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June 03, 2020   |   Diesel Technology Forum

Policy Insider

Our Statement to Senate Commerce Committee Hearing: The State of Transportation and Critical Infrastructure: Examining the Impact of the COVID-19 Pandemic

Policies that encourage the replacement of older heavy-duty vehicles and equipment with new cleaner models provide needed economic stimulus to domestic manufacturers and employment.


On behalf of the Diesel Technology Forum, we respectfully submit this statement on the matter of the Committee’s June 3, 2020 hearing titled The State of Transportation and Critical Infrastructure: Examining the Impact of the COVID-19 Pandemic.

During the last two months the trucking and supply chain industries have been called on to deliver essential supplies, food, medical devices, and personal protective equipment in every corner of the United States at levels not seen before. This tremendous response to the COVID-19 pandemic has been delivered largely by diesel-powered trucks, as diesel powers over 95 percent of all tractor trailers in the U.S., and over 75 percent of all commercial vehicles. With nationwide ready access to fuel, service and parts, diesel is the proven, available, reliable, and efficient technology of choice that enables the nation’s trucking industry to deliver under these extraordinary circumstances.

As America gets moving again and as policymakers consider additional recovery or economic stimulus packages, there are two policies Congress should consider that boost the economy while also helping to sustain levels of lower emissions observed during the pandemic. Each will aide both small businesses and independent truckers and enhance the productivity and efficiency of more trucks on the road today.

Taken together, these strategies will put more new technology on the road quickly and help generate immediate air quality benefits, particularly for sensitive communities in designated environmental justice areas. They will also help spark domestic manufacturing and employment as the U.S. is home to much truck, equipment, and engine manufacturing.

Introduction

By way of background, the Diesel Technology Forum is a not-for-profit educational organization whose members include leaders in diesel engines and equipment, vehicle manufacturers and fuel producers. Our organization serves a primary role of education along with the collection and commission of research to raise awareness of the environmental performance of the newest generation of diesel technology, including those that power commercial vehicles and buses, off-road equipment and stationary engines.

Diesel is the Technology of Work and Keeps the U.S. Supply Chain Moving.

Unlike other fuel and technology types, diesel is the fuel and powertrain of work. The U.S. supply chain relies on diesel to power commercial vehicles and equipment that move commerce. Diesel fuel and engines power 75 percent of commercial vehicles and 95 percent of large Class 8 over the road trucks, while locomotives and marine vessels are almost exclusively powered by diesel technology. While alternative fuels have made in-roads in recent years, natural gas powers under two percent of the commercial vehicle fleet while all-electric technologies are adopted in very small numbers.

U.S. Energy Information Administration Fuel Consumption 

SOURCE: U.S. Energy Information Administration

Consumption of Diesel During COVID-19 Response

The reduction in the consumption of diesel fuel has been moderate relative to gasoline. Passenger vehicle-miles-traveled and the consumption of gasoline fell to historic lows as many Americans simply stayed home subject to state and local shelter-in-place orders. The same is not true of diesel powering many commercial vehicles and equipment types. While some supply chains experienced low volumes, including those delivering gasoline, inputs to shuttered manufacturing facilities and some non-essential goods, other commercial vehicles and equipment were hard at work delivering essential goods including household items, foodstuffs, and medical equipment.

Weekly Gas & Diesel May 20, 2020

Shelter-in-Place Orders Deliver Air Quality Gains

While the effect of the COVID-19 pandemic on the American economy is exacting a severe toll, and one nobody would willingly accept, the reduction in passenger vehicle traffic is generating air quality gains including those environmental justice designated communities. For the first time in generations, residents in Los Angeles have clear sight to the mountains, while the California Air Resources Board reports 21 straight days of code green, or good, air quality. The last time this milestone was achieved was 1980. Here in the nation’s capital, springtime air quality is the cleanest it has been in 25 years as the Washington Metropolitan Council of Governments has reported drops in fine particle emissions and smog forming compounds and much of these gains are attributable to the falloff in passenger vehicle use.

Congress Should Consider Policies to Sustain Air Quality Gains While Providing a Lasting Boost to the Economy

As shelter-in-place orders are lifted and restrictions on certain commerce are eased, a rebound in traffic and transportation related emissions is a reasonable expectation. While members of the Committee will no doubt hear considerations for recovery policy contingent on transformative measures that move away from conventional fuels and technologies to those identified as the greenest and lowest impacts on greenhouse gas emissions, a prudent approach would include a mix of deep rapid investment in proven and available technologies that boost manufacturing today coupled with longer term investments in those solutions that are still on the drawing board.

Diesel technology can deliver immediate term benefits in terms of demonstrated air quality gains and economic growth and there are policies Congress should consider:

Temporarily Suspend the Federal Excise Tax on Commercial Truck Purchases

Temporarily suspending the 12 percent federal excise tax (FET) on commercial truck purchases can have a direct and immediate beneficial effect in reducing emissions by incentivizing the replacement of older and higher emitting trucks with new cleaner models. While it has been more than 10 years since the most recent near-zero emissions tailpipe standard went into effect for newly manufactured trucks, just under half of the commercial vehicle fleet comes with technology to meet the standard. One of the leading contributors to the slow adoption of new and cleaner commercial vehicles is the FET. Today, truck owners looking to purchase a new truck must pay a 12 percent excise tax on top of the purchase price of a new truck. The tax typically adds an additional $22,000 to the purchase of a new truck and trucking equipment that can cost between $130,00 and $150,000 for a Class 8 truck.

Temporarily suspending the FET may entice truck owners to purchase a new cleaner truck. According to the latest data published by the U.S. Census, the trucking industry relies on 3.5 million drivers, the overwhelming majority of trucking firms are small businesses and independent owner-operators. These smaller owner-operators may not have the financial wherewithal to pay the tax on top of the purchase of a new truck.

The benefits of replacing older trucks with new cleaner models is substantial. Replacing a single older generation Class 8 truck with a new model can reduce 30 lbs. of fine particle emissions. As roughly half of the commercial vehicle fleet comes with technology to meet the near-zero fine particle tailpipe emissions standard, these cleaner trucks have eliminated 1 million tons of fine particle emissions that is equivalent to taking all cars off U.S. roads for 33 years. Suspension of the FET to incentivize the replacement of older trucks can help generate substantial benefits from the remaining half of the U.S. commercial vehicle fleet that is of an older generation of technology.

Support Expanded Funding for the Diesel Emission Reduction Act

The Diesel Emissions Reduction Act (DERA) is a highly effective program managed by the U.S. Environmental Protection Agency (EPA) and expanded funding for the program can generate large and immediate term benefits in reducing emissions from heavy-duty trucks, buses and off-road equipment. The program provides a small level of funding to incent the owners of older and higher emitting vehicles and equipment to scrap and replace with newer and cleaner technologies. Since funding for the program was first appropriated in 2008, DERA activities have replaced, repowered, or retrofitted over 60,000 vehicles and equipment to eliminate nearly 16,000 tons of fine particle emissions and almost 500,000 tons of smog forming compounds. Replacing older generations of technology with new more efficient models also saves fuel and reduces greenhouse gas emissions. According to EPA, the program has eliminated 5 million tons of greenhouse gas emissions.

As noted earlier, roughly half of all trucks and buses on the road in the U.S. are of an older generation of technology that do not come with advanced emission controls to meet the most recent near-zero emissions tailpipe standard established by EPA. Expanded funding for the DERA program is an effective tool to encourage vehicle and equipment owners to replace older models with new technologies that meet the most recent near-zero emissions standard.

Much like commercial vehicles, new engines that power the wide variety of off-road equipment must meet stringent tailpipe standards to reduce emissions to near-zero levels including very large applications including locomotives and marine vessels. Research commissioned jointly by the Diesel Technology Forum and the Environmental Defense Fund finds that repowering these much larger engines with new cleaner diesel models can deliver substantial emission reductions. A single locomotive engine replacement generates as much emission reductions as taking 8,000 cars off the road for a year while a single marine vessel engine replacement is like taking 26,000 cars off the road for a year.

These large engine replacement projects deliver substantial emission reduction benefits directly to communities located near ports, railyards, and other freight activities. These communities are often located in environmental justice designated areas and the DERA program has funded many locomotive and marine vessel engine replacements.

Expanded funding for the DERA program can generate substantial clean air benefits by encouraging investment in new cleaner heavy-duty trucks and other key goods movement assets such as marine vessels that are often of an even older generation of technology manufactured before emission controls were ever required. These immediate term benefits would accrue to many environmental justice communities located near ports, railyards and other goods movement facilities.

Support for Multi-Year Surface Transportation Spending Programs

A multi-year reauthorization of surface transportation spending programs may have a beneficial effect on air quality. According to research published by the American Transportation Research institute (ATRI), average speeds by motor carriers across the country during the COVID pandemic more than doubled due to the significant reduction in traffic congestion. As vehicle miles travel rebound as stay at home orders are eased, we can expect traffic congestion to rebound as well highlighting the need to invest in surface transportation programs to hold on to these air quality gains. Research shows that idling trucks were responsible for the consumption of an additional 6.87 billion gallons of fuel in 2016, resulting in 67.3 million metric tons of excess carbon dioxide (CO2) emissions. These are emissions that may not have been generated if surface transportation projects were completed.

Diesel technology is also vital to the completion of many public works projects. Diesel technology powers the large variety of equipment types found at work on these projects. The latest near-zero emissions diesel technology are also available that help reduce emissions for equipment operators and residents in the communities where these projects are located. Much of the diesel powered equipment is manufactured or assembled in facilities across the U.S.

Policy Changes Support Domestic Manufacturing and Employment

Policies that encourage the replacement of older heavy-duty vehicles and equipment with new cleaner models provide needed economic stimulus to domestic manufacturers and employment. Diesel technology is the technology of choice that powers these heavy-duty vehicles and equipment. In 2019, about 1 million heavy-duty diesel engines were manufactured in production facilities in 13 states. The vehicles and equipment they power are also predominantly manufactured in the U.S. as well. According to the Association of Equipment Manufacturers, the production of diesel-powered equipment supports 1.3 million jobs and generates $158 billion in economic value. In fact, the average wage in the industry exceeds the national average, paying workers about $78,000 per year.

We appreciate the opportunity to provide these comments concerning the role of diesel technology in underpinning the supply chain during COVID-19 response. As Congress considers stimulus policies designed for economic recovery, there are low-cost strategies to deliver air quality gains while boosting domestic employment and manufacturing. We urge that you take steps to temporarily suspend the federal excise tax on truck purchases through 2021 while boosting funding for the Diesel Emission Reduction Act.



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Key Contact

Ezra Finkin
Director, Policy
efinkin@dieselforum.org
301-668-7230

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