How faster delivery of goods jeopardizes climate progress: study finds 20% lower efficiency of federal regulations

Fast delivery of goods in the US is becoming more frequent, but expedited transport has a negative impact on the country's climate progress.

In a study published on July 18 in the journal Nature Energy, a researcher from the University of Colorado Boulder and his collaborator estimated that federal regulations improving the energy efficiency of heavy trucks could be up to 20% less effective than policymakers originally expected.

This problem arises because the regulations make trucking cheaper. As a result, a greater number of shippers are likely to switch from less energy-intensive rail transport to more energy-intensive truck transport of goods.

Rebound Effect
In economics, increased consumption due to improved efficiency and reduced costs is known as the rebound effect.

For example, if an air conditioner consumes much more electricity than a fan, many people will use a fan. But when air conditioners become more efficient and cooling becomes cheaper, more people will switch to air conditioners. This behavior change would increase overall energy consumption.

Effects on the Freight Sector
Hughes and his colleagues wanted to investigate the extent of the rebound effect in the freight sector.

"When we think about the challenges in energy and climate change issues, freight transport is a large and important sector that hasn't received enough attention," Hughes said.

The freight sector, which includes the transport of goods by truck, rail, ship, and plane, accounts for approximately 10% of total energy consumption in the US. Freight movement contributes 27% of greenhouse gas (GHG) emissions from the transport sector, which is the largest source of emissions in the US.

Most emissions from the freight sector come from truck transport, which has seen a 76% increase in greenhouse gas emissions since 1990.

In an effort to reduce emissions and avoid more severe climate change consequences, the US Environmental Protection Agency (EPA) has implemented a series of regulations to improve the energy efficiency of heavy vehicles since 2011. These rules require newly manufactured trucks to achieve better mileage with less fuel and emit fewer greenhouse gases.

In March, the EPA announced the strictest fuel efficiency standards to date, aiming to prevent the emission of 1 billion metric tons of greenhouse gases by 2055.

However, 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 instead of rail because trucks can reach their destinations faster, allowing for quicker product sales. The authors note that trucks consume significantly more fuel than rail for transporting the same amount of goods over the same distance.

Unintended Consequences
Hughes and his collaborator, James Bushnell from the University of California Davis, used newly released freight movement data from the US Census Bureau to estimate the rebound effect in the freight sector. Using a computer simulation, they calculated the amount of energy saved if EPA regulations increased the fuel efficiency of new trucks by 5%, which is roughly today's standard.

In this scenario, the team found that the regulations have the potential to save 674 million gallons of fuel annually. However, when they accounted for the increased share of goods that would be transported by truck due to the rebound effect, the regulations would save only 497 million gallons of fuel—still a significant amount, but 26% less than previously estimated.

Some industries, such as the chemical, livestock feed, alcoholic beverage, and petroleum industries, are particularly sensitive to fuel cost reductions and would likely experience the greatest rebound effect, Hughes said.

Considering all modes of freight transport, the team estimated that the rebound effect in the freight sector would reduce overall fuel savings from federal regulations by 20%.

"We show that if we make transport much more efficient, whether by increasing energy efficiency or automation that reduces labor costs, we are likely to consume more energy than we thought," Hughes said.

Although the study focused on the freight transport sector, Hughes added that a similar rebound effect could exist in the retail sector, which includes companies like Amazon.

"These regulations that help reduce transportation costs are certainly beneficial for consumers because we can now buy things at lower prices. But we show that these rules may be somewhat counterproductive in achieving our climate and energy goals," Hughes said.

Hughes said that increasing fuel and transportation costs through programs like carbon emissions taxation would be a more effective way to reduce energy consumption in transport. However, such policies are often very difficult to gain political support, he added.

"This study shows that we should get a fuller picture of the impact these regulations might have so that we don't adopt policies that lead to unintended negative consequences," he concluded.

Source: University of Colorado Boulder