Heavy Trucks, Heavy Assumptions, and the Costs of Business-as-Usual

A new EIS from the National Highway Traffic Safety Administration assumes that by 2040, petroleum will (still) be meeting about 90% of our transportation energy demand. That’s a problem.

In mid-August, to exactly no fanfare at all, the Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) released their final rule for fuel efficiency standards in medium- and heavy-duty trucks.  Think of it as the CAFE standards for big vans, trucks, and trailers.  Of course, that means an EIS summarizing the projected environmental impacts of these new federal mileage standards for medium- and heavy-duty engines and, after Center for Biological Diversity v. NHTSA, 538 F.3d 1172 (9th Cir. 2008), that EIS must include at least some estimate of the costs of not pursuing strict fuel economy standards—including the greenhouse gas (GHG) implications thereof.  Id. at 1198-1202.

This is a big deal because in 2015 these mobile sources accounted for about 20% of total energy consumption in the transportation sector and that sector accounted for about 70% of total U.S. petroleum consumption.

Phase 1 was implemented beginning in 2014 and extends through model year (MY) 2018.  This second phase will take effect in MY2021 and increase in stringency through MY2027.  Unfortunately, although EPA and NHTSA seem convinced these standards are stringent enough, their phased approach, assuming its current trajectory, is not moving nearly fast enough when compared to our commitments in the Paris Agreement of 2015.

Where Are the Goalposts?  Fuel Economy and the Petroleum Economy

EPA and NHTSA announced back in August that the rule would result in over a billion metric tons of averted CO2 emissions and over $170 billion in fuel cost savings for consumers.  And those are big numbers. Their final regulatory impact analysis (RIA) even concluded that the standards’ benefit-to-cost ratio was 8 to 1, making this is a sure winner for Americans.

The U.S. Energy Information Administration graphed the difference between NHTSA’s “reference case” scenario and the standards it adopted as roughly as a healthy uptick in mileage expected from the three classes of medium- and heavy-duty vehicles. EIA Phase 2 Graph

The trouble is these Phase 2 standards clearly expect a “business-as-usual” (BAU) scenario between now and 2040—literally one where we bend the curve slightly downward on petroleum consumption even as continued growth in points-of-consumption eat away those gains, gradually negating them completely (according to NHTSA, sometime after 2050).

This is their account of the scenario:

Petroleum is by far the largest source of energy used in the transportation sector. In 2012, petroleum supplied 92 percent of transportation energy demand, and in 2040, petroleum is expected to supply 87 percent of transportation energy demand. Consequently, transportation accounts for the largest share of total U.S. petroleum consumption. In 2012, the transportation sector accounted for 79 percent of total U.S. petroleum consumption. In 2040, transportation is expected to account for 75 percent of total U.S. petroleum consumption.

Final EIS at S-6.

So, essentially, EPA and NHTSA went looking for technical steps like cylinder deactivations, fuel injection and modulation enhancements, and weight reductions in the vehicle itself.

NHTSA and EPA are both known for doing things their own way, to be sure.  But NHTSA is a component bureau of the U.S. Department of Transportation and the head of that department, like the EPA Administrator, serves at the pleasure of the President.  In other words, the Phase 2 standards are most definitely the actions of the Obama Administration—the same administration that just committed us to the Paris Agreement.  Along with China’s ambitious emissions pledge, the US’s early ratification of Paris last month anchored it firmly in GHG abatement planning the world over.  A signal commitment to BAU in so much of our transportation sector is a signal that the US doesn’t take its commitment to the 2°C temperature goal seriously.  If it did, it would disclose that a scenario with so much petroleum still powering the US’s transportation sector in 2040 is almost surely a scenario where transportation technology has remained essentially unchanged globally.

Our petroleum economy won’t be disrupted by steps like this.  As the economist Thomas Covert and colleagues recently explained, the data on petroleum reserve growth—from improved technology, rising prices, and globalizing markets—all show that simply adding a little cost enhancement to the continued use of petroleum (as is done in EISs like NHTSA’s where the “social cost of carbon” is simply added into the list of factors) won’t do much of anything to reduce consumption. Thomas Covert et al., Will We Ever Stop Using Fossil Fuels?, 30 J. Econ. Persp. 117, 119-22 (2016).  Indeed,

[i]f the past 35 years is any guide, not only should we not expect to run out . . . any time soon, we should not expect to have less fossil fuels in the future than we do now.  In short, the world is likely to be awash in fossil fuels for decades and perhaps even centuries to come.

Id. at 123.

Deriving energy from fossil fuels in continuously cheaper ways just is what the fossil fuel sector knows how to do.  With the price of battery storage what it is today (and what it’s projected to remain), even assuming oil prices at $100 per barrel, electric substitutes in the transportation sector are still three times more expensive than their petroleum counterparts.

Given the projected useful life/capital replacement horizon for machines of this sort, a better analysis for NEPA purposes in the Phase 2 EIS would’ve been to account for the GHG emissions being committed to in allowing petroleum-fueled engines license to operate out past 2040.  That “commitment accounting” for GHG emissions might have meaningfully aligned the alternatives and, thus, meaningfully pursued both NEPA § 102(2)(C)’s “detailed statement” objective and its purposes and declared national policy of seeking a “productive harmony” between humanity and nature.  Our commitment to the Paris Agreement demands no less.  As it stands, this EIS announces more BAU in US transportation energy consumption.  And that won’t do.

{Image: Nissan medium-duty electric truck concept vehicle, 2012}

I teach environmental, natural resources, and administrative law at Penn State Law. Before teaching I was an enforcement lawyer at U.S. EPA. Along the way I've done work for environmental nonprofits and written a fair bit about NEPA.
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