Federal regulators issued new greenhouse gas standards that will force manufacturers to reduce carbon emissions from a wide range of commercial trucks, buses and cargo vans, in three phases by 2027.

The 1,690-page document, unveiled Tuesday following a multi-year review process, is intended to slash CO2 emissions by approximately 1.1 billion metric tons over the lifetime of the vehicles sold under the program, or about a 25 percent reduction compared to the current rules.

By mandating the rollout of more efficient medium- and heavy-duty vehicles and semi-truck trailers, the rules are expected to cut oil consumption by up to two billion barrels and save vehicle owners about $170 billion in fuel costs, regulators said.

“This next phase of standards for heavy- and medium-duty vehicles will significantly reduce greenhouse gas emissions while driving innovation, and will ensure that the United States continues to lead the world in developing fuel-efficient technologies through the next decade and beyond,” said Gina McCarthy, administrator of the Environmental Protection Agency.

Trucks account for about 20 percent of the greenhouse gas emissions produced by the U.S. transportation sector.

Anthony Foxx Secretary of Transportation official portrait

U.S. Transportation Secretary Anthony Foxx

While the technology to achieve the reductions will add to the expense of vehicles, the operators should recoup the cost in fuel savings, said U.S. Transportation Secretary Anthony Foxx.

“This is going to be a huge economic opportunity for those in the trucking industry, whether they are owner-operators or large fleets,” Fox said.

The new regulations received a “cautious” endorsement from the American Trucking Associations. “We are pleased that our concerns such as adequate lead-time for technology development, national harmonization of standards, and flexibility for manufacturers have been heard and included in the final rule,” said Glen Kedzie, ATA’s vice president and environmental expert.

“However, while the potential for real cost savings and environmental benefits under this rule are there – fleets will ultimately determine the success or failure of this rule based on their comfort level purchasing these new technologies,” he said.

The rules, known as Phase 2 standards because they are a second step by the Obama administration to reduce greenhouse gas emissions from trucks, were developed jointly by the EPA and the Transportation Department’s National Highway Traffic Safety Administration.

The standards are projected to achieve vehicle fuel savings as high as 25 percent, depending on the vehicle category. The regulations cover a wide range of equipment including big rigs, work trucks, delivery trucks, school buses and dump trucks.

Regulators estimate that standards will add at least $6,400 to the cost of a semi-truck starting in the 2021 model year and as much $12,440 by the 2027 model year. The added expense of a work truck will start at about $1,110 and rise to as much as $2,700. Fox said the payback – based on reduced fuel expenses – will be about two years for big rigs, about four years for work trucks and about three years for heavy-duty pickups and vans.

In a regulatory first, the new rules set fuel efficiency and greenhouse gas emission standards for trailers used in combination with tractors.

But the regulations will allow manufacturers to achieve reductions through a mix of different technologies and leaves them free to decide how to comply. Big rigs, for example, can use different combinations of technology, including advanced aerodynamics, engine improvements, automated transmissions, lower rolling resistance tires and automatic tire inflation to meet the standards, the regulators said.

In a nod to smaller companies, regulators are delaying the initial implementation of the standards by one year and simplifying certification requirements for small businesses.

“We view the changes as incremental but not shocking, as several environmental groups and government agencies – such as the California Air Resource Board – have been pushing the administration for more stringent standards than those initially proposed, and as the current administration's track record has been one of tighter environmental regulations,” said Michael Baudendistel, an analyst at Stifel Financial Corp.

Big companies that rely on trucking and shipping for their business characterized the new emissions standards as a step forward to improve the environment and to make trucks more efficient.

We work with companies worldwide pursuing a broad array of new technologies and approaches,” said Mike Britt, director of advanced technology for shipping giant UPS. “We know the technology exists in the United states for significantly greater fuel economy. This new set of regulations will encourage innovation and has the potential to spur domestic economic growth.”

PepsiCo also voiced its support for rules.

“There isn’t just one silver bullet that’s going to get us to our greenhouse gas emissions goal, so we are putting a suite of solutions together to help us achieve this goal,” Michael O’Connell, senior director of supply chain for Frito-Lay, a PepsiCo division, told Trucks.com.

The food giant, which also owns Pepsi and Tropicana, uses 50,000 trucks in the Class 3 through Class 8 weight segments daily to deliver its products, O’Connell said.

Frito-Lay is already retooling its fleet. The company has approximately 500 compressed natural gas (CNG) trucks vehicles, more than 35 percent of the its long-haul fleet, he said. CNG trucks emit 23 percent less greenhouse gas emissions than their diesel truck counterparts.

“It’s a win-win for our industry, our customers and communities – reducing emissions and saving fuel and money,” said David Steiner, chief executive of refuse hauler Waste Management. “Having invested in approximately 6,000 natural gas trucks so far, we’ve already seen the benefits of new advanced technologies.”

Truck manufacturers and suppliers also praised the regulation.

Daimler Trucks said it was “pleased” that the EPA and NHTSA “chose a non-disruptive implementation of the standard, thereby allowing the industry over a decade to phase-in technical changes.”

That will make it easier for the manufacturer, which owns the Freightliner and Western Star truck brands to sell its vehicles without “unrealistic cost” pressure, Daimler said.

“The United States is facing significant challenges regarding GHG reduction as well as its continued dependence on foreign oil. DTNA will continue to work closely with the EPA, NHTSA, and our partners to develop new solutions that will have a positive environmental impact and fuel efficiency gains for our customers,” said Martin Daum, chief executive of Daimler Trucks North America.

Auto and truck parts supplier Eaton Corp. said it believes the new standards are achievable and is already working on making components that improve efficiency.

“Our products can bring a significant contribution to compliance,” Mihai Dorobantu of Eaton told Trucks.com. “Just by improving the mechanical efficiency of our transmissions we can bridge off a tenth of what we expect the EPA rules to be.”

But some trucking industry groups questioned the new EPA rules.

The Owner-Operator Independent Drivers Association said it doesn’t support the more stringent EPA greenhouse gas emissions standards because of the burden placed on small-business truckers.

“Forcing a standard that causes so many problems with reliability and maintenance ultimately has no benefits to the environment if no one wants to buy it,” Norita Taylor, spokeswoman for OOIDA, told Trucks.com. “We’d prefer to view the drivers as the optimum fuel economy tool while allowing OEMs to innovate on a more commonsense timetable that benefits the industry and the environment.”

The new rules essentially “nationalize” stricter emissions standards already enacted in California by the state’s Air Resources Board, said Joe Rajkovacz, director of governmental affairs at the Western States Trucking Association.

“For those already complying with California’s rules, not much changes,”  he said.

However, Rajkovacz said one notable change in the final rule relates to the use of glider kits.

“The days of dropping an EPA pre-emission engine into a glider will come to an end on January 1, 2018, unless affected manufacturers chose to litigate,” Rajkovacz told Trucks.com.

A glider is a new cab and chassis but does have an engine or transmission. Gliders allow big rig owners to re-use many of the major components from an existing vehicle or rebuild it using a re-manufactured engine to save money.

California, which at times has pushed for more stringent measures, signaled that it would support the EPA’s regulations.

“We are keen to see this move forward,” said Mary Nichols, chairwoman of the California Air Resources Board. “As the state with the most serious air quality problems in the county these regulations are very important to us.”