push is with a subsidy. But even then, the spillover effects to other states, both good and bad (from increases used truck sales), will be quite large. This will be much more difficult and costly than light duty vehicles because the regulatory boundaries are much more fluid in trucking.

  9. Thanks for another informative, pithy, policy brief. I too have questions.

    1. The new rule requires only that a certain percentage of trucks sold in California (sold!) be zero-emissions vehicles. Doesn’t that rule have a loophole you could drive a you-know-what through? I am picturing a line of truck dealers on the California-Nevada border, right next to the casinos.

    2. You propose subsidizing zero emission trucks, adding “Gulp.” I assume the quoted deglutition is because you, like me, teach students that subsidies are second best. First best would be taxing the polluting trucks. Have we given up on even mentioning the preferred policy before we resort to political expedience? And if we do that aren’t we practicing political science, without license?

    Best,
    Arik

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