Marcela Pinilla
Director of Sustainable Investing
On March 28, 2022, Environmental Protection Agency (EPA) published a proposed rule that would set new, more stringent standards to reduce pollution from heavy-duty vehicles and engines starting in model year (MY) 2027. The proposed standards would significantly reduce emissions of smog- and soot-forming nitrogen oxides (NOx) from heavy-duty gasoline and diesel engines and set more stringent greenhouse gas (GHG) standards for certain commercial vehicle categories.
Zevin Asset Management presented the following testimony in a virtual public hearing at EPA for the proposed rule:
As investors we are constantly scanning the horizon to understand the long-term implications of delayed or proactive corporate and public policy action on climate issues.
We believe the trend is overwhelmingly toward cleaner, more efficient modes of transport. Therefore, we believe EPA should set a strong foundation by strengthening its proposed heavy-duty engine and vehicle standards. We need this strong precedent to substantively address both climate and public health concerns; stronger standards will also enhance the competitiveness of the U.S. trucks industry.
Businesses of all sizes can benefit from the transition to electric vehicles. Many leading businesses and their investors are especially focused on this fast-developing area, recognizing a huge opportunity to make progress on their own sustainability goals.
However, the availability of electric commercial trucks has been slow to develop. Transportation remains the leading and growing source of GHG emissions and harmful air pollutant emissions and U.S. Medium and Heavy-Duty Vehicles (MHDVs) are the second largest source of GHG emissions in the transportation sector, and their emissions are projected to grow significantly. To meet climate goals, it will be necessary to electrify the medium- and heavy-duty truck sector as quickly as possible.
We are seeing increased demand for demand for zero emissions trucks as companies seek to reduce operating costs and meet climate goals. A recent survey of Corporate Electric Vehicle Alliance members demonstrates that the demand for zero emission vehicles (ZEVs) is there.
While many classes are increasingly cost competitive, strong policies will be necessary to ensure the availability and adequate production volume of these trucks. In our view, and in many investors’ views, the proposed standards are not stringent enough to accelerate that transition at the necessary rate and scale. Strong standards are necessary to address economic risks associated with climate change and the competitiveness of the U.S. truck industry.
Air pollution from heavy duty trucks nitrogen oxide (NOx) emissions has a disproportionate impact on disadvantaged communities located near truck routes, distribution centers, and ports. We cannot look away anymore, as investors who are stewards of assets that are aiming for a cleaner carbon future. As racial justice and climate action converge, weighing social impacts and costs need to be critical elements of EPA’s remit as well.
The last rulemaking for these pollutants was 20 years ago. It is time to set strong standards that are going mitigate air pollution in a substantial way. Affected communities have suffered for far too long.
EPA’s own analysis shows that net health benefit savings from reductions in ozone and particulate matter under its proposals far exceed costs — up to $220 billion in net benefits.
In conclusion, strengthening the proposed standards will mitigate the climate, public health, and economic concerns associated with Heavy Duty Vehicles. A zero-emission vehicle mandate, which has also been adopted by California and five other states (others are considering or near adoption), will be necessary to accelerate the transition to electric trucks at the rate and scale needed to meet climate goals. The United States can be a leader if we put strong and leading policies in place. We look to EPA to set us on the right path to a successful climate transition.
Note: Zevin Asset Management testified along numerous organizations including Sierra Club, American Trucking Associations, WRI, Environment America, Labor Network for Sustainability, Environmental Law and Policy Center, NRDC Action Fund, Ceres, Moms Clean Air Force, Environmental Defense Fund, Union of Concerned Scientists, Earthjustice, and various local climate coalitions and dozens of concerned citizens.