California’s Advanced Clean Fleets Rule is Good for the Economy and Environment
But should be further strengthened before it’s finalized to maximize benefits.
By E2/NRDC interns Niaz Jamshidi & Arely Ortiz
This blog discusses findings from a new independent analysis by ERM, California Clean Trucks Program, analyzing the impacts of cleaner medium- and heavy-duty trucks on the environment, public health, industry, and the economy.
California’s recently proposed Advanced Clean Fleets (ACF) rule would propel zero-emission truck (ZET) sales over the next 20 years generating massive economic, public health, and environmental benefits. It will do so by driving in-state ZET technology innovation and manufacturing investments and jobs, reducing the greenhouse gases (GHGs) causing climate change, slashing truck tailpipe pollution to improve air quality and mitigate public health costs.
Also, as more ZETs are purchased thanks to the ACF rule, they will put downward pressure on all residential and commercial electricity rates while helping fleets save money on fuel and maintenance costs. In fact, this smart standard will create over $72 billion in cumulative net societal benefits through 2050. Thirteen leading Californian business groups, representing thousands of businesses, entrepreneurs, and investors and trillions of dollars in annual economic activity, and including the San Francisco Chamber of Commerce and the Los Angeles Business Council, agree; California’s business community supports ambitious transportation policies that are good for the economy and good for the environment. California must act now to finalize the strongest ACF rule possible.
What is the ACF rule?
The ACF rule builds off California’s existing clean truck standards, such as the Advanced Clean Truck (ACT) rule, by requiring certain public and private truck fleets to gradually shift to ZETs. Also, the proposed rule requires all medium- and heavy-duty vehicles sales in California to be zero-emission by 2040.
While the proposal is an important step, the rule must be strengthened before it is finalized. As a recent ERM report found, improving the rule by requiring all new medium- and heavy-duty vehicle sales to be zero-emission by 2036 would produce significant additional benefits.
100% Zero-Emission Medium- and Heavy-Duty Vehicle Sales by 2036
The ERM report modeled three scenarios with increasing levels of ZET sales ambition against a baseline business as usual scenario that includes California’s existing clean truck standards, such as the ACT rule and Heavy-Duty Omnibus (HDO) rule. The study’s most beneficial scenario involved exceeding the current proposal with 100% zero-emission sales requirement for all new medium- and heavy-duty vehicle classes starting in 2036.
The data tells a compelling story: California’s economy, the health of our residents, and the state’s environment will be positively impacted by an ACF with a more ambitious 100% ZEV sales by 2036 requirement.
Importantly, the study also found the current proposal could stall ZET sales, missing out on important progress at a critical time. California’s ACT rule plateaus in 2035 with lower sales requirements than the ACF rule’s purchase requirements. The mismatch means manufacturers will over comply with the ACT rule to meet fleet ZET purchasing, causing them to stockpile compliance credits. Once the ACT rule plateaus in 2035 and before the 100 percent sales requirement begins in 2040 under the current proposal, ZET credit stockpiling could stifle sales, resulting in over 170,000 fewer pollution-free trucks, vans, and buses on the road compared to the 2036 target.
The following chart depicts the drop in ZET sales in California if the 100% zero-emission sales date is not moved from 2040 to 2036.
100% Zero-Emission Sales by 2036 is Good for the Economy and the Environment
California has long benefited from its climate policy leadership, developing into a global hub of clean vehicle innovation, including a robust electric vehicle and battery manufacturing center. This global leadership, and the associated job creation and in-state investment, is the product of innovative clean energy economy policies — like the ACF — that continue to pay dividends for California’s economy.
In 2020, electric vehicles were the state’s most valuable export, producing over $5.6 billion in revenue and overtaking California’s aerospace industry for the first time. As an established center of the clean energy economy, there is a strong base of over 500,000 clean energy workers, with 53,000 employed in clean vehicle jobs.
California clean energy businesses and employees are not the only ones benefiting from this move to zero emission vehicles: as more ZETs become available, California’s fleet owners and operators will be able to realize their significant fuel and maintenance cost savings.
$23 Billion in Statewide Fleet Cost Savings
ZETs are rapidly becoming cost-competitive with their diesel-powered counterparts. For example, the ERM report found the average ZET in California could save between $48,000 and $84,000 in fuel and maintenance costs over its lifetime compared with an equivalent fossil-fueled vehicle. As a result, the statewide net fleet savings from 100% ZET sales by 2036 surpasses $23 billion by 2050.
ZETs Lower Electric Bills, Generate Infrastructure Investment, and Create Jobs
Plugging in of thousands of new ZETs will spread an increasing amount of electricity demand over the largely fixed costs of California’s electric system. Increasing utility net revenue from ZET charging can be passed on to customers in the form of savings, causing average residential and commercial electricity rates to fall by around 2.5 percent by 2050. By adopting an ambitious ACF rule, the average California household will save an estimated $46 per year and the average commercial customer $426 per year on their electric bill.
A stronger ACF rule also means more investment in charging infrastructure. For example, 100 percent new ZET sales by 2036 requires building about 500,000 chargers by 2050, driving $12 billion in public and private infrastructure investment and stimulating local job creation.
Addressing the Air Pollution and Climate Crises
California’s air quality and climate will reap the benefits of moving this requirement forward to 2036. Costs associated with extreme climate events, such as wildfires and droughts, are substantial and on the rise.
The transportation sector is California’s largest source of GHG emissions and, despite making up only 7 percent of California’s fleet, medium- and heavy-duty vehicles account for 27 percent GHG emissions, 56 percent of the particulate matter (PM) pollution, and 62 percent of NOx emissions from on-road vehicles.
Reducing emissions from medium- and heavy-duty trucks is an economic imperative necessitating aggressive action.
The ERM report found that under business as usual, annual medium- and heavy-duty vehicle GHG emissions are projected to fall by 16 percent through 2050 as existing state and federal standards ramp up. However, if California finalizes an ACF requiring all new truck sales to be zero-emission by 2036, causing more fossil fuel trucks to be replaced ZETs faster, would reduce GHG emissions by 46 percent by 2050.
Transportation pollution imposes significant public health costs in the form of additional medical expenses, decreased productivity, and missed workdays. A robust economy is predicated on a healthy workforce and a healthy consumer population. Less truck pollution means fewer minor health impacts (e.g., asthma attacks) and less hospital visits — both of which can cause missed work or school days and depress economic activity.
Moreover, low-income communities and communities of color are disproportionately harmed by this vehicle pollution due to their close proximity to freight infrastructure such as ports and warehouses. Frontline communities and all Californians will reap the benefits of cleaner air as more ZETs replace dirty fossil fuel trucks. By adopting a 100 percent ZET sales requirement by 2036, the state can realize an estimated $30 billion in avoided public health costs.
A Stronger ACF Rule Generates $82 Billion in Cumulative Benefits by 2050
The chart below shows projected cumulative net benefits from the more ambitious rule totaling $82.1 billion by 2050. Net benefits by 2050 include:
- Operating ZEVS saving fleets net $2.4 billion
- $771 million in utility net revenue
- $30.1 billion in air quality benefits
- $17.7 billion in climate benefits
The answer is clear: passing an ACF rule with 100% sales requirement for all truck classes starting in 2036 is a critical opportunity to significantly reduce GHG emissions, advance California clean energy economy, and rein in harmful air pollution. Now California’s regulators must rise to the occasion and finalize an ambitious ACF rule.
