HomeSpecial ReportsEPA Takes Technology-Neutral Approach in Finalizing Phase 3 GHG Rule

EPA Takes Technology-Neutral Approach in Finalizing Phase 3 GHG Rule

The Biden administration finalized the strongest greenhouse gas emission (GHG) standards for heavy-duty vehicles, including school buses, by following a technology-neutral approach that still favors zero emissions.

The U.S. Environmental Protection Agency (EPA) announced on Friday its Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles – Phase 3 of the Clean Trucks Plan built on EPA’s Heavy-Duty Phase 2 program from 2016. The final standards set stronger carbon dioxide (CO2) standards for model years 2027 through 2032 and will avoid, “1 billion tons of greenhouse gas emissions and provide $13 billion in annualized net benefits to society related to public health, the climate and savings for truck owners and operators,” according to a press release.

The EPA added it is not proposing or adopting changes to the existing Phase 2 GHG emissions standards finalized in 2016. When compared to Phase 2, Phase 3 begins in MY 2027 with a 13 percent increase in the stringency of emissions standards for medium heavy-duty vocational vehicles, which includes school buses, and a 17 percent increase in the light heavy-duty vocational vehicle standards. Each vehicle category increases in stringency with each model year, resulting in medium heavy-duty vocational standards being 40 percent stricter CO2 standards and light heavy-duty being 60 percent more stringent.

In addition to school buses, the new regulation applies to delivery trucks, refuse haulers, public utility trucks, transit, and shuttle buses as well as day cabs and sleeper cabs on tractor trailer trucks. The rule also applies to light heavy-duty vehicles, which EPA confirmed includes Type A school buses.

“Trucks and other heavy-duty vehicles are vital to the U.S. economy, transporting goods and freight and providing services for industry, transit and other sectors,” an EPA press release adds. “At the same time, heavy-duty vehicles account for 25 percent of all greenhouse gas emissions from the transportation sector, which is itself the single largest source of greenhouse gas emissions in the U.S. Greenhouse gas emissions are the primary driver of climate change and its impacts, including more severe heat waves, drought, sea level rise, extreme climate and weather events, coastal flooding, and catastrophic wildfires.”

The standards are technology-neutral and performance-based, the EPA stated, which allows each manufacturer to choose what set of emissions is best suited for them and their customers. Available technologies include advanced internal combustion engine vehicles (diesel and gasoline), hybrid vehicles, plug-in hybrid electric vehicles, battery electric vehicles, and hydrogen fuel cell vehicles.

Related: School Bus Manufacturers, Stakeholders Comment on GHG Phase 3

But the rule favors zero emissions solutions.

The Clean Fuels Alliance America expressed “extreme” disappointment, noting that EPA did not evaluate the use of biodiesel and renewable fuels as part of engine systems to meet the new standards. “The agency considered a range of alternative fuel and engine configurations, such as natural gas and hydrogen. EPA did recognize that equipment makers will continue to have the option to use biodiesel and renewable in their compliance strategies,” the organization stated.

“EPA’s rule flatly dismisses the benefits of biodiesel and renewable diesel as the lowest-cost and most widely available options to kickstart decarbonization of the heavy-duty vehicle sector,” added Kurt Kovarik, the trade association’s vice president of federal affairs. “There should be no uncertainty that biodiesel and renewable diesel also reduce criteria pollutants from heavy-duty vehicles, which will continue to be manufactured and used during the timeframe of this rule. EPA should recognize that biodiesel and renewable diesel merit a role in meeting these emission standards for heavy-duty vehicles.”

However, the EPA rule reiterates that feasibility is supported through potential compliance pathways, and the final standards do not mandate the use of any specific technologies. Plus, remaining in effect is the Averaging, Banking and Trading (ABT) program that allows manufacturers further flexibility in meeting the standards via credit data calculated from fleetwide averaging of emissions.

The final rule also provides more time in the early model years of the program for the development of vehicle technologies and the deployment of charging and refueling infrastructure. The proposed standards would remain in place through MY 2033, unless and until the EPA sets new standards.

EPA confirmed that most school buses fall under the Medium Heavy Duty Compression-ignition multi-purpose standards. (Screenshot of EPA final rule.)

“For MY 2032, we are finalizing more stringent standards than proposed for light and medium heavy-duty vocational vehicles and day cab tractors,” the rule states. “Our assessment is that setting this level of standards starting in MY 2032 achieves meaningful GHG emission reductions at reasonable cost, and that heavy-duty vehicle technologies, charging and refueling infrastructure, and critical minerals and related supply chains will be available to support this level of stringency (as many commenters agreed with and provided technical information to support). Our assessment of the final program as a whole is that it takes a balanced and measured approach while still applying meaningful requirements in MY 2027 and later to reducing GHG emissions from the HD sector.”

The EPA also provides a projected percent mix of vehicle technologies to support the feasibility of Phase 3 Standards. In one example for Medium-Heavy Duty, it states EVs would need to make up 13 percent of the fleet by MY 2027.

That number grows to 16 percent in MY 2028, 19 percent in My 2029, 22 percent in MY 2030, and 31 percent by MY 2031. In MY 2032 ZEV’s would consist of 40 percent of the Medium-Heavy Duty Vocational vehicles. Currently, the Electric School Bus Initiative reports 8,682 electric buses have been committed — either awarded, ordered, delivered or in operations — accounting for 1.8 percent of all the school buses on the road.

Another example of a compliance pathway that does not use ZEVs includes a suite of GHG-reducing technologies. The chart shows ICEV, short for internal combustion vehicle, powered by natural gas (CNG or propane), hybrid electric vehicles (HEV), plug-in hybrid electric vehicles (PHEV) and hydrogen-internal combustion engines (H2ICE), the latter not existing today, EPA noted.

The EPA added that the use of lower carbon fuels such as CNG and propane continue to evolve to improve their CO2 emissions reductions.

Allen Schaeffer, the executive director of the Engine Technology Forum, said the rule will challenge manufacturers and suppliers with requirements that will contribute to cleaner air and reduced carbon emissions.

“EPA rules would be based on life-cycle greenhouse gas emissions rather than a tailpipe-only basis,” he said. “A life-cycle approach supports consumer choice for both fuels and vehicles. In setting final timelines and the performance-based standards, the EPA’s final rule properly provides important flexibility to allow vehicle manufacturers to meet performance-based requirements through multiple technology pathways. It further recognizes the many challenges for both manufacturers and consumers in moving to zero tailpipe emission electric vehicles.”

He noted that the success of the rule is contingent on many factors that are out of the vehicle manufacturers’ control, such as the industrial base to support widespread electrification. The Engine Technology Forum added that the trucking industry is already investing in and using what it called ultra-clean heavy-duty trucks that are using biodiesel, renewable diesel, and renewable natural gas.

Meanwhile, the American Bus Association and its partners that make up the Clean Freight Coalition stated modern motorcoaches powered by diesel are among the most environmentally friendly modes of transportation. “They produce fewer emissions per person per mile than nearly all other forms of passenger transportation,” a statement on Friday reads. “Motorcoaches also contribute to a cleaner environment and alleviate traffic congestion by taking up to 50 individuals out of their cars.”

ABA adds that the recent EPA rule mandating a rapid shift to electricity will result in an increase in equipment costs, potentially doubling them. STN previously reported that more stringent emissions regulations from EPA and the California Air Resources Board will result in additional engineering necessary for diesel engines, thus resulting in additional increases to the already steady rise in costs.

Related: All Eyes on Diesel’s Future: EPA Publishes Final Truck Engine Rule
Related: Some Type A School Buses Fall Under Latest EPA Pollution Reduction Rule

The ABA added that the current lack of infrastructure and limited electric capacity make this transition impractical and financially burdensome for the industry and consumers.

“The ABA firmly believes that a realistic and gradual approach is necessary to ensure a successful transition to electric vehicles. Rushing this process without adequate infrastructure and electric capacity will only burden the end user, the consumer, and the taxpayer with increased costs. The ABA urges policymakers to consider the long-term implications and feasibility of such a transition, emphasizing the need for a comprehensive plan that addresses the challenges associated with electric vehicle adoption.”

Amid increased costs, an EPA spokesperson told School Transportation News that the new standards are expected to result in realized annualized savings of $3.5 billion in the heavy-duty industry, compared to annualized costs of about $1.1 billion from 2027 through 2055.

The EPA added that with the tax credits under President Joe Biden’s Inflation Reduction Act the typical buyer of new vocational vehicles will save money on the upfront cost of the vehicles and recoup any additional costs, such as the purchase and installation of vehicle charging equipment, in two to four years. For example, the spokesperson noted, a purchaser of a heavy-duty truck in 2032, when the standards are fully phased in, could save between $3,700 and $10,500 on fuel and maintenance costs annually, depending on vehicle type.

During a media call on Thursday that previewed the final rule, EPA Administrator Michael Regan responded to a question about independent owner-operators who can’t afford electric vehicles and might be forced to keep their older ICE vehicles longer.

Regan said the over 170,000 public comments reviewed by EPA spoke to the need for a diverse suite of options for truck owners-operators to choose from.

In terms of infrastructure build out, EPA said it considered zero-emissions charging infrastructure needs when finalizing the rule.

“Our analysis shows that there will be sufficient charging, refueling and grid distribution buildout infrastructure available in the timeframe of the Phase 3 program to support BEVs and FCEVs should manufacturers choose to comply with the standards through the use of these technologies,” the EPA stated. “Our analysis of infrastructure support for the final rule is even more robust than that for the proposal and includes a number of improvements including incorporating additional data released since the proposal, enroute charging in addition to depot charging, and a fuller accounting of the electricity distribution system.”

The EPA added that charging, refueling and grid distribution infrastructure is necessary for a successful deployment and adoption. Through the Bipartisan Infrastructure Law and the Inflation Reduction Act, the government is making large investments. But more funding is needed.

“Private investments will also play a critical role in meeting future infrastructure needs,” EPA adds. “And domestic manufacturing capacity of BEV charging equipment is also increasing. These important early actions and market indicators suggest strong growth in ZEV charging, refueling, and distribution infrastructure that will continue in the coming years.”

Related: EPA Advances Reduced Greenhouse Gas Emissions Goals, More Stringent Standards
Related: Senators Call for Stronger EPA Regulation for Heavy Duty Vehicles
Related: Senate Republicans Organize Fight Against EPA 2027 Emissions Rule

Friday’s final rule adds that manufacturers, charging network providers, energy companies and others are also investing in high-power public or other stations that will support public charging. For example, the rule mentions that Daimler Truck North America is partnering with electric power generation company NextEra Energy Resources and BlackRock Renewable Power to collectively invest $650 million to create a nationwide U.S. charging network for commercial vehicles.

The EPA, in consultation with other federal agencies, said it will also issue periodic reports on electric charging hydrogen refueling and grid distribution buildout infrastructure. “Based on these reports, as appropriate and consistent with its Clean Air Act authority, the EPA may decide to issue guidance documents, initiate a rulemaking to consider modifications to the Phase 3 rule, or make no changes to the Phase 3 rule program,” the spokesperson added.

Last week, the EPA also published a final rule on the Multi Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles, which targets cleaner-burning gasoline that cuts particulate matter by over 95 percent as well as on spurring adoption of hybrids, plug-in hybrids, and full battery-electric vehicles. The EPA refers to medium-duty vehicles for the first time, which includes 8,501 pounds to 14,000 pounds gross vehicle weight rating and includes the cutaway chassis that Type A school bus bodies are built on.

STN reached out to school bus OEMs for comment and will report on responses as they are provided.

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