Deliveries are faster than ever in the United States, but the faster movement of goods is jeopardizing the country’s climate progress.
In a new study published July 18 in the journal Nature Energy, a CU Boulder researcher and his collaborator estimate that federal regulations aimed at improving the fuel efficiency of heavy-duty trucks could be up to 20 percent less effective than policymakers initially anticipated.
That’s because regulations are making trucking cheaper. As a result, more shippers are likely to switch from less fuel-intensive rail to more fuel-intensive trucks to transport their goods.
“We were surprised to see how much of an impact changing transportation decisions have on our energy use,” said Jonathan Hughes, corresponding author of the study and a professor in the Department of Economics at the University of Colorado Boulder. “Improving vehicle fuel efficiency is very costly for truck manufacturers, so it’s important to know what benefit we can actually get from these costly regulations.”
The rebound effect
In economics, increased consumption due to improved efficiency and reduced costs is known as the rebound effect.
For example, if using an air conditioner uses much more electricity than using a fan, many people will continue to use the fan. But as air conditioners become more efficient and cooling becomes cheaper, more people will switch to air conditioning. This change in behavior will increase overall energy consumption.
Hughes and his colleagues wanted to study the magnitude of the rebound effect in the freight sector.
“When we think about the challenges of energy and climate change, freight transportation is a large and important sector that has not received enough attention,” Hughes said.
The freight sector, which includes the transportation of goods by truck, rail, ship, and air, accounts for about 10 percent of total energy consumption in the United States. Freight transportation contributes 27 percent of the nation’s greenhouse gas (GHG) emissions from the transportation sector, which is the largest source of emissions in the United States.
The majority of freight sector emissions come from trucking, which has seen a 76% increase in GHG emissions since 1990.
To reduce emissions and avoid the worst impacts of climate change, the U.S. Environmental Protection Agency (EPA) has implemented a series of regulations since 2011 aimed at improving the fuel efficiency of heavy-duty vehicles. These rules require that newly manufactured trucks achieve better mileage using less fuel and emit fewer GHGs.
In March, the EPA announced the toughest fuel economy standards ever, aiming to avoid 1 billion tons of greenhouse gas emissions by 2055.
But while these regulations make trucks more energy efficient, they also make trucking cheaper by reducing fuel costs. As a result, many shippers may choose to transport their goods by truck rather than by rail because trucks can reach their destinations faster, allowing products to be sold more quickly. The authors note that trucks use much more fuel than rail to transport the same amount of goods over the same distance.
Unintended consequence
Hughes and his collaborator, James Bushnell of the University of California, Davis, used recently released freight data from the U.S. Census Bureau to estimate the rebound effect in the freight sector. Using a computer simulation, they calculated how much energy would be saved if the EPA regulation increased the fuel efficiency of new trucks by 5 percent, which is roughly the current standard.
Under this scenario, the team estimated that the regulation would save 2,700 million liters of gasoline per year. But if we take into account the increase in the share of goods transported by truck due to the rebound effect, the regulation would save only 1,800 million liters of fuel, which is still a significant amount, but 26% less than previous estimates.
Some industries, such as chemicals, animal feed, alcohol and petroleum, are particularly sensitive to reductions in fuel costs and would likely see the largest rebound effect, Hughes said.
Considering all modes of freight transportation, the team estimated that the rebound effect in the freight sector would reduce the total fuel savings resulting from federal regulations by 20 percent.
“We show that if we make transportation much more efficient, either by increasing energy efficiency or by automating labor costs, we will probably end up consuming more energy than we expected,” Hughes said.
While the paper focuses on the freight sector, Hughes adds that a similar rebound effect could also exist in the retail sector, which includes companies like Amazon.
“These regulations that help reduce transportation costs certainly benefit consumers because we can now buy things at lower prices. But we’re showing that these rules can be somewhat counterproductive in terms of achieving our climate change and energy goals,” Hughes said.
Hughes said it would be more effective to reduce energy consumption in transport by increasing the price of fuel and transport, for example by taxing carbon emissions. But it is very difficult to get political support for such measures, he added.
“This study shows that we should have a more complete picture of the impacts that these regulations could have, so that we do not end up adopting policies that lead to unintended negative effects,” he said.
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