“It speaks to an issue in the industry, which is the costs are falling on owner-operators when the [clean air] benefits are much more widespread than that.”
The success of California’s ambitious zero-emission truck programs hinges on providing financial incentives to small trucking companies so they can afford to buy the vehicles, which cost roughly three times as much as diesel models.
That was the takeaway of a panel discussion hosted last week as part of a symposium introducing yet another California clean truck initiative. Project 800 is a California Air Resources Board (CARB) program that calls for 800 zero-emissions heavy-duty trucks to be put into service at the state’s ports by the end of 2021.
Project 800 joins California Gov. Gavin Newsom’s executive order mandating that all new passenger vehicle sales in the state be zero emissions by 2035. Under the same executive order, all heavy-duty trucks transporting containers to and from California ports must also be 100% zero emissions within the same time frame.
Another initiative approved last year, the Advanced Clean Truck rule, calls on manufacturers to sell an increasing percentage of electric big rigs every year, with a goal of phasing out fossil fuel model sales completely by midcentury.
A transition of this scope and scale won’t happen unless the truck operators who need the money most benefit from incentives designed to bring down the purchase price of electric vehicles in the ports and cities and on the highways, said Bill Magavern, executive director of the Coalition for Clean Air.
On average, a Class 8 diesel truck costs around $100,000, and a comparable electric model, $290,000.
“We know we’ve had some incentive projects, but it might be fair to say those have been taken advantage of by early adopters,” said Magavern, who moderated the Project 800 panel.
As the state looks to convert all of trucking to zero emissions, “we need to go well beyond the initial group to include small fleets and independent owner-operators. And that’s going to require some evolution in incentive projects.”
Big fleets dominate
As Magavern noted, a handful of pilot projects, featuring zero-emission trucks manufactured by OEMs and operated by leading fleets, are currently active at the ports, where a Clean Truck Action Plan aims to dramatically scale back emissions by 2035.
Daimler Trucks North America has partnered with Penske Truck Leasing and NFI to make deliveries in 20 battery-electric eCascadias.
PACCAR (NASDAQ: PCAR) brand Kenworth is testing a 10-truck fleet of hydrogen-powered big rigs, along with Volvo Trucks North America, which is piloting Class 8 VNR trucks as part of its Volvo LIGHTS project.
While these high profile demonstration projects make headlines, they barely scratch the surface of the industry.
NInety-six percent of trucking companies consists of fleets running fewer than six trucks, noted Chris Shimoda, vice president of government affairs for the California Trucking Association. Half of trucks are run by owner-operators, and a third of those operate a single truck. That is representative of the industry at large, he said.
“It’s an industry dominated by small mom and pops, and we need to be mindful of that.”
Nevertheless, Shimoda drew a comparison with the light-duty EV transition, in which wealthy Tesla owners are widely perceived as driving electric car purchasing. “By default,” Shimoda, acknowledged, “we’re going to have to have the bigger, more capitalized folks driving the transition.”
Equity financing
Shrayas Jatkar, policy specialist for the California Workforce Development Board, linked expansion of incentives to worker exploitation at the San Pedro ports, where many truck drivers have been misclassified as independent contractors.
Many of these drivers operate under lease-to-own schemes, in which the motor carriers lease a truck to the driver with the promise of future compensation and independence. The reality, documented in numerous reports, is truckers often have no ownership rights until the vehicle is paid off, and even then the truck must remain leased to the company that owns it.
“Port trucking or drayage — this is where vulnerable workers can get trapped in poverty and indebtedness,” Jatkar said. Placing the burden of financing expensive trucks on exploited workers, he explained, in turn “hinders the state’s ability to slash emissions.”
Jatkar said as a first step he would like to prohibit clean truck incentives from going to companies with outstanding labor judgments against them. “We want to mandate and encourage the right things and prohibit and discourage the wrong things.”
The California Pollution Control Financing Authority runs a heavy-duty financing program targeting fleets with 10 trucks or fewer, said Nancee Rolies, the agency’s executive director. Last year the agency helped fund 4,400 cleaner truck models, although she conceded most of the recipients were early adopters.
Plus, even if buyers secure, say, a $100,000 grant for a zero-emissions truck, they have to pay taxes on the full amount — $300,000. To that end, Rolies supports a new policy that is gaining traction: a tax exclusion program, creating tax parity with diesel trucks.
Funding uncertain as new programs announced
The challenges facing California apply to other jurisdictions, big and small. On Monday, President Joe Biden announced a plan to transition the federal government fleet to electric vehicles, with funding yet to be determined.
The city of Los Angeles has adopted a “Five zeros” Green New Deal, said Lauren Faber O’Connor, chief sustainability officer for the Office of Mayor Garcetti: a zero-carbon grid, zero-carbon buildings, zero-carbon transportation and zero-waste and 100% recycled wastewater.
“When you look at that scale, we absolutely have to look at different ways of funding,” she said.
New pots of money may be on the horizon. Newsom’s proposed 2021-22 budget calls for $1.5 billion to be invested in clean trucks, buses and cars, as well as infrastructure to fuel those vehicles.
Some of the funds would go to heavy-duty vehicle incentive programs such as the (currently underfunded) Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project.
And in November, the South Coast Air Quality Management District announced $50 million to help replace Class 6-8 diesel trucks at the San Pedro ports with cleaner technology models.
Volkswagen settlement money also is helping fund electric truck purchases.
Show me the money
Whether the funds will be distributed fairly is an open question. Everyone benefits from clean air, Jatkar observed, yet truckers are bearing the brunt of the cost to transition away from diesel.
“It speaks to an issue in the industry, which is the costs are falling on owner-operators when the benefits are much more widespread than that.”
Redistributing the costs of reducing emissions, to retailers and consumers, for example, would help level the playing field.
“How we do that is a big question,” Jatkar said, “but a greater understanding of those costs would be very helpful.”
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