Blog Post

What Will New Regulations Mean for Heavy-Duty Truck Use and the Rebound Effect?

Oct 29, 2015 | Benjamin Leard, Joshua Linn, Virginia McConnell, William Raich

Commercial trucks account for roughly 6 percent of US greenhouse gas emissions, and by 2030 their emissions are forecast to exceed those from the entire car and light-duty truck fleet. To address carbon dioxide emissions from heavy-duty trucks, the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) began jointly regulating the emissions rates and fuel economy of trucks for the first time in 2014. In June, the agencies announced plans for Phase II of the standards, set to begin when Phase I ends in 2018. These new standards extend through 2027 and regulate heavy-duty engines, truck tractors, truck trailers, and single-unit vocational trucks—and will require significant improvements to fuel economy to achieve the emissions reduction goals.

As new trucks attain higher fuel economy under the coming regulations, their per-mile fuel costs will decrease. Any associated increased driving from changes in operating costs may partially offset the decrease in fuel use and emissions under the standards—this is the so-called “rebound effect,” which must be accounted for in forecasts of energy savings and associated emissions reductions from such regulations. Although numerous studies have estimated the rebound effect for light-duty vehicles and residential energy use, few studies include estimates of its magnitude in the trucking sector. We tackled the latter in a recent RFF discussion paper.  

Using detailed truck-level data for heavy-duty and vocational trucks from the Census Bureau’s Vehicle Inventory and Use Survey (VIUS), we analyzed the determinants of truck use during a period with no regulations, from 1977 to 2002. From the results, we can draw inferences about the effects of the coming truck regulations. We explored three topics that have important implications for the overall benefits of the standards: the magnitude of the rebound effect, substitution between trucks with varying fuel economy, and trucks’ responsiveness to economic activity.

First, detailed data on trucks’ vehicle miles traveled (VMT), fuel economy, and physical and operational characteristics allowed us to estimate the effect of changes in cost per mile on total miles driven during the period of the survey, for both Class 7 and 8 tractor trailers and Class 2b–8 vocational vehicles. We estimate the rebound effect to be close to 30 percent for tractor trailers, implying that a 10 percent decrease in their cost per mile would lead to a 3 percent increase in overall VMT. This is much higher than the agencies’ rebound effect estimate of 5 percent. Our estimate for vocational vehicles is very close to the 15 percent assumed in the agencies’ analysis.

Second, the rebound effect takes time to fully materialize. In the short run, we find evidence that VMT shifts from older, less-efficient trucks to newer, cleaner trucks. This means that the rebound effect is smaller in the short run as more miles travelled are shouldered by newer, more efficient vehicles. Eventually, all trucks in the fleet will have turned over and be subject to the standards, and the rebound effect will approach our estimate described above. We find this substitution effect and the resulting lower short-run rebound effect only for tractor trailers, not for vocational vehicles.

Finally, we estimate the effect of changes in economic activity on total VMT. Implicit in EPA and NHTSA’s analyses is an assumed one-to-one relationship between total VMT and GDP. We test this assumption and find that the use of both tractor trailers and vocational vehicles responds less than proportionally to changes in economic activity. This finding is important for generating estimates of the total costs and benefits of the standards: if total VMT in the future is less than the assumed baseline because of the less-than-proportional relationship between VMT and GDP, the magnitude of emissions reductions and fuel consumption will be lower.

For both the rebound effect and economic responsiveness, our estimates mainly differ from the agencies’ assumptions for tractor trailers. The implications of this are important, as tractor trailers represent roughly two-thirds of greenhouse gas emissions from heavy-duty trucks. Going forward, we are conducting a simulation on the effect of our estimates on overall VMT and carbon dioxide emissions.