Hail to the Chief, Indeed: President’s truck order will bring fuel-saving technologies to scale

This was originally posted on the Innovation Exchange blog.

There is no question that tools exists today to significantly reduce fuel consumption by medium and heavy-duty trucks. The recent National Academy of Sciences’ report on reducing emissions from these vehicles explored this in-depth as did another recent report from NESCAUM. The key question is: can we deploy these tools at an acceptable cost?

The answer is closer to “yes” than ever before, thanks in part to President Obama’s statement last week instructing the National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency (EPA) to develop rules to reduce emissions from medium and heavy-duty trucks – which consume over a quarter of the nation’s liquid fuels.

The most advanced of our fuel-saving tools, such as the hybrid system for medium-duty trucks, face a significant upfront cost barrier. While these systems can payback over the lifetime of the vehicle, the ROI timeline is too extended for most businesses to justify the cost without external incentives. Other, more incremental strategies such as single-wide tires face cultural and cost barriers as well. The resulting upfront capital cost versus long-term operating savings conundrum slows the adoption of these tools and delays emission reductions.

Fuel-saving components need to be produced at a large enough scale to spread out the fixed costs over time while simultaneously bringing the dollar cost down. By creating a nationwide standard for greenhouse gas emissions, the President has put us on a path to finally reach this scale. Imagine that instead of spreading the fix costs of developing and producing medium-duty hybrid powertrains, or single wide tires over a few hundred vehicles a year, these costs are spread over tens of thousands of trucks annually. The ROI for any one unit will instantly be much more attractive. This is what can happen with a strong federal rule.

How will this impact the business community? Consumers, shippers and carriers will be better off with more efficient, cleaner trucks. Operating costs will be lower and less exposed to fuel price volatility. The increased capital costs should be manageable with the advantages of scaled economies. Some of the increased upfront cost will likely be recouped through hire residual values too.

Of course, technological improvements alone aren’t sufficient. There remain many opportunities to reduce emissions through better operational practices, particularly for freight. From reducing empty backhauls, cutting idling, dropping curb weight, decreasing packaging and improving trucking loading, every truck trip can get more done. Some trips can be avoided all together or simply moved to more efficient modes of transportation.

Medium-and-heavy duty trucks will continue to play a vital role as we transition into a carbon constrained world. These trucks are needed to deliver food and beverages to restaurants and stores, drop off packages at homes and offices, and move goods across the nation. However, they will use less fuel for each of these actions. That’s a good thing for the environment, our pocketbooks and energy security.

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