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BorgWarner, Cummins, Eaton, Ford to EPA: It’s Time to Finalize GHG Phase 3

John Larkin

Author: Clinton Wright

 1 year ago 8 min read

BorgWarner, Cummins, Eaton, Ford to EPA: It's Time to Finalize GHG Phase 3

What’s the best way to push heavy-duty vehicle emissions toward zero? While
major truck and engine makers all say they have ambitious goals to help the
global heavy-duty transport industry reach zero emissions, it appears that
they disagree when it comes to how U.S. regulators are trying to get there.

BorgWarner, Cummins, Eaton, and Ford on Feb. 6 called for stronger national
heavy-duty pollution standards through an informal alliance called the
Heavy-Duty Leadership Group.

At issue is the Environmental Protection Agency’s proposed Phase 3
greenhouse gas emissions standards for heavy-duty commercial vehicles.

EPA’s April 2023 proposal called for CO2 standards for model-year 2027
heavy-duty vehicles that go beyond the current standards that apply under
the HD Phase 2 Greenhouse Gas program.

The agency also proposed an additional set of CO2 standards for heavy-duty
vehicles that would begin to apply in MY 2028, with progressively lower
standards each model year through 2032.

The Heavy-Duty Leadership Group issued a “statement of principles” calling
on EPA to finalize the rule by March 31.

Electric Truck Progress Report

The companies in the alliance said they believe that EPA’s tighter standards
would “provide industry with the confidence to deploy capital and resources
that will result in high-quality job growth and technology leadership, which
are critical in de-carbonization of the transportation sector.”

BorgWarner, Cummins, Eaton, and Ford are diverging from other industry
players when it comes to two controversial provisions of the rule, regarding
changes to existing GHG Phase 2 regulations for 2027 and the need to
consider charging infrastructure.

The Heavy Duty Leadership group is distancing itself from the Truck and
Engine Manufacturers Association, which has criticized the EPA’s GHG Phase 3
proposed rules for the lack of infrastructure consideration and the
backtracking on GHG2.

However, one thing the two groups do agree on is the importance of EPA
working with the industry.

The HDLG stressed the need for a “whole of government approach” to partner
with private industry to meet the new EPA standards.

EMA said previously it looked forward to working with EPA and other
stakeholders to ensure the final GHG Phase 3 rule would “successfully
facilitate a swift transition to ZEVs.”

Changing GHG Phase 2
HDLG called for no delay in EPA’s planned MY 2027 start date. In comparison,
the Truck and Engine Manufacturers Association and the American Trucking
Associations have criticized this provision for changing a previous
regulation and upending plans for OEs and trucking companies alike. EMA and
ATA want to see that date pushed to 2030 or later.

“This administration should not set the precedent that established standards
can be changed from administration to administration, thus completely
undermining regulatory certainty and stability and undermining manufacturers
necessary multi-year investment plans,” said EMA President Jed Mandel in
testimony to EPA last year.

ATA said “the proposal reneges on commitments and timelines EPA made in
Phase 2 of the standards, upending the plans and schedules for both
equipment makers and purchasers.”

Charging Infrastructure
ATA criticized the GHG Phase 3 proposal because “the rule does not take into
account the lack of infrastructure to fuel and charge these new vehicles –
infrastructure that is critical to maintaining our supply chain.”

ATA and EMA have advocated for an “off ramp” that would end or weaken
emissions standards if certain charging and fueling infrastructure goals
aren’t achieved.

“Without electricity recharging and hydrogen refueling infrastructures in
place, trucking fleets won’t be able to operate zero-emission vehicles and,
thus, won’t make the needed investment to purchase them,” EMA President Jed
Mandel told the EPA in testimony last year.

“To successfully achieve a zero-emission future, the infrastructures needed
to allow commercial ZEVs to complete the important work of hauling the
nation’s freight must be in place and trucking fleets must see a positive
business case to invest capital in their purchase.

“We need a whole of government approach to solve the problem and meet the
challenge. EPA should do its part by adopting a final rule that includes a
requirement to assess progress on the development of the needed
infrastructure.”

The Heavy-Duty Leadership Group companies said they opposed this “hard-wired
off ramp,” emphasizing the need for regulatory certainty and clear market
signals.

The companies instead urged the EPA to conduct regular technical assessments
of factors related to the adoption of zero-emission technology, such as the
number of charging and other fueling stations, battery costs, availability
of rare minerals and other critical issues.

Previous Split on Emissions Regulations
It’s not the first time Cummins and Ford have split from other EMA members
when it comes to emissions regulations.

In 2022, EMA filed a lawsuit against the California Air Resources Board,
saying the agency has not provided enough lead time for truck and engine
makers to meet its latest emission standards due to go into effect in 2024.

While the lawsuit was intended to address the short lead time, not the
contents of the regulation itself, it drew the ire of environmental groups
and saw some EMA members distancing themselves from it. Ford and Cummins
were among several EMA members that had stated publicly that they did not
support the litigation.

EMA ended up withdrawing that challenge. EMA later worked out a compromise
with CARB, forming the Clean Truck Partnership.

Daimler, Navistar, Volvo Take a Different Approach
The HDLG announcement comes on the heels of one by Daimler Truck North
America, Navistar, and Volvo Group North America forming a group called
Powering America’s Commercial Transportation, a coalition that will use
education and advocacy to speed the construction of nationwide
electric-truck charging infrastructure.

The group plans to lobby at the national and state level and to work with
utilities and state public service commissions to address charging
infrastructure challenges.

Together, the three companies represent approximately 70% of all new medium-
and heavy-duty truck sales in the U.S., according to the announcement. Each
already has battery-electric vehicles in the marketplace, but say access to
charging infrastructure is a major bottleneck to widespread adoption.

Daimler and Volvo have been criticized for pushback on EPA’s GHG Phase 3
rule. Environmental and advocacy groups last month sent letters to the CEOs
of Volvo Group and Daimler Truck calling on them to “stop their attempts to
hinder clean trucks and clean air progress in the U.S.” The letters were
signed by groups such as Environmental Defense Fund, Evergreen Action,
Sierra Club, and Public Citizen.

“While both companies have made public commitments to electrify their
heavy-duty vehicles and have been supportive of a transition to zero
emission trucks in Europe, they continue to attempt to stymy progress in the
United States through back door opposition directed at the truck standards
proposed by the U.S. EPA,” the groups said in a news release.

ATA: EPA Proposal ‘Recipe for Failure’
While the EPA standards are directed at manufacturers, the American Trucking
Associations pointed out after the GHG Phase 3 proposal was unveiled last
year, “It is fleets – the customers and end-users of this equipment – who
will ultimately determine their level of success.”

In an analysis of the EPA GHG Phase 3 proposal, ATA said any regulation
should be technology neutral, achievable, and based on sound science, and
said the GHG3 proposal falls short on all three.

“EPA is moving at breakneck speed to force the industry towards
electrification while failing to address the key enablers towards any new
technology adoption,” said ATA chief Chris Spear last year. “EPA’s proposed
adoption rates assumes that product availability, vehicle costs, range,
weight reduction, energy capacity and recharging and refueling
infrastructure will all be available for fleets to utilize the technology.
Instead of the agency leap frogging existing low-carbon technologies towards
electrification, allow today’s technologies to be fully adopted.”

ATA said the proposal’s aggressive timelines, with new standards coming into
play annually after 2027, rush early-stage technologies to the marketplace
without sufficient testing and validation.

“The rule bets so heavily on electric and hydrogen vehicles – technology
that has yet to be fully vetted and proven in the commercial freight
environment – so as to pick winners, providing no flexibility for fleets to
reduce emissions with existing solutions.”

“Mandating unproven technology that won’t meet our industry’s unique
requirements is a recipe for failure,” Spear said.

More on HDLG
The HDLG companies stressed they are willing to meet the challenge of
investing in advanced technologies necessary to make progress toward meeting
new EPA Greenhouse Gas (GHG) standards.

The group’s statement of principles emphasizes that each Heavy-duty
Leadership Group company is committed to “aggressively cutting GHG emissions
with near-term milestones and long-term net zero goals.”

Originally formed in 2010, the Heavy-duty Leadership Group is an informal
alliance. The companies credit the EPA’s first two phases of the rule for
accelerating the industry’s adoption of advanced technologies while
minimizing market disruption.

Its members invite other companies aligned with its statement of principles
to join the HDLG to support EPA in finalizing the Phase 3 rule.

Phase 3 national heavy-duty efficiency and emissions standards apply to
vehicles ranging from pickup trucks to big-rig tractors, including
18-wheelers, sanitation trucks, buses and other commercial vehicles. The
standards would complement the criteria pollutant standards for MY 2027 and
beyond heavy-duty vehicles that the EPA finalized in December 2022.
According to the EPA, the projected net benefits of the heavy-duty proposal
range from $180 billion to $320 billion.

HDLG Statement of Principles, February 2024
The HDLG Companies support EPA’s ongoing efforts to achieve further
de-carbonization in the transportation sector through a sound, achievable HD
Phase 3 GHG rule that starts in MY 2027. The HDLG companies do not support
proposals to delay the start of EPA Phase 3 HD GHG until MY 2030 or later.

Each of the HDLG Companies has made public commitments to reduce its carbon
footprint by aggressively cutting GHG emissions with near-term milestones
and long-term net zero goals. These corporate sustainability principles
underpin our support for finalization of an EPA Phase 3 GHG rule with
urgency and not later than March 31, 2024.

EPA should make a commitment in the final rule to conduct periodic Technical
Assessments of a wide range of factors directly related to the pace of
adoption of Zero Emission Tailpipe HD technologies, including: battery
technology advancement, availability, and affordability; critical mineral
sourcing and cost; deployment of an extensive and available charging/fueling
network, supporting electrical grid and fuel infrastructure, and other
factors.

Long-term technology-neutral regulations provide industry with the
confidence to deploy capital and resources that will result in high-quality
job growth and technology leadership, which are critical in the
de-carbonization of the transportation sector. The HDLG companies trust EPA
to consider proposing future revisions through new rulemaking, if triggered
by any major changes to the factors evaluated in EPA’s Technical
Assessments, but the HDLG Companies are opposed to proposals for a
“hard-wired off ramp” triggered by an infrastructure development or similar
metric.

Multiple technology pathways exist and must be considered in a
technology-neutral manner to achieve EPA’s performance-based HD Phase 3 GHG
standards. These solutions include hybrid powertrains; advanced engine
technologies; hydrogen combustion; and electric and hydrogen zero tailpipe
emission propulsion systems.To ensure technology-neutral, performance-based,
standards, EPA should make a regulatory commitment within the Phase 3 Final
Rule to propose near-term technical amendments to streamline hybrid
certification test procedures.
Achieving the Administration’s ambitious GHG reductions in the HD sector
will require a “Whole of Government “approach involving DOE, DOT, EPA, and
other Federal, state, and local government agencies working with the private
sector to ensure that IRA and the Bipartisan Infrastructure Law funds are
wisely invested across the U.S. economy to leverage a commercially viable HD
infrastructure, which accelerates the adoption of zero-emission commercial
vehicles.

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