Navigating the Road to Compliance: Strategic Steps for Fleets Eyeing Emissions Rule

Rhea-AI Summary

Cummins Inc. (CMI) has outlined strategic steps for fleets to comply with the EPA's new emissions rule. Key considerations include:

1. Understanding EPA's heavy-duty Phase 3 emissions regulations
2. Familiarizing with various forms of emissions
3. Exploring alternative fuels and powertrain options
4. Locating alternative fueling stations
5. Transitioning workforce to new technologies
6. Calculating costs and potential savings
7. Collaborating with utilities for infrastructure changes
8. Seeking incentives and grants
9. Studying vehicle lifecycle management and battery storage
10. Utilizing reliable resources for information

Cummins emphasizes the need for industry-wide collaboration to meet these ambitious goals, highlighting its position to develop and manufacture a range of technologies supporting customers' energy transition journeys.

Positive

• Cummins is well-positioned to develop and manufacture a broad range of technologies for energy transition
• Potential for fleets to recoup upfront costs of zero-emission vehicles within 3 years through operational savings
• Growing market for second-life applications and recycling of EV batteries, potentially creating new revenue streams

Negative

• Significant upfront costs for fleets, with an estimated $17,000 more for a MY 2032 day cab tractor ZEV compared to conventional vehicles
• Challenges in infrastructure development, particularly for high-powered charging stations required for heavy-duty electric trucks
• Potential workforce transition issues as fleets adapt to new technologies and maintenance procedures

Insights

Transportation Industry Analyst

This comprehensive guide for fleets navigating new emissions regulations is crucial for the transportation industry. The EPA's ambitious goals for zero-emission vehicles (ZEVs) by 2032 - 34% for day cabs and 25% for sleeper cabs - signal a significant shift in the market. This transition will likely reshape the competitive landscape, favoring companies that adapt quickly.

The emphasis on alternative fuels and new powertrain technologies suggests major opportunities for suppliers in these sectors. Investors should watch companies like Cummins, which are positioning themselves as leaders in this transition. The projected increase in upfront costs ($17,000 per vehicle) balanced against operational savings could impact fleet financials in the short term but potentially improve profitability long-term.

The focus on infrastructure development, including charging stations and alternative fuel corridors, indicates potential growth in related industries. This could create investment opportunities in utilities, charging infrastructure companies and firms involved in battery recycling and second-life applications.

Environmental Policy Expert

The EPA's new emissions rule represents a landmark shift in environmental policy for the transportation sector. This aggressive approach to reducing greenhouse gas emissions aligns with broader climate goals but poses significant challenges for industry adaptation.

The rule's flexibility in compliance pathways - including battery electric, fuel cell, hybrid and cleaner combustion technologies - demonstrates a pragmatic approach to achieving emissions reductions. This multi-pronged strategy could accelerate innovation across various clean technologies.

The emphasis on infrastructure development, particularly the National Zero-Emission Freight Corridor Strategy, indicates strong government commitment to facilitating this transition. However, the success of these initiatives will depend heavily on coordinated efforts between federal, state and local governments, as well as private sector engagement.

Investors should monitor how effectively these policies drive market transformation and technological advancement in the coming years.

Fleet Management Consultant

For fleet operators, this emissions rule presents both challenges and opportunities. The 10-step guide offers a comprehensive roadmap for compliance, emphasizing the need for strategic planning and adaptation.

Key considerations for fleets include:

• Total Cost of Ownership (TCO): While upfront costs may increase, operational savings could offset these expenses within three years.
• Infrastructure planning: Collaboration with utilities for charging infrastructure is crucial.
• Workforce transition: Training for new technologies will be essential.
• Lifecycle management: Opportunities in battery second-life applications and recycling could provide additional revenue streams.

Fleets that proactively address these areas may gain a competitive advantage in terms of compliance, efficiency and potentially lower operating costs. However, the transition will require significant investment and careful planning. Investors should look for companies demonstrating clear strategies for managing this transition effectively.

Cummins

by Tom Quimby, On-highway Journalist

NORTHAMPTON, MA / ACCESSWIRE / August 27, 2024 / Between the fine print and varying perspectives on the rule announced March 29, you may be seeking steadiness amid uncertainty. Cummins Inc. met the U.S. Environmental Protection Agency (EPA) unprecedented ambition with a call to action for all of industry and all levels of government to work together. "This is an ambitious goal, and there will be challenges across our industry to reach it," Cummins wrote. "However, Cummins is uniquely positioned to develop and manufacture a broad range of technologies that enable our customers to prosper, wherever they are along their energy transitions journey." The following considerations may help a fleet chart a path to compliance with the stringent standards set by the new emissions rule.

1. Determine what your fleet must know about the Environmental Protection Agency's heavy-duty Phase 3 emissions regulations.

It's best to get ahead of the curve in terms of knowing the avenues of compliance. EPA projects that one pathway for meeting the new standards would be for industry to aim for 34% ZEVs for day cab tractors and 25% for sleeper cabs in model year 2032. The stated goals include use of battery electric and fuel cell technologies. EPA also suggests other potential pathways for both day and sleeper cabs like hybrids, hydrogen combustion, or natural gas. Knowing which pathway is best for your fleet will make all the difference.

2. Get familiar with forms of emissions.

From carbon dioxide, nitrous oxide, methane to fluorinated gases, the more familiar you are with emissions the better off you will be in terms of knowing how best to address each one and why. CO2 comprises nearly 80% of all greenhouse gases (GHGs), according to EPA. Nitrous oxide (N2O) makes up roughly 6 percent of GHGs and is blamed for posing health risks among communities exposed to heavy vehicle traffic, according to EPA. While methane makes up only a 12% share of GHGs, EPA considers it to be 28 times more potent in terms of trapping heat. Fleets can help reduce methane by using natural gas engines like Cummins new X15N. Renewable natural gas used in advanced engines like the X15N can produce near-zero emissions well-to-wheel.

3. Get more familiar with alternative fuels and powertrain options.

Cummins and its subsidiary Accelera have published several articles and videos that shed light on various fuels and technologies designed to lower or eliminate emissions. The company is hard at work around the world perfecting internal combustion powertrain designs, batteries, fuel cells and hydrogen production systems that can allow your fleet to reach emissions goals.

4. Know where to find alternative fuels.

The Department of Energy regularly updates its Alternative Fueling Station Locator map. To date, there are 73,850 charging stations across the U.S. and Canada. About 15% of those are DC fast-chargers which may not yet be suitable for Class 8 electric trucks. The Argonne National Laboratory notes that "a long-haul truck driver driving a Class 8 [electric] tractor would require a 1.6-megawatt charge to recover 400 miles of charge within a 30-minute break." The higher-powered approach for medium- and heavy-duty electric trucks is known as the megawatt charging system (MCS). Chargers for Class 1 and 2 passenger EVs peak at around 500kW or roughly three times less. Truck-centric refueling corridors for electric and fast-fill hydrogen are being funded along major routes through the Inflation Reduction Act. Keep an eye on progress through the DOE's interactive corridor map and the Joint Office of Energy and Transportation's recently published National Zero-Emission Freight Corridor Strategy. Detailed information including maps lay out a nationwide plan for fueling the next generation of clean trucks.

5. Transitioning your work force.

Have fleet managers, drivers and technicians familiarize themselves with cleaner-running diesel, natural gas, hydrogen combustion, hybrids, battery electric and fuel cell trucks. One way to do this is to attend trade shows for opportunities to see these vehicles up close and experience valuable seat time in 'ride and drive' events. Cummins leaders are also accessible in sharing the ins and outs of clean, hard-working trucks which may offer a break in maintenance costs. Service methods and tooling will also change, leaving some fleets to opt for OEMs and others to handle servicing until they're more comfortable in having their own technicians take on these high-tech rigs.

6. Calculate the cost.

The EPA estimates that fleets will "pay an average of $17,000 more in upfront costs for a MY 2032 day cab tractor ZEV than for a conventional, including the cost of electric vehicle charging infrastructure, but recoup these costs in 3 years or less through yearly operational savings." Those costs are based on tax credits through the Inflation Reduction Act and an anticipated drop in production costs particularly for EV batteries. Total cost of ownership (TCO) for electric trucks can be trimmed if fleets rely on slower, overnight charging when utility rates are lower. Slower charging also prolongs battery life.

7. Work with utilities to understand infrastructure changes required for installing chargers at fleet sites.

Utilities, like fleets, are bracing for major changes in energy use and show eagerness to help. Several utilities including Southern California Edison and Duke Energy offer programs aimed at informing and assisting fleets in the transition to cleaner energy.

8. Be on the lookout for incentives.

Grants, tax credits and other offers will be offered to help make the switch to alt fuel trucks and vans. Look for opportunities at the federal, state and local levels.

9. Study vehicle lifecycle management and battery storage.

When EV batteries can no longer perform at peak efficiency for powertrain use, that does not mean that they are no longer useful. According to global management group McKinsey & Company, second-life use applications for used EV batteries are growing and "after remanufacturing, such batteries are still able to perform sufficiently to serve less-demanding applications, such as stationary energy-storage service." Second-life use cases include grid resiliency, EV charging and facility backup power. These batteries get an even greener profile when charged through clean solar or hydrogen fuel cell generators. Following second-life use, batteries are candidates for recycling, an industry that's projected to grow as more of these valuable batteries enter the market through EVs, hybrids and fuel-cells. Recycling methods used to recover battery elements like lithium, cobalt and nickel continue to improve and thus provide more value as EV manufacturing increases. Market research firm MarketsandMarkets expects a nearly 26% jump in value for the EV battery recycling market by 2031. Nonetheless, some fleets may prefer that OEMs or other entities take on battery lifecycle management.

10. Seek reliable resources.

In addition to utilizing experts like OEMs or Cummins, fleets can use many resources when sorting a given technology's capability to measure up to needs. Trade publications and organizations closely study and assess commercial vehicle performance. Research groups report results of in-depth studies on emerging technologies such as the non-profit North American Council for Freight Efficiency (NACFE). NACFE's chart below offers a quick assessment of alt fuel vehicle capabilities. TRC Companies offers consulting services for businesses interested in adopting alt fuel vehicles. Its annual trade show, the Advanced Clean Transportation Expo, attracts OEMs and thousands of attendees including fleet executives who often share their experiences with alt fuel vehicles in various panels throughout the week-long event. Utilities are also gaining traction as subject matter experts. Southern California Edison offers a full line-up of EV guidance including its Funding Finder Tool and Electrification & Infrastructure Guidebook. Case studies are also available for review.

View additional multimedia and more ESG storytelling from Cummins Inc. on 3blmedia.com.

Contact Info:
Spokesperson: Cummins Inc.
Website: https://www.3blmedia.com/profiles/cummins-inc
Email: info@3blmedia.com

SOURCE: Cummins Inc.

View the original press release on accesswire.com

FAQ

What are the EPA's projections for zero-emission vehicles (ZEVs) in the trucking industry by 2032?

The EPA projects that one pathway for meeting the new standards would be for the industry to aim for 34% ZEVs for day cab tractors and 25% for sleeper cabs in model year 2032.

How does Cummins (CMI) plan to address the new EPA emissions regulations?

Cummins is developing and manufacturing a broad range of technologies, including internal combustion powertrain designs, batteries, fuel cells, and hydrogen production systems, to help customers meet emissions goals and comply with the new regulations.

What is the estimated cost increase for zero-emission vehicles according to the EPA?

The EPA estimates that fleets will pay an average of $17,000 more in upfront costs for a MY 2032 day cab tractor ZEV compared to a conventional vehicle, including the cost of electric vehicle charging infrastructure.

How can fleets offset the higher costs of zero-emission vehicles, according to the Cummins (CMI) report?

Fleets can offset costs through yearly operational savings, tax credits from the Inflation Reduction Act, and by using slower overnight charging when utility rates are lower. The EPA estimates these costs can be recouped in 3 years or less.