A Cummins Inc. official said the Columbus-based company should be ahead of its competitors in complying with ambitious new tractor-trailer fuel economy standards issued by the Obama administration Tuesday.
U.S. truck makers are expected to improve tractor-trailer fuel economy by about 20 percent by 2018, saving $50 billion in fuel costs over five years and decreasing carbon-dioxide emissions, President Barack Obama said.
Cummins is already working on bringing new technology to market, and the company will be a year ahead of schedule to meet the requirements, said Rich Freeland, president of the company’s engine business.
“The big boost will be to those that meet the fuel-economy standards and do it at the lowest cost,” Freeland said. “We intend to get to the standards ahead of the dates that have been targeted.”
Cummins shares were up more than 5 percent Tuesday afternoon, to 88.18 each, along with an overall rise in the stock market.
The administration’s plan—the first attempt to regulate the efficiency of heavy-duty trucks, including city buses and garbage trucks—is expected to to save 530 million barrels of oil, according to a statement from the White House.
The standards for heavy-duty trucks follow Obama’s July 29 announcement of fuel-economy rules for cars and light trucks that are to take fleetwide averages to 54.5 miles per gallon by 2025. For heavy-duty trucks, regulations focus on how much carbon individual truck parts emit, instead of the mileage standards used for cars. The effort to regulate big rigs and other work trucks started while the White House was negotiating fuel-economy rules for passenger vehicles, Obama said.
“We started getting letters asking that we do the same for medium and heavy-duty trucks,” Obama said in the statement. “They were from the people who build, buy and drive these trucks. And today, I’m proud to have the support of these companies.”
The cost of a big rig will increase approximately $6,220 because of the new fuel-saving technology, administration officials said during a briefing. Truck operators will save $73,000 in fuel costs over the lifetime of the trucks, according to summaries of the regulation.
One type of big rig, the high-roof sleeper cab, may achieve a 23-percent reduction, according to the officials. Heavy-duty pickup trucks and vans, used by contractors and small businesses, will become about 15 percent more efficient by 2018, according to the White House statement. School buses, city-transit buses and work trucks used by utilities will improve about 10 percent.
Trucking companies, who will bear the up-front costs of more expensive technology, will pay for the investments through fuel savings in 18 months to 24 months, said Bill Graves, president and CEO of the American Trucking Associations in Arlington, Virginia.
“It’s an exciting time for our industry,” Graves said to reporters outside the White House. “It was a win-win for everyone.”
It’s too early to tell what will happen to sticker prices because introduction of the cleaner trucks is still three to six years away, said Martin Daum, president and CEO of Daimler Trucks North America LLC.
“If the customer saves $2,000 a year in fuel, then he’s willing to pay for that,” Daum said. “If he saves very little then we can’t ask for something. It’s a function of what technology we put on the truck and what the fuel price is.”
Small-business truckers will have a hard time paying for the new trucks, especially when costs from other regulations including electronic data recorders and mandatory speed limiters are taken into account, said Joe Rajkovacz, director of regulatory affairs at the Grain Valley, Mo.-based Owner-Operator Independent Drivers Association.
“The EPA has demonstrated yet another example of our wretchedly broken regulatory process,” Rajkovacz said. “Congress should take action when they return in September to rein in the bureaucracy.”
Truck makers that use advanced technologies such as diesel-electric hybrid transmissions and heat-waste recovery systems will get 1.5 credits for every system used, the officials said. Companies can trade the credits, which are subject to an annual cap, they said.
The goals should help trucks improve fuel use to 7 miles or 7.5 miles per gallon by 2018, he said, from about 6.5 miles per gallon today, said Glen Kedzie, vice president and environmental counsel at the American Trucking Associations, an Arlington, Va.-based industry group.
Engine improvements will account for about 6 percent of the efficiency improvement, Kedzie said. Truck makers will be able to use changes such as lighter materials, tires with less friction, engine-idle reduction and better aerodynamics for the rest of the 20-percent improvement, he said.
U.S. trucks consume about 22 billion gallons of diesel every year, said Allen Schaeffer, executive director of the Diesel Technology Forum, a Frederick, Md.-based trade group.
“Because of the sheer magnitude of commercial vehicles operating in the United States, this regulation has the potential to result in significant environmental and energy-efficiency gains,” Schaeffer said.
An analysis by the Union of Concerned Scientists, a Cambridge, Mass.-based liberal-leaning environmental group that helped negotiate the standards with the White House, claims the rules should add about 40,000 U.S. jobs in areas including manufacturing by 2020.
“The new standards will shift clean-truck technology into gear,” said Don Anair, a senior engineer with the group’s clean-vehicles program. “They’ll help put Americans back to work by shifting money away from oil companies and back toward local economies.”
The industry has collaborated with regulators at the Environmental Protection Agency and the National Highway Traffic Safety Administration over the past 15 months. This type of cooperation could serve as a lesson to politicians, said Daniel Ustian, chairman, president and CEO of Navistar International Corp.
“Every day we compete pretty hard against each other,” Ustian said. “But we’re all here lined up. Maybe we can show Washington it can be done.”