The California Air Resources Board (CARB) is not providing sufficient financial support for trucking operators to update their fleets to zero-emission vehicles per the agency's own desired mandate, according to industry sources.
CARB's Advanced Clean Fleets (ACF) regulation has a 2036 deadline requiring manufacturers to sell only zero-emission medium- and heavy-duty trucks in the Golden State. Several other states, including Colorado, Massachusetts, New Jersey, New York, and Washington have fully adopted this mandate.
To be implemented, the ACF requires a Clean Air Act waiver from the Environmental Protection Agency (EPA). A public hearing was held earlier this month by the EPA where the waiver's opponents and proponents were allowed to argue their cases. The trucking industry, which largely opposes the waiver, was outnumbered by those in favor, specifically healthcare professionals, environmental groups, and community leaders.
Trucking's general argument is that it fully supports a healthy environment, but is against this particular mandate because the federal and selected state governments have set unrealistic goals for the century-old industry to transform itself from fossil fuel dependent to zero tailpipe emissions.
Clean Trucking previously reported on how CARB's policies "don't reflect reality," and not only could it be potentially bad business for a trucking operator to publicly protest the agency's policies due to retribution concerns, but also that bad politics are involved in decision making.
This perceived gap between policy and reality has resulted in a critical problem many operators are now facing: potentially losing their businesses due to a lack of sufficient financial assistance to purchase newly mandated zero-emission semis to replace existing diesels.
Necessary investments
"CARB has the most ambitious clean trucking policies in the world. It’s incredible," said Adam Browning, executive vice president of policy at Forum Mobility, a zero-emission trucking and charging infrastructure provider for drayage in California. "However, achieving success will take an all-government approach to build scale and lower costs."
While the industry is making impressive progress with zero-emission semis and the necessary charging infrastructure, small businesses are realizing they can't afford those products without additional subsidies. Even the current cost of doing business has increased past the point of feasibility for many.
"Right now, California can and should be doing a lot more to support this industry," Browning continued. "This year, the legislature didn’t put up anything for trucks and truck incentives. The Low Carbon Fuel Standard (LCFS) credit can reduce the cost of running a zero-emission vehicle quite a bit."
A few years ago, that credit was around $170. Today, it hovers at about $70. While still readily available, that delta means the average drayage driver is spending over $1,000 a month on previously reimbursable expenses. In other words, complying has become even more expensive than it used to be. The CARB board has scheduled a hearing on November 8 to consider cost-cutting amendments to the LCFS.
The California Public Utilities Commission, meanwhile, has offered to add funds to help lower the costs of installing chargers but there's a proposal to eliminate that program. Doing so would raise electrification transition costs even more.
"We need a policy and consistent support to ensure we have diesel parity as a way to exit the scene. Nobody is going to make a million dollar investment [in zero-emission vehicles] and then they’ll operate at a loss. We need a product that can compete with diesel," Browning emphasized. "No one will make the necessary investments if they can't make money."
Figure it out
So how do small fleets survive? "Just figure it out," is how Matt Schrap, CEO of Harbor Trucking Association, describes California's current message to independent operators. "Go figure it out with a trucking as a service company (TaaS) [such as WattEV]. Maybe work with a dealer for a 90 percent discount, or even work as a driver for another company that already has ZEVs." Either way the message is clear: it's on you to find and get funding.
[Related: WattEV CEO explains how it's building America's largest EV trucking fleet]
While CARB does offer incentive programs towards the purchase of electrified commercial trucks, specifically the On-Road Heavy-Duty Voucher Incentive Program (VIP) and the Hybrid & Zero-Emission Truck & Bus Voucher Incentive Program (HVIP), and the federal government also has the Commercial Clean Vehicle Tax Credit worth up to $40,000, many claim these incentives are insufficient. Some operators, however, remain unaware of the full scope of these incentives, and of what some of the original equipment manufacturers provide in terms of financing and infrastructure setup.
"We're trying to convince regulators that instead of spending money on PR, they should first help early adopters get these trucks working," says Bill Aboudi, president of AB Trucking, a Port of Oakland-based drayage operator. "But we're very supportive of the new [powertrain] technologies."
Some operators remain hesitant to begin the ZEV transition due to concerns that CARB may change the regulations. There is precedent for this fear, specifically 2008's California Truck and Bus Regulation which required all heavy-duty diesel truck and bus operators to either retrofit or replace older diesel engines with new engines equipped with particulate matter filters.
"Most of these guys went and bought trucks to have coverage [to meet the new regulation]," Schrap adds. "Then CARB pulled the rug out and essentially changed the rule [to now require operators to buy ZEVs]." Operators who made the required investments to meet those standards are now being asked to so again at an even higher cost and risk.
Operators and regulators, while often at odds, are working towards the same ambitious, complex end. A continual reinvention of an extremely vital industry, that can't afford to pause as they evolve. Robust credit and incentive programs are key to ensuring that operators are not unfairly burdened as they attempt to evolve in a way that benefits the future. However, as quickly as a program can be put in place to aid compliance, it can be removed when the winds of power blow a different way. Hopefully, regardless of political climate, those in power will continue to invest in a critical industry.
