ESG & Industry Updates

Transportation Decarbonization: Medium & Heavy Duty Vehicles

Posted by Kelly Burke on Jan 30, 2023 1:07:12 PM

As we have been discussing, the US National Blueprint for Transportation Decarbonization breaks the Transportation sector into seven categories, each of which has its own targets for emission reduction/elimination, and strategies for how those declines in emissions will be achieved. The second segment by emission % is Medium- and Heavy-Duty Vehicles.

For the purposes of the Decarbonization Blueprint, “Medium and Heavy Duty On-Road Trucks and Buses” includes everything from heavy-duty pickup trucks to long haul semi’s (and everything in between). MHDV make up approximately 5% of vehicles, but they are responsible for 21% of transportation emissions. A further 50% of those emissions are from heavy duty trucks that make up about 10% of the total MHDV category. So when we are talking about this category’s emissions, most of the effective action that can be taken should be focused on a small segment of the total. The other simultaneous focus for MHDV category is the social and environmental justice issue. Where the emissions from light duty vehicles are more ubiquitous, the emissions from MHDV are often concentrated in major urban areas and along disadvantaged corridors within the country.

In terms of the numbers, 81% of the MHDV segment is diesel powered, and unlike light duty vehicles, there is not really a clear ability to easily pivot to EV or hydrogen options (outside of potentially in some of the lighter vehicles that run smaller ranges without heavy freight – like postal trucks). So the suite of zero emission options for the MHDV segment will necessarily be more varied than LDV or other segments where there is less variation in use and function for the vehicles in question. That means a LOT of research & development. Additionally, turnover and replacement timelines for heavy duty vehicles are substantially longer than those for light vehicles, so all the proposed new changes would end up slow rolling out on newer vehicles over time. This is where renewable diesel options will likely become a key factor in pushing MHDV toward hitting emissions goals.

In November of 2022, the US joined the “Global Memorandum of Understanding on Zero Emission Medium- and Heavy-Duty Vehicles” introduced at COP26 which agrees that we will be on a path to 100% new zero-emission MHDV by 2040 at the latest, with a target of 30% by 2030. In January 2023, the EPA announced their “Final Rule and Related Materials for Control of Air Pollution from New Motor Vehicles: Heavy Duty Engine and Vehicle Standards” that sets new emission standards for HD vehicles in line with the Decarbonization plan (you can read that EPA rule here: Control of Air Pollution From New Motor Vehicles: Heavy-Duty Engine and Vehicle Standards )

All of this to say that despite the lack of current technology with which to make the changes required to hit emissions targets, it appears all the rules and regulations coming out across Federal Agencies are intending to follow through on the goals set. This portion of the policy obviously carries serious implications for trucking and transportation companies across the board in terms of their equipment purchasing, maintenance of current options, etc. This is definitely a portion of the plan that is still very much unsettled in terms of immediate and longer range impacts. We will keep a close eye on developments and continue to keep you informed of major changes that impact the industry.

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Topics: EPA, carbon emissions, emissons, Biden Administration, paris accord, decarbonization

Transportation DeCarbonization Blueprint: Light Duty Vehicles

Posted by Kelly Burke on Jan 20, 2023 10:41:32 AM

The US National Blueprint for Transportation Decarbonization splits the Transportation sector into seven categories of focus: Light-Duty Vehicles, Medium- and Heavy-Duty Vehicles, Off-Road, Rail, Maritime, Aviation, and Pipelines. We will discuss the major items involved in each of these, from largest % of carbon share to least, starting with Light Duty Vehicles.

Light-Duty Vehicles produce 49% of current transportation emissions (of note, for the purposes of the Blueprint “current” refers to 2019 levels due to the pandemic and related shutdowns making 2020 & 2021 data unreliable/useless).

The United States has over 280 million light duty vehicles on the road and these vehicles:

  • Account for 75% of passenger transport miles,
  • Account for 50% of total transportation energy use and emissions
  • Consume over 120 billion gallons of gasoline annually
  • Emit over 1,000 MMT CO2 annually

As we are all aware, Light Duty Vehicles (LDV) in the US have been subject to increasingly strict emissions requirements over the past few decades, and we have seen a massive increase in the availability of electric vehicles (EV) as well. To put specific numbers on it, in the past 15 years, LDVs have seen a 30% improvement in fuel economy (some of the ultimate impact of this however was mitigated by the trend toward larger, more fuel intensive passenger vehicles during that time period). EV have seen an explosion in popularity, it used to be you’d see a Prius or Volt here or there, now you would be hard pressed to drive to Boston without getting stuck behind a Tesla or two. Again, in terms of specific numbers, EV sales reached over half a million vehicles sold, bringing the total to 4.5% of market share in 2021 (18% in California!).

One of the major focuses of the blueprint in the LDV sector is the promotion of EV and zero emission vehicles, with an obvious preference for EV adoption. In tandem with EV adoption, there is a necessary push for charging infrastructure to make them a more feasible option for consumers. The goal is to have 50% new light duty EV sales by 2030, which would be a major step down the road to the ultimate goal of 100% EV adoption.

There is also an included focus on “Funding Research and Innovation” in this section of the Blueprint, which largely functions as an acknowledgement that we aren’t quite there on battery life and battery cost. Part of the legislative language in the Bipartisan Infrastructure Bill (BIL) and Inflation Reduction Act (IRA) included large investments toward the development of a reliable EV manufacturing supply chain. The legislation also references research and development aimed at achieving price parity between EV and traditional combustion engine vehicles to make them more accessible to the average consumer in terms of price, practicality, and maintenance costs over time. Studies indicate that battery cost has dropped 90% from 2010 to 2020, and projections indicate that when the price reaches $100/kwh the MSRP on EV will hit parity with combustion engine vehicles. The legislation mentioned above intends to fund the research on battery technology to make those price levels reality.

So that is the overview, the major takeaways being that the major goals for this section are:

  • “Achieve 50% of new vehicle sales being zero-emission by 2030, supporting a pathway for full adoption, and ensure that new internal combustion engines are as efficient as possible.”
  • “Deploy 500,000 EV chargers by 2030”
  • “Ensure 100% of Federal Fleet procurement be zero-emission by 2027”

Obviously, for the purposes of energy suppliers, particularly at the consumer level, the growth of EV adoption implies a longer-term shift in the mix of gasoline demand and delivery, especially to stations and municipalities. Actual changes in market share of EV and zero-emission vehicles is something to watch.

Next up, medium- and heavy-duty trucks and buses.

Stay Tuned!

 

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Topics: EV Charger, EPA, carbon emissions, emissons, Biden Administration, ev, dot, decarbonization

Biden Admin Releases US National Blueprint for Transportation Decarbonization

Posted by Kelly Burke on Jan 13, 2023 8:09:33 AM

January 10th, 2023 the Biden Administration released the US National Blueprint for Transportation Decarbonization.

The Blueprint is an interagency developed framework of strategies and actions to take carbon emissions out of the Transportation sector by 2050, developed by the Department of Energy (DOE), the Department of Transportation (DOT), Housing and Urban Development (HUD), and the Environmental Protection Agency (EPA). It’s the conclusion essentially of the memorandum of understanding (MOU) between those departments that they would develop the outline to drive policy decisions and regulatory updates focused on the goal of decarbonization in the sector through 2050 in a cooperative manner between federal agencies.

Another way to think about it is the blueprint is basically what the plan is for implementing actions for the investments created by the Bipartisan Infrastructure Law (BIL) from November 2022, and the Inflation Reduction Act (IRA) from August 2022. These bills established billions in funding for infrastructure and outlined aggressive action on climate change (respectively). The blueprint developed is part of the process for allocating where investment and change happens to push the country toward the enormous mitigations in emissions that the BIL and IRA legislation attempted to make possible.

As we’ve discussed previously, the Transportation sector is the nations largest source of greenhouse gas, and accounts for a third of all domestic GHG emissions, so emissions mitigation/elimination across this sector is obviously a goal in the context of Climate Change. The blueprint additionally sought to develop action plans for the sector with environmental justice in mind – the concentration of emissions and negative impacts from the transportation sector have historically been concentrated in low income, urban, and minority areas of the country and that is an additional factor that needs to be addressed.

The strategies in the blueprint are aimed at ensuring the US hits both the President’s stated commitments on emissions reduction, and the US Nationally Determined Contribution under the Paris Agreement. In order to hit both 2030 targets and 2050 goals, there is a mix of short- and long-term recommendations.

The report specifically seeks to

  1. “Increase convenience by Implementing System Level and Design Solutions”
  2. “Improve Efficiency through mode shift and More Efficient Vehicles”
  3. “Transition to Clean Options by Deploying Zero-Emission Vehicles and Fuels”

The method for doing so is split into strategies, goals, and action plans by transportation subset (or mode). They are:

  1. Light-Duty Vehicles (49% of current emissions)
  2. Medium- and Heavy-Duty On-Road Trucks and Buses (21% of current emissions)
  3. Off-Road Vehicles and Mobile Equipment (10% of current emissions)
  4. Rail (2% of current emissions)
  5. Maritime Vessels (3% of current emissions)
  6. Aviation (11% of current emissions)
  7. Pipelines (4% of current emissions)

We will go through each mode individually, and highlight what we think the important takeaways are for each in terms of what things may impact energy suppliers either directly or via end users (customers) over the upcoming weeks.

Definitely a topic to keep an eye on, because if the U.S. intends to hit the lofty goals on emissions reduction it set itself, there will likely need to be some big big changes out there in the market.

Stay tuned!

 

 

 

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Topics: EPA, climate change, carbon emissions, dot, decarbonization

EPA Finalizes 2018 RFS Volume,Declines Obligated Party Change Proposal

Posted by Ed Burke on Dec 1, 2017 5:22:05 PM

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Yesterday (November 30th) the EPA finalized renewable volume obligations for the RFS for 2018 and the RVO levels for 2019.

Final 2018 levels are 19.29 billion gallons of total renewable fuel, 15 billion of which is conventional biofuel and 4.29 billion of which is advanced biofuels, including cellulosic ethanol. The final volumes are actually very close to those proposed in July.

Additionally, the EPA has finally issued a ruling regarding the obligated party petition. The petition has been pending while the agency sifted through comments from relevant parties on all sides of the issue.

You may recall that starting around June of 2016 some major refiners & other parties petitioned the EPA to redefine obligated parties under the RFS. The obligated party under the RFS as enacted is ““the entity that holds title to the gasoline or diesel fuel, immediately prior to the sale from the bulk transfer/terminal system… to a wholesaler, retailer or ultimate consumer.” 

So basically refiners, blenders, and importers are the obligated parties in handling RIN compliance. The argument is that smaller marketers and blenders are subject to compliance costs and purchasing RIN credits in an arena where large refiners have an advantage, and non-blenders (retailers) have no exposure.  

Supporters of changing the obligated party claim that the change would enable the market to more readily respond to the annual renewable volume obligation (RVO) standards, begin to address the structural constraints that EPA identified in its 2015 RFS rulemaking, and eliminate barriers that prevent RIN value from being passed through to consumers.

On the other side of things, retailers & related groups argue that non-manufacturers have no control over the composition of the petroleum products with which renewable fuels must be blended in order to be sold as motor fuels. Manufacturers and importers not only have control over the composition of the products they sell, but also the terms under which they sell them, and thus should remain the obligated parties.

The EPA ultimately denied the proposed change in obligated parties. Their reasoning stated was that the change would not result in improved effectiveness of the RFS as a whole, and would similarly not provide remedy to the major issue within the standard, which remains the issue of cellulosic ethanol and its (lack of) use. There would also be a lack of uniformity in who would be a stake holding and thus obligated party, which the agency felt would result in more confusion with compliance, rather than less.

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Topics: EPA Mandate, RINs, Biofuels, Cellulosic Ethanol, EPA, RFS

Clean Power Plan Rollback - Serious Issue or Symbolism?

Posted by Ed Burke on May 31, 2017 10:25:38 AM

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This March, President Trump signed an executive order to potentially roll back the Clean Power Plan, as part of a broader order regarding Energy Production & Independence in the US. The order directs the EPA to review the ruling and make a determination on whether to "rescind, repeal, or revise".

The basis of the order is the idea that the regulations hinder US energy production and have a job limiting effect. The administration has posited that the Clean Power Plan is an overstep by governmental regulating bodies, particularly the EPA, and is a part of the "War on Coal" that they promised to stop during the campaign season. 

The order does not detail what replacement protocol would be in place, or what impact the change or repeal of the Clean Power Plan would have on the Paris accords, the global agreement that essentially rests on the CPP being in effect in the United States (Refresher on that here: Senate Strikes Down Clean Power Provisions Ahead of Climate Change Summit

The Clean Power Plan, as put forth by the Obama Administration, would require States to limit carbon emissions from power plants by 32% of 2005 levels over 25 years. Initially, the 2014 drafts indicated much of the reduction would be achieved by a switch to natural gas (from coal and other carbon intensive sources) but the finalized 2015 version indicated most of the reduction would be achieved by moving to solar, wind, etc. (For details and a refresher on the power plant portion of the Clean Power Plan and the industry criticisms of it, particularly the renewable versus nat gas portions, you can read this article: "Obama, EPA announce First Ever Federal Regulations on Power Plant Emissions")

An interesting wrinkle to the entire debate raging over the CPP & the new Executive Order is that the Clean Power Plan is actually not currently in effect, officially anyways. The Plan is held up while pending lawsuits in many states, who have refused to comply with the plan details until the litigation is settled. 

However, be that as it may, many States are addressing carbon regulation concerns themselves, joining states like California and basically the entire Northeast Region in handling in-house (For example, this article in Fast Company regarding the steps being taken by Virginia's governor, among others:"Obama's Clean Power Plan might be dead in DC, but States are rebuilding it themselves" 

In addition to States handling much of the issues in contention themselves, according to the State of Electric Utility Survey for 2017, when the folks who handle energy mixes for power plants were asked what the future of their energy production looked like, less than 4% of respondents indicated they anticipated adding more coal to their energy mix, with 52% predicting their coal usage would plummet. 

So, how much of the executive order is merely symbolic? If many states and power generation companies are addressing the issue of coal and/or emissions themselves, its quite possible that even should the EPA greatly roll back the CPP, it may not be the "sky is falling" situation that many believe it would be. 

I wrote an article about the current state of the Clean Power Plan, and what's happening in light of (and despite) the President's directive. You can read that article in Oil & Energy online here: The Clean Power Plan: Repeal or Replace?

What do you think the future holds for the Clean Power Plan?

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Topics: EPA, clean power plan

Renewables in 2015 & 2016

Posted by Ed Burke on Mar 11, 2016 1:30:00 PM

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2015 was a banner year for Renewables. The EPA finally finalized RFS volumes for 2014-2016 in November. In December, Congress passed the tax extenders package which included both the $1 per gallon biodiesel blender credit and cellulosic blending credit of $1.01 per gallon, retroactively.

We also saw the Paris Climate Change Summit in November (Here's a quick recap of where we were then in terms of Climate Change regulations). The Summit saw 190 countries agree to Climate Change resolutions and almost univerally agreeing that each country would lower its carbon emissions.

2015 saw increases in renewable fuels use essentially across the board, and 2016 projections are optimistic on growth. I wrote an article for Oil & Energy's March issue that goes into depth on current levels, projections, and how the renewables mix looks like it will shake out through 2016. You can read that article here: Oil & Energy: "Renewables are Changing the Energy Mix"

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Topics: Biodiesel, EPA, renewable energy

Senate Strikes Down Clean Power Provisions Ahead Climate Change Summit

Posted by Ed Burke on Nov 18, 2015 4:24:41 PM

Image of the U.S. Capital Building

Yesterday, the Senate voted to block President Obama’s Clean Power Plan with respect to the new EPA regulations on Power Plant Emissions announced in August, as well as blocking the moratorium on new Coal Fired Plant building. (For a refresher on those regulations, read this “Obama, EPA Announce First-Ever Federal Limits on Power Plant Emissions” )

The Senate challenged the regulations under the somewhat obscure Congressional Review Act which allows the legislature to vote to block enactment of new federal regulations as long as they do so within 60 days of publication. It was a fairly clever move, given the rules came out in August, but because technically they were not published until October, they were fair game.

The rationale behind using the Congressional Review Act cited was that nearly half of the States are suing the EPA over these specific parts of the Clean Power Plan, and several are vowing to refuse to comply pending said lawsuits.

The Review Act also is not subject to filibuster and only requires a simple majority, not 60 votes – so the final count of 52-46 (on both the emissions regulation vote, and the moratorium vote) was sufficient to block the regulations. That is, until it hits the President’s desk, where it will immediately be vetoed. It’s extremely unlikely that a veto could be overridden, so essentially this legislation will drop off in the same fashion the Keystone Bill did earlier this year.

The Power Plant portion of the multiple Climate Change resolutions proposed by the Administration is essentially the centerpiece to the overall plan. The timing of the vote is not advantageous for the Administration because, as we’ve mentioned, the Climate Change Summit is to be held in France a few days from now.

 Essentially, the regulations are critical for the U.S. if a broad Climate Change agreement is to be secured at the conference, which is really the entire point of it – to broker a global agreement.  Without being able to cite massive overhauls and regulation of emissions on a broad scale, the U.S. has much less of an ability to point to what we are doing as a model for a global pact.  

 

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Topics: EPA, obama, clean power plan, climate change summit

Ahead of the Climate Change Summit, Here's Where We Are on Regulations

Posted by Ed Burke on Nov 16, 2015 2:39:21 PM

Image of Climate Change in a dictionary

Despite the horrific ISIS terrorist attacks in Paris this past weekend and the fact that France will still officially be in a State of Emergency, as declared by French President Hollande, the Global Climate Change Council Meeting is still slated to take place in Paris on November 20th

 Some are arguing that at the very least the venue ought to change, others that it should be postponed, and still others that the best thing we can do in response to terrorist attacks is carry on with scheduled events versus cancelling  in fear.

 Regardless of anyone’s position, at the moment, the Council meeting is a go.

 We’re likely to hear new proposals from both the US, and several European countries on comprehensive changes. So before new policies or talking points are rolled out, it’s a good time to recap the steps the United States has taken policy wise to combat Climate Change over the past year through EPA proposals and regulations.

 I wrote a “roundup” of major EPA rulings and proposals from 2015 aimed at combatting Climate Change and how they may impact the industry for Fuel Marketers News Magazine recently - You can read the article in PDF format here: 

"Climate Change: Regulations Roundup"

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Topics: EPA, climate change, climate change summit

Accidents Happen - EPA Spill Highlights Difficulty of Mine Decontamination

Posted by Ed Burke on Aug 12, 2015 1:31:32 PM

Person sitting next to a river with a river warning sign in the frame

(Photo: Alexa Rogals, The (Farmington, N.M.) Daily Times)

Earlier this week, while an EPA team worked to stem a leak from the Gold Medal mine in Colorado, an abandoned mine not operational since the 1920s, a pressure fluctuation caused hundreds of thousands of gallons of contaminated water to spill into the Animas River. This river feeds into the Colorado River – a main water supply source for the West.

All eyes are on the river now, but the Federal government has been working to cleanup and stop mine runoff for decades. An estimated 40% of waterways in the region have some level of heavy metals contamination from such runoff. In fact, the ruptured mine was being worked on in the first place because testing by the EPA showed that contamination levels were rising to a level that impacted aquatic life.

It turns out that there are an estimated 20,000 abandoned mines in Colorado and up to 500,000 throughout the West. Surprisingly, until late into the 20th century (1970) there weren’t many regulations on mining – meaning essentially anyone could start mining anywhere. As a result, when there were mining booms throughout the West, once a mine either didn’t yield or was exhausted, it was simply left there. As time goes on, water builds up within the mines and leaks into waterways and the surrounding environment, carrying with it, heavy-metal contaminants that could be dangerous in high concentrations.

One of the issues that has made mine cleanup such a slow process is that under the Clean Water Act, you’re legally and financially liable for spills even if it happened inadvertently in a cleanup effort, so stemming the pollution from the mines and handling the arduous process of decontamination has fallen solely on the EPA, and there are simply too many mines to fully decontaminate them all quickly.

It’s also an issue of cost – fully neutralizing the mine involves treating the trapped water to safe levels then releasing it, repeatedly, to the tune of about a million dollars a pop, essentially forever.

A “Good Samaritan” provision has been repeatedly proposed as an addition to the Clean Water Act, so other environmental groups can begin working on mine decontamination as well. Ironically, it sounded like a better idea before the spill than after. It’s hard to imagine an immediate pond containment system to control damages going in as quickly as the EPA was able to do. 

The release has certainly put the EPA and their cleanup response in the spotlight.

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Topics: EPA, emergency response

Obama, EPA Announce First-Ever Federal Limits on Power Plant Emissions

Posted by Ed Burke on Aug 6, 2015 2:16:38 PM

Climate change definition in a dictionary

 

On Monday (August 3rd), President Obama unveiled his latest initiative to combat Climate Change, in the form of new proposed regulations on power plant emissions. The plan would reduce emissions from power plants to 32% below the 2005 benchmark levels by 2030 (by 870 megatons). This is the first time federal limits on this type of emissions would be enacted, and the EPA’s Clean Air Act is cited by the administration as allowing for said federal limits.

From the EPA press release on the new regulations:

“By 2030, the plan will cut carbon pollution from the power sector by nearly a third and additional reductions will come from pollutants that can create dangerous soot and smog, translating to significant health benefits for the American people. By 2030, emissions of sulfur dioxide from power plants will be 90 percent lower and emissions of nitrogen oxides will be 72 percent lower, compared to 2005 levels”

(You can read the full EPA Press Release here: EPA Newsroom )

The estimated cost of the program is $8.4 billion annually, according to an EPA spokesperson, and the benefits are projected to be between $34 and $54 billion per year, including health benefits.

Under the rule, individual states must draft and adopt compliance plans by 2018 and meet initial projected targets by 2022.

Industry groups and officials are obviously not thrilled with the new rule, citing potential billions in infrastructure costs associated with moving away from coal power generation. Additionally, the plan includes a target of the US generating 28% of its power via “renewable” sources versus the current 13% level – this does not include natural gas, and further complicates how exactly states and utilities can make changes to hit these targets.

The earlier draft in 2014 included more assumptions that the move would be from coal to natural gas (which generates around a 50% reduction in carbon emissions), this ruling in that regard is even more cumbersome, with the additional costs and difficulty of going from coal to wind, solar, or nuclear – when it's already expensive to go from coal to natural gas.

Critics are citing this as another example of the “War on Coal” and Legislators from coal heavy states cite job and revenue hits they believe the new rule will cause. Some Attorneys General have already signaled they are filing suit, arguing the rules go far beyond the Clean Air Acts provisions, and some states have declared they will refuse to follow the guidelines.  Of note however, is that recently the Supreme Court ruled in favor of the EPA re: the Clean Air Act and methane regulations, and it may very well do so again on this case.

We shall see - stay tuned!

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Topics: natural gas, President Obama Address, EPA, carbon emissions, clean air act, power plant emissions, coal

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