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Greenhouse gas rules drive up truckers' costs

Canada's truckers are facing rising costs due to tighter emissions standards.

Fred Lum/FRED LUM/THE GLOBE AND MAIL

Canada's truckers – including drivers of full-size pickups – are facing rising vehicle costs as Ottawa joins with the United States in imposing new greenhouse gas emissions standards starting in 2014 model years.

But the higher upfront costs should be recouped in a few years of operating the vehicles as trucks become more fuel efficient and reduce their consumption of high-priced diesel.

The new regulations – developed in concert with the U.S. – will target a range of heavy-duty trucks from 1-tonne pickups to the largest tractor-trailers. The two governments have already set emission regulations for light-duty vehicles until 2016, and are expected to issue new rules for post-2016 models in the coming year.

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On Friday, Environment Minister Peter Kent unveiled draft regulations that will reduce carbon dioxide emissions from new heavy-duty trucks by as much as 23 per cent by the 2018 model year, when the new rules are fully in place.

The minister said the industry will also benefit from lower operating costs at a time when diesel fuel prices are projected to remain higher, and likely climb further.

"These regulations would not just help us take action on climate change – they would also help the trucking industry become more competitive," Mr. Kent said during the announcement in Boucherville, Qu., home of Transport Robert, a trucking firm that has purchased 180 liquefied natural gas-powered transports.

In an interview, Mr. Kent said it is not yet clear how much the draft regulations will add to the cost of specific vehicles. But he said operators should be able to quickly recoup their higher sticker price from lower operating costs, in as quickly as one year for the heavy mileage trucks.

In the draft regulations posted on the Canada Gazette, Environment Canada estimated total cost of the new rules to be $800-million between 2014 and 2018, while benefits would be $5-billion, primarily from fuel savings.

The Canadian Trucking Alliance – which represents the nation's transport industry – welcomed Ottawa's draft regulations, which mirror U.S. regulations announced a year ago. However, alliance president David Bradley said the Canadian trucking companies recognize the need for greater fuel efficiency.

"The way you reduce GHGs is through improved fuel efficiency and with diesel prices continuing to increase year by year, motor carriers are motivated to burn less fuel," he said. "In fact, at no time in our industry's history have our companies' environmental goals been so aligned with society's desire to reduce GHGs."

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While companies won't need to buy LNG-powered vehicles to meet their fleet emission targets, the regulations will provide an added incentive for them to do so, on top of the existing spread between low natural gas prices and higher diesel costs, said Bob Oliver, president of Toronto-based Pollution Probe who attended the minister's announcement.

"This will add just one more layer of justification for the adoption of natural gas trucks," Mr. Oliver said.

One company that stands to gain from the North American-wide effort to cut emissions in the transport sector is Vancouver-based Westport Innovations Inc. which works with the world's largest truck makers to produce LNG-powered vehicles.

Westport has seen its business grow by 30 per cent a year in recent years, and new emission standards will drive that growth even more, company vice-president Jonathan Burke said in an interview from Vancouver.

Auto manufacturers support a North American approach to emission regulations and are supportive of Ottawa's approach, said Mark Nantais, president of the Canadian Vehicle Manufacturers Association, which represents the Detroit Three automakers.

He said it is too early to say how much the new rules will drive up prices. Mr. Nantais said manufacturers have a wide range of existing technologies that will improve mileage and reduce emissions, and each will choose a different solution.

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About the Author
Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

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