> i \ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
9 WASHINGTON, D C 20460
SEP 1B 2014
OFFICE OF
AIR AND RADIATION
MEMORANDUM
SUBJECT: Transmittal of Recommendations Related to the SmartWay Transport
Partnership
FROM: Janet G. McCabc
Acting Assistant Administrator
TO: Gina McCarthy
Administrator
On behalf of the-Clean-Air Act Advisory Committee (CAAAC), we are pleased to present to you
a report arid list of recommendations related to the SmartWay Transport Partnership
(SmartWay). As you know, the CAAAC is a senior-level committee consisting of senior
managers and experts representing state and local government, environmental and public interest
groups, academic institutions, unions, trade associations, utilities, manufacturing industries and
others. The Committee provides advice to the U.S. Environmental Protection Agency on a
variety of important air quality issues.
The EPA asked the Mobile Source Technical Review Subcommittee under the CAAAC to
consider the SmartWay program and to advise the EPA on ways to enhance and sustain it.
SmartWay is a non-regulatory, market-based public-private partnership developed by the EPA in
collaboration with the domestic ground freight sector. Launched in 2004, SmartWay aims to
improve the energy and environmental efficiency of the freight sector by accelerating the
adoption of advanced technologies and operational strategies that save fuel and reduce
emissions. To date, .Smart Way has focused its efforts on the truck and rail sectors.
The Subcommittee formed a workgroup made up of a broad set of experts to examine the
program. The attached report is a result of their efforts. In short, the workgroup affirmed the
value of this voluntary partnership and included a range of recommendations for programmatic
and policy enhancements to reduce emissions, energy use and costs further in the freight
transportation sector. The report also included recommendations that the EPA consider extending
the SmartWay program to the air and marine freight sectors and consider piloting a market based
partnership like SmartWay in the nonroad sector.
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The workgroup leaders presented the attached recommendations to the full CAAAC committee
in April 2014. After deliberating, the full committee voted to forward these recommendations to
the EPA. The Office of Air and Radiation greatly appreciates the efforts of the Subcommittee
andis now in the process of implementing some of these recommendations while considering
others.
If you have any questions or would like more information on how the Office of Air and
Radiation is moving forward on these recommendations, please let me know.
Attachment
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U.S. Environmental Protection Agency’s
SmartWay Transport Partnership Program:
Recommendations and Findings
SmartWay Legacy Fleet Workgroup
Mobile Source Technical Review Subcommittee
Clean Air Act Advisory Committee
U.S. EPA
April 2014
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Table of Contents
Executive SUIT rT ar f ........................... .•••••••.•• .• .• 4
Introduction 10
Charge for MSTRS SmartWay Legacy Fleet Workgroup 10
Organization of Report •••• ••••••• . . 12
Transportation Fuel Consumption and Emissions .13
SmartWay Background and Role in Freight Sector 14
Background and History 14
SmartWay Process and Role of Program in Freight Sector 15
Utilization of SmartWay by EPA for Regulatory Development 18
Adoption and Utilization of SmartWay by Industry 19
International Adoption and Replication of SmartWay Program 22
Key Features and Elements of the SmartWay Program 22
Potential Gaps and Limitations of the SmartWay Program 25
Workgroup P 1 pproach 28
Developing a Framework for EPA 28
Goals and Guiding Principles 28
Maturity Scale and Evaluation Tool 30
Overarching Workgroup Recommendations 34
Data Quality Assurance and Quality Control 34
SmartWay Brand and Recognition 35
Partner Recruiting and Retention 36
Financing 37
Black Carbon 38
Operational Strategies 40
Truck and Rail ..................•••• 43
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Vocational Trucks .
Drayage Trucks 46
Logistics 46
Small Carriers and Owner Operators 49
Driver Training
SmartWay Designated Trucks 51
Rail 53
Transportation Refrigeration Units 54
Air and lJlarine Freight Sectors 57
Introduction
Air Cargo 59
Air Cargo Market Characteristics 59
Technology in the Air Cargo Sector 60
Regulatory Environment 61
Opportunities and Barriers for SmartWay in Air Freight 61
Ocean I IViarine Cargo ................ . . . . ••• . 64
Ocean Market Characteristics 64
Regulatory Environment 66
Ocean Cargo Industry Action 67
Opportunities and Barriers for Smart Way in the Ocean Segment 69
tionroad IViobile Sources.......... 72
Workgroup Process 72
Overview of Nonroad Equipment Sector GHG lssues......................... . 75
Nonroad GHG Equipment Fuel Consumption and COz Emissions 75
Nonroad Equipment and Application Diversity 76
Potential Application of SmartWay Methodology to Nonroad
Equiprrient Sectors 77
Potential Methodology for a Pilot Nonroad GHG ‘SmartWay-style’ Project.. 77
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Job Site / Farm Site Level Focus vs. Equipment Level Focus 77
Carbon Footprint Analysis (C02) for Nonroad Equipment 78
P griculture 81
Surface Coal .............. ......u..u .u•• ••us•s••uu••u 85
Quarry & Pr 1 ggregate
Appendices
A) Workgroup Members and Participants 89
B) Workgroup Process Roadmap 90
C) Sector Evaluation Filtering Tool - Worksheet Template 91
D) SmartWay Reciprocity Agreement with Clean Cargo Working Group 99
E) Agricultural Sector Additional Detail 100
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Executive Summary
The SmartWay Legacy Fleet workgroup presents this report to the Mobile Source
Technical Review Subcommittee (MSTRS) at the request of U.S. Environmental
Protection Agency’s (EPA) Office of Transportation and Air Quality (OTAQ). EPA is
seeking advice on potential enhancements to the SmartWay Transport Partnership
(SmartWay) program, as well as the applicability of the SmartWay program in the marine,
air and nonroad transportation sectors.
The observations and recommendations in this report were developed through a
workgroup process formed under The Clean Air Act Advisory Committee (CAAAC), under
the provisions of the Federal Advisory Committee Act (FACA), 5 U.S.C. App.2 § 9 (C).
This report is based on the advice, input and recommendations made by key
stakeholders in the freight transportation and nonroad sectors, business and industry,
academic experts, environmental and community groups and states (Appendix A). 1
SmartWay is a market-based public-private partnership, created and administered by
EPA to help industry move goods in cleaner, more efficient ways. Freight efficiency is a
growing concern for policy makers as goods movement represents a significant portion of
the nation’s transportation greenhouse gas inventory and is growing more rapidly than
passenger transport emissions. SmartWay provides a standard set of quantification,
benchmarking and reporting tools that help industry to optimize the energy and
environmental performance of their domestic, ground freight supply chain. SmartWay
enables shippers, carriers and logistics firms to exchange performance data in ways that
improve freight efficiency by accelerating the adoption of advanced technologies and
strategies which reduce fuel use, costs and emissions. These efforts protect the
environment, enhance our nation’s energy security and foster economic vitality.
To encourage continuous improvement in freight efficiency, SmartWay provides
incentives and recognition for top performers, including use of the SmartWay brand as a
mark of cleaner more sustainable transportation, and an annual awards program.
SmartWay’s three-thousand partners include large and small firms, dozens of Fortune
500 companies and represent major economic sectors such as retail, food & beverage,
manufacturing, chemicals, paper & lumber, consumer goods, and others. Since 2004,
‘The Clean Air Act Advisory Committee us a chartered federal advisory committee, operating under the
Federal Advisory Committee Act (FACA; 5 U.S C., App.2). The committee provides advice to the
Administrator of the U.S Environmental Protection Agency on issues related to implementing the Clean
Air Act Amendments of 1990. The findings and recommendations of the Committee do not represent the
views of the Agency, and this document does not represent information approved or disseminated by
EPA.
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SmartWay partners have eliminated over 51 million metric tons of C02, saved over 120
million barrels of oil and $16 billion in fuel costs, and reduced 738,000 tons of NOx and 37,000
tons of PM.
The success of SmartWay in the U.S. has led to its adoption in Canada, where Natural
Resources Canada now administers the program for Canadian firms, using the same tools
methods and metrics for assessing freight efficiency. In addition, the SmartWay public-private
partnership model is now being replicated in other countries in Latin America, Asia and the
European Union. SmartWay is also being used as a template to inform the development of
freight sustainability programs under the United Nations Environment Program’s Climate and
Clean Air Coalition.
EPA is seeking advice from MSTRS as part of its ongoing mission to improve the environmental
efficiency of the transportation sector. While light duty passenger cars and trucks represent over
half the nation’s mobile source greenhouse gas emissions, the freight (primarily trucking and rail)
and nonroad sectors are a significant component of emissions 2 as seen in Figure 1 below.
2 ://wwwepa.gov/otapJclimate/dOCUmeflts/420fl3O 33 a.Pdf Fast Facts, U.S. Transportation Sector
Greenhouse Gas Emissions 1990-2011.
Agricultural Ships Buses
Equipment and Pipelines 0.9 4... Lubricants
2.4% Boats Rail 1.8% r / 0.4%
Constructio’\.2 4% 2.4% LL/
Equipment
3.7%
Other Non-
Transportati ..
on Mobile
4.0%
Motorcycles
0.2%
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Figure 1: Share of U.S. Mobile Sources GHG Emissions by Sector
The future success of SmartWay will require EPA to continue program innovation to
ensure that the program’s value proposition remains strong. SmartWay must evolve to
meet the needs of the market and its partners, so that it can continue to generate more
emissions reductions and cost savings. While the program results and replication by
other countries are good indicators of the program’s success, SmartWay does have
gaps and limitations which are noted in this report and are the basis for multiple
recommendations to EPA.
The workgroup, in affirming the on-going value of SmartWay as a voluntary partnership
program, also considered Agency resource implications of program continuance and the
resource implications of workgroup recommendations. The SmartWay program, at
current program maturity levels, is providing valuable service to program participants
and, in addition to those benefits, is providing direct support to the Agency’s core
mission of protecting human health and the environment. This direct support is
accomplished by extending the agency’s impact from regulatory programs to the
broader supply chain participants that can provide substantive and quantifiable
incremental emission reduction and fuel efficiency improvement benefits to society.
Additional recommendations from the workgroup heavily leverage existing, externally
available reports and resources that minimize the need to invent, create or manage
additional data sources as the program expands. While modest resource additions may
be required, the benefit of this extension to the Agency’s core mission as described
above should be able to fully justify such resource additions.
Recognizing the strengths and limitations of SmartWay in its current configuration, the
workgroup finds that EPA should consider numerous programmatic and policy
enhancements. These changes will help the program reach its full potential and
continue to drive further emissions reductions and energy and costs savings in the
transportation sector.
The workgroup recommends that EPA continue to enhance, expand, support and
resource the current program, by strategically implementing recommendations
summarized in the tables below, and detailed later in this report. This includes
recommendations that EPA consider extending the existing program to achieve greater
emissions reductions by including the modes of air and marine freight. It also includes
recommendations for implementing a market based, public-private partnership like
SmartWay in the nonroad sector, also detailed in later sections of this report
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- - General Recommendations
#
Recommendation
Considerations
in the
Page
G
Use maturity scale and sector
evaluation and filtering tool
to assess transportation
(including truck, rail, marine
and air) sectors and subsectors
for inclusion in SmartWay
Helps EPA establish key areas for
truck, rail, marine and air sectors and avoid
transportation sectors where little or no impact is
likely, while aligning priorities with limited
resources
consider
30
0-2
Continue to enhance data
quality and rigor of data
validation
Implement quality assurance process,
audits, cross check with other data providers
34
G 3
Strengthen SmartWay brand
Conduct research on brand awareness and
perceptions of stakeholders
35
0-4
Strengthen partner recruiting
efforts, develop expert group to
advise EPA
Expand visibility, use social media, package
labeling, add other freight modes to enable the
shipper module to do supply chain assessments
36
0-5
Strengthen partner retention
efforts, develop expert group to
advise EPA
Simplify and streamline benchmarking tools,
provide report cards, webinars, educational
forums, opportunities to engage, expand role of
Affiliates
36
G-6
Enhance financing programs,
subject to funding
Leverage state and federal funds, prioritize by
hotspots, develop common application, reach out
to underserved populations
37
G-7
Incorporate black carbon
reporting and reduction
incentives
Include in all modes incentivize
support adoption of low sulfur fuels globally
and
38
G 8
Incorporate operational
strategies and accord credit
appropriately to partners
implementing the strategy
Require shippers to report carbon targets
include operational strategies across all modes,
but do not double count activity implemented by
carriers, publish case studies, best practices
40
-Truck afldRailRecomniefldatiàhS . -
#
... Recommendation.
Cónsideratibns
Page
1-1
Limit focus on vocational
trucks to large fleets and
operators
Avoid highly specialized, non-freight operators
45
1 2
Keep drayage focus on fleets
of 50+, use port metrics and
technology to measure idling
and queuing
Data collection and reporting requirements may
be too onerous, create web based interface to
ease reporting, develop port metrics
46
1-3
Enhance role of third party
logistics (3PL) partners, and
account for various logistics
business models, refine
reporting guidance
Identify credit opportunities for 3PLS which
mode shift and operational improvements, refine
performance ratings to account for varying fleet
sizes and modes utilized
47
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1-4
Ease and simplify participation
for small carriers and owner
operators
Create web-based simple reporting tool for small
carriers, or have a third party collect and
aggregate data for EPA, provide incentives to
participate
49
1 5
Incorporate SmartWay into
driver training schools
Fosters improved performance and creates
awareness
51
1-6
Ensure SmartWay continues to
inform EPA regulatory
programs such as the Phase 2
Heavy Duty Diesel GHG
rulemaking
Improve and streamline technology verification
process, incorporate emerging technologies, raise
performance threshold on SmartWay Designation
for Model Year 2014 and newer trucks
52
1 7
Enhance integration of Rail
partners in SmartWay
Incorporate rail operational strategies, provide
greater visibility, streamline reporting to parallel
standard reporting currently done for Surface
Transportation Board
53
1-8
Include Transportation
Refrigeration Units (TRU5) in
SmartWay program
Require reporting on TRU fuel use, incentivize
maintenance and improvements, including
alternative refrigerants
54
Air and Marine RecornmSfldations: ,
-
Recommefldation
Considerations -
Page
2-1
Incorporate Air and Marine
Freight into SmartWay
Partnership shipper tools and
create Air Freight and Marine
Partner categories
Establish methods to enable shippers to assess
supply chain carbon impacts across all modes
including air cargo and ocean shipping. Include
foreign flag carriers. Provide partner categories for
these modes and include foreign flag carriers.
62
69
2-2
The addition of other freight
modes in SmartWay can best
be achieved through reciprocity
and/or data sharing
arrangements with existing and
established protocols and data
sets
Streamline data acquisition by capturing DOT
Form 41 data for air cargo and through reciprocity
with BSR’s Clean Cargo Working Group for
marine cargo to reduce Agency and industry
burden
not
63
69
2-3
EPA should adopt metric units
currently used by rest of world,
for EPA tools and methods
Combinations of metric and English units are
understood by Europeans, and switching between
short tons and metric tons leads to errors
69
2-4
SmartWay should commit to
the ongoing global efforts to
harmonize and align
multimodal supply chain
carbon accounting
methodologies, and tools
Since discussion of such methodologies are
developing quick’y in North America, Europe and
global organizations, EPA should support and
provide resources for active involvement in the
supply chain metrics alignment work now ramping
up globally
70
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Nonroad Recommendations
#
Recommendation
Considerations
Page
3
EPA should create a voluntary,
market based partnership for
nonroad sector based on data
gained in pilot projects.
Model on principles and design of SmartWay but
create alternate brand, using pilot projects to
inform construct of a more comprehensive
program
84
3-2
EPA should implement a Pilot
program for the nonroad sector
Focus on subsectors with fixed work sites, such
as quarry and mining, or the goods movement
portion of a nonroad sectors’ freight activity, such
as transporting agricultural products from
agricultural sites
86
87
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Introduction
The SmartWay Transport Partnership (SmartWay) is a non-regulatory, market-based
public-private partnership developed by the U.S. Environmental Protection Agency
(EPA) in collaboration with the domestic ground freight sector. Launched in 2004 by
EPA’s Office of Transportation and Air Quality, SmartWay aims to improve the energy
and environmental efficiency of the freight sector by accelerating the adoption of
advanced technologies and operational strategies that save fuel and reduce emissions.
To date, SmartWay has focused its efforts on the truck and rail sectors.
SmartWay partners and affiliates work with EPA to benchmark, report and improve
environmental and energy performance, share best practices, promote freight
sustainability and educate others on these efforts. EPA provides the benchmarking
tools and partnership framework, facilitates information exchange, validates partner
data and vendor technologies, markets the branded program, provides incentives and
recognizes partner achievements.
As part of its commitment to cost-effective public policy and strategic implementation of
its programs, the EPA asked the Mobile Source Technical Review Subcommittee
(MSTRS) to consider the SmartWay program and advise EPA on ways to enhance and
sustain it. EPA was also interested in looking at the potential application of SmartWay in
the air and marine modes of freight transportation and in the nonroad sector.
A “Charge” was created to guide this assessment and a workgroup was formed in the
fall of 2011 to complete the task. The workgroup was comprised of business and
industry leaders, academia, state and local authorities, technical experts and non-
governmental stakeholders. The Charge was written as follows:
Charge for MSTRS SmartWay Legacy Fleet Workgroup
To sustain and improve EPA’s success in helping SmartWay partners cut fuel use and
emissions in goods movement while adapting to fit the changing business environment
and needs of our program partners and stakeholders, EPA asks the workgroup to make
recommendations that will enable EPA to both sustain its legacy fleet programs and
extend SmartVVay into the broader transportation supply chain.
To continue to achieve additional emissions reductions and contribute to energy
independence, while meeting the needs for more partners in more modes without
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assuming a commensurate increase in resources, EPA asks the workgroup to make
recommendations that will enable SmartWay to maximize opportunities for program
efficiencies and strategic program growth, while refining our understanding of the needs
and challenges of multiple stakeholder groups.
More specifically, the workgroup is asked to help EPA by making recommendations on
how to:
1) Accelerate and sustain continued legacy fleet efficiency improvements in
the trucking and rail sectors:
• Incorporate cutting edge technologies and operational innovations
• Enhance data quality and reporting throughout industry
• Provide feedback on EPA legacy fleet strategies
2) Explore opportunities for additional fuel savings and emission reductions
from other freight transport modes such as marine and air freight:
• Integrate new modes and freight sectors into SmartWay
• Enhance multimodal supply chain environmental and energy performance
assessment (carbon accounting) to reflect all modes for SmartWay
• Inform the ongoing global dialogue which is working to standardize methods
and tools, using SmartWay tools and factors where appropriate
3) Explore opportunities to apply the public-private market based partnership
model into the nonroad sector:
• Introduce the non-freight sector to the SmartWay Partnership model, using
the public-private, market based collaboration to drive further emission
reductions and enhanced energy security
• Recommend how to design, build and implement program features, tools,
processes and methods which drive additional emissions reductions from the
nonroad sector
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Organization of Report
This report was written with the assumption that the reader may have little or no background or
exposure to the SmartWay Transport Partnership and/or the freight sector. The program is
summarized early in the report in order to give the reader a general understanding of the
SmartWay program, its background and history, features, processes, status, and results. It also
identifies key gaps and limitations of the program as well as the international replication of green
freight programs like SmartWay. This background is intended to provide a context and
foundation for the recommendations later in the report.
The report then provides an overview of the workgroup process that was used to develop the
recommendations, including a suggested prioritization and decision process for setting goals, a
sector evaluation tool, and goals and guiding principles. These resources and principles are
intended to serve as tools for EPA to support the recommendations in this report and future
decision making and planning for the program. The report goes on to make overarching
recommendations that are broadly applicable to the program and not specific to the workgroup
charge.
The remainder of the report is divided into three sections that reflect the three key components
of the charge described above:
1) The first section addresses key questions about how to enhance and strengthen the existing
program in its current configuration.
2) The second speaks to the questions of applying SmartWay to other freight modes,
specifically air and marine.
3) The third section applies to the question of whether the public-private, market based
SmartWay program template should be applied in the nonroad sector.
Each of these three areas of consideration requires different background and information to
support the recommendations, as did the workgroup deliberations, and thus the approach,
background and format used will vary in these sections.
Finally, the appendix includes supplemental information on the workgroup roadmap, as well as
templates of the decision and prioritization matrix developed by the workgroup for EPA.
Note that the Clean Air Act Advisory Committee is a chartered federal advisory committee,
operating under the Federal Advisory Committee Act (FACA; 5 U.S.C., App.2). The committee
provides advice to the Administrator of the U.S. Environmental Protection Agency on issues
related to implementing the Clean Air Act Amendments of 1990. The findings and
recommendations of the Committee do not represent the views of the Agency, and this
document does not represent information approved or disseminated by EPA.
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Transportation Fuel Consumption and Emissions
The key drivers for EPA investing resources in a program like SmartWay stem from the
energy and environmental impacts of the transportation sector. There are numerous
and diverse on-road and nonroad sources of greenhouse gas and criteria emissions in
the transportation sector. Criteria air pollution emissions have declined considerably in
recent years due to stringent new emission standards, and attention has turned to
transportation GHG emissions.
The transportation sector is a major consumer of energy and almost entirely reliant on
petroleum, with implications for national energy security. The transportation sector in
the U.S annually generates over 1.7 billion metric tons of C02 emission from fuel
combustion, or about 27% of the total greenhouse gases. 3 When including emissions
from non-transportation mobile sources such as agricultural, lawn and garden, and
construction equipment, mobile sources constituted nearly a third, or 30%, of total U.S.
GHG emissions in 2011. Over 70% of total petroleum used in the U.S. is consumed by
the transportation sector where petroleum accounts for 93% of total energy used 5 .
While light duty passenger cars and trucks are the most significant source of
greenhouse gases, heavy duty diesel and nonroad sources are also significant.
Although fuel efficiency and emissions standards help ensure cleaner, more energy
efficient vehicles in today’s new fleets, and less emissions in the future, the legacy
diesel fleet will be in service for years to come. This is a concern particularly in the
heavy duty diesel fleet (on-road and nonroad) because of the durability and longevity of
these vehicles, engines and equipment. With rebuilds and repowers, heavy duty trucks
and equipment can operate for decades and millions of miles and hours, at the emission
levels of much earlier standards. This presents a challenge but also an opportunity for
programs like SmartWay that have proven to improve the energy and environmental
efficiency of the legacy fleet.
EPA 430-R-13-001, U.S. EPA Inventory of U.S. Greenhouse Gas Emissions and Sinks 1990-2011, April 2013
http://www.epa.gov/otac /CIimate/dOCUmefltS/420f1 3 0 33 a . Qdf . Fast Facts, U.S. Transportation Sector
Greenhouse Gas Emissions 1990-2011.
U.S. Energy Information Administration, What are the major sources and users of energy in the United States?
August 2013, http://www.eia.gov/eflergv in brief/article/maior energy sources and users.cfm
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SmartWay Background and Role in Freight Sector
Background and History
Because of the scale and growth of emissions from heavy duty diesel trucks and rail
over the last couple decades, EPA saw opportunities to work with the freight sector.
EPA first engaged with industry stakeholders in 2001 to explore ideas for a new, public-
private collaboration focused specifically on the freight sector and goods movement.
Discussions centered on developing a voluntary, market based initiative that would
achieve multiple goals:
• Reduce harmful greenhouse gas emissions and other pollutants from goods
movement by;
• Accelerate the adoption of fuel and cost saving technologies and strategies;
• Create recognition and visibility for freight sustainability achievements by industry
leaders; and
• Enhance the working relationship between EPA and the transportation sector.
From those early discussions, the concept for the SmartWay Transport Partnership was
born.
Working closely with the American Trucking Associations and Business for Social
Responsibility, a Charter Partner group of business leaders was created in 2003 to kick
off this effort. These 15 Charter Partners 6 advised EPA on the creation of SmartWay,
including the development of the partnership structure and program design, the
performance benchmarking tools and methods, technologies and best practices, and
the SmartWay brand. Other companies were invited to participate and the program was
launched on February 9, 2004 with 50 Partners from the trucking, rail and shipper
sectors.
The Partnership has grown considerably in the decade since and now includes about
3,000 shippers and carriers of freight (both truck and rail), third party logistics providers
and freight brokers, as well as non-profits and other affiliates. These partners and
affiliates represent a wide range of Fortune 500 firms and small enterprises from most
major economic sectors including retail, food and beverage, manufacturing, consumer
6 SmartWay Charter Partners American Trucking Associations, Business for Social Responsibility,
Canon, Coca Cola Enterprises, CSX, FedEx, H-E-B, The Home Depot, IKEA, Interface, Nike, Schneider
National, Swift, Yellow Roadway, and UPS.
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goods, lumber and paper, agriculture, chemicals, pharmaceuticals and others. These
industry leaders are working together with EPA to accelerate the adoption of advanced
technologies and strategies to reduce fuel use from goods movement. SmartWay
partners also are able to monitor their progress through the program’s performance
benchmarking and reporting tools.
The fundamental mission of SmartWay is to give businesses the information and tools
needed to optimize goods movement energy and environmental efficiency in a
continuous improvement process. EPA also provides credible information on verified
SmartWay technologies and best practices, recognition and other incentives to
encourage partner progress.
The SmartWay program has become an influential element of the domestic ground
freight industry. By establishing criteria for line-haul class 8 tractors and trailers and
verifying the performance of energy saving technologies, EPA is helping create
awareness and confidence which helps accelerate the adoption of these technologies.
EPA articulates the SmartWay “value proposition” as:
• Helping carriers to become more efficient and reduce emissions by saving fuel and
reducing costs, which offers carrier partners a competitive advantage.
• Helping shippers identify more efficient carriers and acquire better data and
visibility of their freight supply chain operations which helps them to reduce their
transportation footprint.
• Enhancing the energy security of the freight sector in the U.S. to help it become
more sustainable and competitive.
• Providing participating businesses with visibility and opportunities to showcase
achievements and leadership.
SmartWay Process and Role of Program in Freight Sector
Partnership Process
To achieve the goals as described above, EPA facilitates the exchange of freight
performance information and data in three SmartWay partner categories:
Freight carriers (rail, truck and multimodal) benchmark and report the
environmental performance of their fleets while working to improve efficiency and
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cut costs, using technologies and strategies which save fuel and reduce
emissions.
Logistics firms benchmark and report performance based on freight brokered
with SmartWay and non-SmartWay registered carriers, while engaging with
carriers and shipper clients to improve efficiency.
Freight shippers benchmark, analyze and report freight operations efficiency
and operational practices, while committing to ship more of their goods with
SmartWay Carriers.
All partners get credible carbon benchmarking data and assessments that can
be used to meet their growing need to report, disclose and reduce their carbon
emissions.
SmartWay also has an Affiliate category which works closely with EPA and the freight
sector to promote the goals of SmartWay. SmartWay affiliates include non-profit
professional and trade associations, environmental groups, non-governmental
organizations and others stakeholders which work with their membership to learn the
drivers for and benefits of freight sustainability. Affiliates actively promote SmartWay to
their constituencies though webinars, events and meetings, as well as publications and
other educational materials. EPA has expanded the affiliate category to also include
for-profit truck dealers, and truck leasing companies, with the purpose of promoting
SmartWay tractors and trailers, as well as and travel plazas and truck stops, to promote
idle reduction.
The SmartWay program provides a process and a platform where shippers and carriers
of freight are able to collaborate on their shared goals for better efficiencies and
reduced costs. As shippers, carriers and logistics firms register in the program, report
freight operations data and benchmark their performance, EPA facilitates an exchange
of data and best practices that helps all partners collaborate more effectively in a
continuous improvement process. These steps are presented in Figure 2 and
summarized below:
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Improve
Efficiency
Innovate
Operations
Measure
Supply Chain
Footprint
Figure 2 - The SmartWay continuous improvement process
1. Measure Supply Chain Footprint
Each partner group is provided with SmartWay calculator tools which are used to
report freight activity data to EPA (as required to participate in the program). The
truck carrier, multimodal and rail SmartWay tools prompt these partners to report
on their equipment types and model years, fuel use, miles driven and tons of
freight carried, among other factors. Logistics and Shipper partners report the
miles and tons of freight shipped with of SmartWay registered and non-
SmartWay carriers and other key performance data.
2. Benchmark Performance
Each partner uses the SmartWay tools to benchmark the performance of their
freightoperations using a gram per mile and gram per ton-mile metric for C02,
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Benchmark
Performance
I
Report
Results
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NOx and PM emissions. The carrier assessment is performance based, and
reflective of the amount (and type) of fuel used to move a given quantity of freight
and miles. The logistics and shipper results are reflective of the quantity of miles
and freight moved by their SmartWay and non-SmartWay carriers, as well as the
actual performance of those carriers. Using higher performing carriers will
generate lower emissions results.
3. Report Results
Carrier partner tools assess data and create emission factors that are used in the
shipper and logistics assessments as described above. All SmartWay tools
create reports that partners use for public reporting needs such as Corporate
Social Responsibility Reports, Carbon Disclosure Project submittals and Global
Reporting Index reporting. EPA SmartWay provides a degree of credibility for
reporting results, especially for carbon foot printing and disclosure, which is a
growing trend in business.
4. Innovate Operations
EPA works with partners to help foster innovations that save fuel and reduce
costs and emissions. By verifying the performance of fuel saving technologies,
EPA helps provide more reliable information to the market and create confidence
for carriers to invest in new equipment. By collecting and sharing best practices
on operational strategies and providing driver training curriculum, EPA helps
SmartWay partners to share and learn new ways to optimize freight operations’
energy and environmental efficiency.
5. Improve Efficiency
As partners implement new technologies and strategies, the improved efficiency
will be seen in reduced costs and lower grams per mile and grams per ton-mile
emissions for freight movement. Carriers can demonstrate their lower emission
factors (i.e., improved performance) to their shipper clients (who are increasing
demands for cleaner transportation providers), and shippers can demonstrate
and report reduced emissions footprints. SmartWay Partners continue this
ongoing improvement process from year to year and collectively generate
significant reductions of emissions.
Utilization of SmartWay by EPA for Regulatory Development
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Over the past decade, as EPA worked with the trucking and rail sector to develop and
implement SmartWay, it developed a collaborative working relationship with key
stakeholders, including trucking firms and equipment manufacturers, rail and truck
associations, and technology vendors. SmartWay partnership activities created
opportunities for EPA to learn from these stakeholders about the challenges and needs
of this important economic sector. The technology program provided unique
opportunities to develop better data about the real world performance of fuel saving and
emission reducing technologies.
EPA conducted much of the testing for SmartWay, bringing together vehicle
manufacturers, technology suppliers, testing facilities, technical organizations, and end
users to evaluate technologies and vehicle designs of most interest to the heavy duty
trucking fleets. These include aerodynamic vehicle features and equipment, idle
reduction technologies, new and retreaded lower rolling resistance tire products, and
emission control devices.
By identifying and refining test methods, EPA with its SmartWay and industry partners
helped to advance the collective technical understanding of how to best evaluate the in-
use performance of new and emerging technologies for the heavy duty sector. This
insight coupled with the SmartWay data was instrumental in helping EPA to develop a
refined understanding of the heavy duty trucking sector, including the performance of
heavy duty truck fleets, equipment and technologies, the complexity and diversity of
fleet operations and the needs and challenge of this important sector.
When EPA began development of the Heavy Duty Greenhouse Gas Rule, it drew
heavily from the SmartWay experience, including the development of test procedures to
evaluate long haul trucks and truck components as well as establishing benchmark
performance levels from the use of the best available technologies identified in the
SmartWay program. These technologies provide part of the basis for the GHG
emission and fuel consumption standards adopted in this rulemaking for certain types of
new heavy-duty Class 7 and 8 combination tractors.
Adoption and Utilization of SmartWay by Industry
The current SmartWay program design and focus is limited to the trucking and rail
segments of the goods movement supply chain. Other modes such as barge, air,
marine or pipeline are not part of SmartWay.
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There are currently about 3,000 total shipper, carrier, and logistics partners and
affiliates in SmartWay. Current carrier categories include all Class I railroads and over
2,300 carriers registered in the program. Participation in the trucking and rail carrier
categories grew rapidly in the early years of the program and has leveled off in recent
years. (Figure 3) EPA estimates that the truck carriers represent about 10% of the total
fleet of commercial trucks in the U.S. and over 25% of the total miles traveled by
trucking, both commercial for-hire and private fleets.
Over 2,000 carriers participate in SmartWay. Increasingly SmartWay shippers prefer
SmartWay-registered carriers over non-registered carriers with many making SmartWay
registration either a requirement or a preference in contracts and RFPs. About 300
logistics firms also participate in SmartWay. Logistics firms procure carrier services on
behalf of shipper clients, and they often use SmartWay data and partner status as
criteria to broker freight for shipper clients that are requesting SmartWay registered
carriers.
Figure 3— SmartWay Partner Growth
3500
SmartWay Partner Growth
(2004-2014)
3000
2500
2000
1500
1000
500
0
2004
2006 2008 2010 2012
2014
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SmartWay calculator tools help companies to assess improvements from year to year
and estimates the emissions reductions achieved from efficiency improvements. EPA
aggregates the total emissions reductions of all partners to quantify the program results.
Based on data submitted since program launch in 2004, SmartWay Partners have
saved:
• 51.6 million metric tons of C02 (Figure 4)
• 738,000 tons NOx
• 37,000tonsPM
• 120.7 million barrels of oil
• 5 billion gallons of fuel
• $16.8 billion dollars in fuel costs
SmartWay Partner Savings
2007 to 2013 Performance Trends
60
C
0
C 40
30
U 20
I-
10
0—
2007 2008
38.9
27.9
17.3
2.2
4.2
Figure 4— SmartWay Program C02 reductions
2009 2010 2011 2012 2013
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International Adoption and Replication of SmartWay Program
The SmartWay program has served as a template for other countries and regions which
are working to deploy public-private, market based partnerships to address freight
emissions. EPA and NRCan signed a letter of Agreement in 2012 to extend the
SmartWay program into Canada. This effort has replicated the SmariWay tools into
metric and French versions for use in Canada. EPA and NRCan work together to
create a seamless program for partners in both countries. Mexico replicated 1 st
generation SmartWay tools and methods in its Transporte Limpio program which is
administered by the environmental authority SEMARNAT.
EPA collaborated with a range of stakeholders including World Bank, Clean Air Asia,
and others to pilot SmartWay technologies in China. Those efforts fostered the
development of the Green Freight China Initiative which is being implemented by the
Ministry of Transportation (MOT) using many of the program design elements of
SmartWay. In Europe, a consortium of SmartWay partners and other firms developed
the Green Freight EU program, again, modeled on many SmartWay program features
and processes. Similar efforts are underway in Latin America where other countries like
Brazil and Chile are exploring fuel-saving and emission reducing technologies and
program opportunities.
The global proliferation of green freight programs like SmartWay has captured the
attention of the United Nations and its Climate and Clean Air Coalition. This coalition of
countries is working to address short lived climate forcers and has created a Heavy
Duty Vehicle and Engines Initiative aimed at reducing black carbon emissions and
greenhouse gases. A key element of this initiative includes a Global Green Freight Call
to Action and Global Green Freight Action Plan which is using the SmartWay program
as a template for replication globally.
Key Features and Elements of the SmartWay Program
EPA utilizes multiple features of the program to support the Partnership with industry,
add value and incentives, and help ensure the program meets its goals. These include:
Performance benchmarking and reporting tools: As the program has grown, EPA
has worked to evolve SmartWay to keep pace with the challenges and demands of the
marketplace and its partner community. The program was launched with a set of
simple, “ 1 st generation” spreadsheet calculation and reporting tools that used
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technology surveys to estimate carrier efficiency. In turn, those efficiency estimates
served to create relative rankings of carrier performance. While useful to educate
carriers about technologies and practices, this method did not provide the emissions
factors that shippers increasingly needed to conduct emission footprint analysis and
reporting.
Those spreadsheet calculators were recently replaced with 2 uid generation performance
benchmarking tools. These new, existing tools enable partners to perform more
comprehensive assessments of their freight operations and provide more data to help
optimize performance, increase efficiency and reduce emissions and reduce costs.
More information on these tools and methods can be found on the SmartWay Website.
Data Quality and Assurance: As SmartWay partners increasingly report and publicly
disclose their carbon freight emissions, the program’s influence has grown and it has
become subject to greater scrutiny. In response, EPA has taken steps to ensure the
quality and credibility of data reported by partners. EPA created a SmartWay Data
Verification Program to achieve this. The effort involves SmartWay staff visits to a
sample of partners each year. Through these visits, SmartWay learns the steps its
partners take to collect, quality check, and track the data reported to EPA. EPA also has
published and shared with its partners and other stakeholders, a USmartWay Data Best
Practices Guidance document that is available on the SmartWay web.
Technology verification: EPA created a technology verification program to raise
awareness and build credibility for technologies that carriers can use to save fuel and
reduce emissions. EPA learned early in the development of SmartWay, that this
technology market was fragmented and that confidence and awareness was lacking in
many areas. Many carriers could not afford to risk unproven technologies, or had lost
confidence due to unsupported claims by vendors. The SmartWay technology program
was created to test and collect data on the performance of idle reduction and retrofit
devices, aerodynamic equipment, and tires.
EPA publishes a list of those verified technologies and promotes these categories to
industry. EPA also uses the verification program to set criteria for SmartWay
designated tractors and trailers. The SmartWay designation program allows for
manufactures to build and market equipment with the specification criteria, or for
partners to retrofit existing equipment and label it as usmartWay Designated”
Partner visibility and recognition: To encourage and provide incentives for partners
to accelerate efficiency improvements, EPA provides opportunities for partner visibility
and recognition. These opportunities help EPA to recognize freight industry leaders for
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their corporate citizenship and achievements in emissions reductions and fuels savings
while also encouraging their peers to compete to earn the recognition. EPA does this
through the annual SmartWay Excellence Awards program where top performers in
each partner category are awarded at a major industry event in front of their peers.
Partners compete intensively for these awards and go on to tout their achievements in
the media. EPA provides additional recognition and visibility for partners though public
service advertisements, partner spotlight articles, panel sessions at industry
conferences and through other media channels
Branding and marketing: EPA created a SmartWay brand and logo to educate the
public about cleaner, more sustainable transportation options. EPA uses the SmartWay
brand in the SmartWay tractor and trailer designation program, described above, its
affiliate program and a light duty vehicle labeling program in addition to the SmartWay
Partnership program. Partners in good standing may use the brand per EPA logo
guidelines to promote their participation in the Partnership and their commitment to
improve freight efficiency. Partners use the brand in business-to-business
communication, websites, advertising and reporting. EPA creates awareness and
visibility for the brand, and thus enhances the SmartWay value proposition for partners,
by creating public service campaigns and advertising with the brand. The variations of
the brand can be seen in Figure 5 below.
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SmartWay Brand Marks/Logos
US EPA Dessgnated
SmartWay
SmartWay
Transport Partnership
U S ENvIRONMENTAL PROTECTION AGENCY
US CPA Certified
SmartWaT
Elite
S’ SmartWay
Proud Supporter of
SmartWay
‘ SmartWay
Transport Partner
Gattinq Th.ro With CiEoncr Air
US EPA Designated
11 S SmartWay
Trader
US EPA Designated
SmartWay
Tractor
Figure 5 - The SmartWay logo and its multiple variations
Potential Gaps and Limitations of the SrnartWay Program
SmartWay program results should be commensurate with the resources applied by EPA
and partners alike. The future success of the SmartWay program will require EPA to
continue program innovation to ensure that the value proposition remains strong and
that it evolves to meet the needs of the market and the partners. While the program
results and replication by other countries are indications of the program’s success, the
program does have gaps and limitations which are worth noting for purposes of this
report and its recommendations to EPA.
First and foremost, for a sustainability program that aims to help the freight sector
improve supply chain environmental performance, the program may be lacking in
scope. Currently, SmartWay provides tools for improving sustainability to the trucking
and rail sector.
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While the trucking and rail modes create the most emissions in the U.S., significant
emissions are generated in the other freight modes of air and marine. By not including
air and marine freight modes in SmartWay, EPA may be forgoing opportunities to
leverage partners and market mechanisms in these sectors to generate additional
emissions reductions.
Although EPA has limited resources to invest in the SmartWay program, the question of
applying SmartWay in all modes of freight transportation, including air and marine is one
of the key elements of the workgroup charge. By not helping SmartWay partners to
benchmark their entire freight supply chain EPA may be limiting the utility of SmartWay
and diminishing the value proposition that it represents. These questions will be
addressed later in this report in the section for Air and Marine.
Secondly, EPA and Natural Resources Canada (NRCan) administer SmartWay in their
respective countries to address the freight sector in the U.S. and Canada. While this
reflects domestic obligations and priorities, it may not effectively meet the more global
needs of multinational firms which are sourcing goods abroad and moving them through
a global, multimodal supply chain. While the SmartWay template may be adopted
internationally, in varying forms, countries which implement green freight programs are
more often than not, using tools, methods and metrics which are not necessarily aligned
with each other in ways that facilitate the reporting and exchange of key freight data.
Again, the impact of SmartWay may be limited domestically, by not enabling its more
global partners to complete more comprehensive global supply chain benchmarking.
On a related note, country and regional authorities, as well as investors and consumers
are increasingly requiring or demanding carbon accounting and disclosure. This trend
is driving more firms to seek tools, methods and metrics to do carbon benchmarking
and reporting. SmartWay is used by some of its partners to do this work domestically,
yet many firms are forced to use other methods abroad. Experts and industry
stakeholders alike increasingly see a need to standardize or harmonize freight supply
chain carbon accounting methods, tools and metrics across all freight modes. EPA may
consider opportunities to engage in the growing global dialogue on how to address this
challenge, again with the goal of strengthening the domestic SmartWay program.
Third, as the SmartWay program has grown in market influence, and more shippers use
SmartWay data in their carrier selection process, EPA has determined that there is
more incentive for partners to submit data which overstates performance in order to
enhance their ratings in the program. EPA’s Inspector General reviewed SmartWay in
2012 and found that while the program has a positive impact on industry, a data
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verification process should be implemented to ensure the integrity of self-reported data.
EPA had already begun to implement such a program at the time of the review and has
created a multi-faceted process to address these concerns. These actions included the
development of a Data Quality Best Practices guidance document, training and
outreach to partners, annual site visits, and tool and data process enhancements which
flag any suspect data for further review.
Finally, EPA resources will largely determine the future success of the SmartWay
program as partner participation grows and the scope potentially expands to other
modes. To administer the current program EPA must allocate funding for staffing to
manage the tools, the database and the partner data process, in addition to marketing,
education, stakeholder support, technology verification, and other program needs. In
order for the SmartWay program to meet goals for continued emissions reductions, and
if SmartWay continues to expand to other modes and grow its partner base, EPA will
need to consider how budgeting priorities shall be commensurate to support program
goals.
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Workgroup Approach
Developing a Framework for EPA
In examining the charge from the Mobile Sources Technical Review Subcommittee, the
SmartWay Legacy Fleet Workgroup determined that the most significant and enduring
input it could provide was to suggest an overarching framework for strengthening the
program. The aim is to give the agency a structured approach as it considers options
for modifying and possibly expanding SmartWay.
This framework consists of four main components:
1) Goals and guiding principles,
2) A maturity scale for program assessment,
3) An evaluation and filtering tool for all transportation sectors and subsectors, and
4) Specific recommendations on the main categories of air, marine and nonroad
sectors.
Goals and Guiding Principles
The first and foremost element of this framework involves being clear about the
direction and priorities. The workgroup recommends that EPA immediately and clearly
articulate its goals for the SmartWay program. To help establish these goals, the
workgroup recommends that EPA grow the SmartWay program and enhance integrity
by:
• Maximizing reductions of greenhouse gases and criteria pollutant emissions
across all transportation sectors
• Increasing the engagement and commitments of more partners and
stakeholders, across more sectors
• Continuously improving program assets such as partner tools, web site,
education and training, brand equity, database, and data management processes
• Ensuring the validity of results and benefits through rigorous data analysis and
research, assessment methodologies, peer review, and QNQC processes
However, this list does not provide the level of clarity that EPA will need as it works to
address various tradeoffs and considers where to focus resources. The MSTRS charge
specifically included goals to achieve “further emission reductions and enhanced energy
security”. With this charge, clarity is needed on program goals and how to measure
SmartWay’s success. Will SmartWay have goals around participation, C02
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reduction/fuel savings, criteria pollutants, additional greenhouse gas emissions (GHGs)
such as methane and nitrous oxide, and/or black carbon? For example, if the goal is to
grow participation in SmartWay, then this will lead to a program that has a low bar for
entry and numerous players.
Or, if the main goal is to reduce C02 emissions then the agency will need to prioritize
those areas with the biggest emissions reduction and fuel efficiency opportunities.
Similarly, if the main goal is reduction in criteria pollutant emissions, then the program
design may shift from fuel efficiency to incentivizing retrofits and other emissions
reduction efforts. If EPA intends to focus on addressing black carbon via SmartWay,
EPA may need to use both a 100-year global warming potential (GWP) and a 20-year
GWP for scoring credits. This is especially important if EPA intends to focus on
addressing black carbon via SmartWay.
Thus, the workgroup recommends EPA consider these recommended goals but take it
a step farther by prioritizing them. A logical prioritization could be first to reduce
greenhouse gases, second to grow participation, third to strengthen the rigor of the
program and fourth to improve program assets.
Additionally, the workgroup recommends that EPA work with other agencies and entities
to ensure that this is a national vision for the SmartWay program. It is important to the
success of this effort that there is a single program with a single agency leading the
way. The government should avoid duplication of efforts in freight sustainability and
EPA may work to subsume other related efforts.
The workgroup also identified Guiding Principles and Strategies that are key to the
program’s success. The workgroup believes that EPA should create value for
SmartWay partners and stakeholders by focusing on:
• Increasing partner support and incentives for participation through technical
assistance, education, branding and recognition
• Providing robust and user friendly tools for performance benchmarking which
increases the flow of information
• Driving development, demonstration and broad deployment of fuel saving
technologies and best practices
• Helping partners achieve cost effective fuel savings across all sectors
• Creating broader market demand for fuel efficiency:
o internal to company operations
o from customers and clients
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a via shareholders and other stakeholders
Maturity Scale and Evaluation Tool
The second element of this framework is to recognize that there is a progression for
firms in various sectors (e.g., marine or nonroad) and subsectors (e.g., container vessel
or mining) to participate in the SmartWay program. This occurs naturally as an entity
first starts to participate and must learn the procedures and value of such a program.
Over time, partners become more familiar and will seek to grow their involvement and
thus the value for them. in recognition of this natural progression, the Workgroup
recommends that EPA establish a formal Maturity Scale (Figure 6) and Filtering
Evaluation tool (Appendix C) to better serve the participants and ensure they get as
much benefit as possible out of the program. In considering a possible progression, the
Workgroup considered three levels or phases to reflect participants growing
engagement in SmartWay:
Phase I - Launch and General Involvement to get as many organizations as
possible involved;
Phase 2 - Expanded Tools and Information to enhance the tools and add value to
the SmartWay partners; and
Phase 3 - Technology and Operational Leadership by creating classes of industry
and sector leaders so that entities can distinguish themselves from others and drive
further GHG reductions.
This approach has several positive aspects. First, it enables EPA to present a vision for
how they hope sectors and subsectors may be engaged going forward. Second, it
allows for unique considerations by sector instead of a cookie cutter approach. Third, it
provides greater value to those who remain active and are industry leaders as a
reflection of their increasing priority on the SmartWay program’s objectives.
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The Maturity Scale
-‘Phase 3
Phase 2
Phase 1
Pilot/Demonstration
Prioritized List of Sectors for Inclusion
Filtering Questions
All Sectors
Figure 6 - Sector Evaluation and Filtering Process
For the third element of this suggested framework, the workgroup developed a
methodology (described below) for the agency to utilize when considering the inclusion
of a sector or subsector into the SmartWay program. This was developed because the
decision about what sectors to include in the program is ultimately EPA’s to make. The
workgroup considered various sectors as examples but does not have the resources or
breadth to take on the broad scope needed.
Leaving this to EPA, the workgroup decided to focus its attention and resources on
providing a sound methodology so that the agency has a standard process for use over
the long-term to facilitate such decisions. The workgroup created the following
methodology and tool and recommends that EPA integrate it into their processes.
Techti
h1t4
• Step3
Step 2
Step 1
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Sector Evaluation and Filtering Process:
STEP I -- As a first step, EPA needs to determine what sectors or subsectors to
consider. The workgroup contends that any sector can be considered for inclusion in
the SmartWay program through this methodology. The challenge is doing it at the right
level. For example, considering the nonroad sector as a whole will not be effective
given the variation and complexity of the sector. This means that EPA will need to
segment into subsectors based on similarities that allow vehicles/equipment to be
grouped together. These similarities could include how the vehicles or equipment are
used, who uses them, and the technologies to improve efficiency, among others
STEP 2 -- Once a sector or subsector has been identified for consideration, EPA should
utilize the filtering tool (see Appendix C) developed by the workgroup to take it through
an evaluation process. The tool will promote a standard process consistent with EPA’s
goals and vision for the program to determine whether a sector should be prioritized for
inclusion in the SmartWay program. The tool involves asking specific filtering questions
about the market, fuel, technology, operation and efforts already underway to improve
efficiency in the sector. Quantitative and qualitative data should be gathered as much
as possible in this stage. The workgroup believes this standardized process will make it
much more data based and efficient.
STEP 3-- After EPA has considered various sectors and taken them through the tool,
the workgroup recommends evaluating them together to establish a prioritization. This
is accomplished by considering the output from the evaluation tool and plotting the
sectors against degree of impact and likelihood of success.
STEP 4-- These sectors should then be evaluated and next steps recommended. The
Agency should consider the type and level of engagement for each sector. Options
include 1) not recommending the sector for inclusion in a SmartWay type program, 2)
partnering with another organization focused on GHG reductions for the sector but not
through SmartWay, or 3) including it in the SmartWay program.
STEP 5-- Once a sector has been recommended for inclusion in the SmartWay
program, the Agency would consider the sector’s maturity. Different sectors will require
different focus. For one sector, the focus may simply be on getting the industry involved
while another sector may need to be more focused on establishing differentiation based
on technological and operation leadership. The Agency should determine the sector’s
current maturity level and develop a strategy on how to move it to the next level.
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The Workgroup created and then piloted this methodology with various sectors. The
methodology has been refined through this process. (see example in Appendix C)
However, the overall methodology and tool are not considered final and the Workgroup
recommends that EPA tailors and continues to further improve the methodology and
tool. Furthermore, the Workgroup recommends that EPA dedicate a resource to
implement and integrate them into the Agency’s processes to create a more disciplined
structure for the SmartWay program over the long-term.
As mentioned, the Workgroup utilized this methodology in considering three main
categories of sectors: (1) truck and rail, (2) air and marine and (3) nonroad. Based on
our evaluation, the Workgroup has developed multiple overarching recommendations as
well as numerous sector-specific recommendations for each of these areas.
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Overarching Workgroup Recommendations
Numerous recommendations specific to each element of the charge were generated
from the sub workgroup process and discussions. Those recommendations are made
in the latter sections. However, multiple recommendations arose that were common to
SmartWay at any level regardless of sector or subsector. These recommendations are
offered below as overarching recommendations for EPA to enhance and strengthen
SmartWay, independent of any other recommendations or potential policy changes.
Data Quality Assurance and quality Control
The long-term credibility of any voluntary partnership program rests heavily upon the
ability of independent observers to accept the functionality of program elements, data
accuracy and data quality. To that end, the EPA Inspector General’s office conducted a
review of SmartWay data integrity and the Work Group believes that report serves as a
useful validation of existing SmartWay data quality elements and points to continuous
improvement opportunities which should be pursued. Specifically, the Work Group
recommends:
EPA consider as a core program design principle, the need to balance the need for
rigorous data reporting requirements with a user-friendly, simple process that can be
readily adopted by business and industry. The program requirements must be credible
but not too onerous.
The SmartWay Legacy Fleet workgroup recommends the following:
• EPA should continue to enhance SmartWay data quality and validity by
collaborating and cross-checking with other data providers (i.e., Clean Cargo
Working Group), forming data sharing agreements with classification societies,
key shipping organizations and companies, and consulting with independent
organizations that are doing similar work (i.e., ICCT, academic institutions).
• EPA should continue to enhance the utility of data from new tools, metrics,
performance benchmarking and reporting transparency by:
• Implementing data quality assurance processes via phased approaches
• Encouraging further transparency by partners
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• Identifying opportunities to align with other standard methodologies for data
collection, verification and supply chain application.
• Where available, adopt and harmonize data and methodologies for other
modes with other recognized entities such as BSR’s Clean Cargo Working
Group.
• EPA should develop a data audit protocol to communicate and ensure quality of
SmartWay data. This protocol should be based on assessments that target the
most impactful and widest spread data sources and collection techniques.
• EPA should develop guidelines for third-party data verification.
• A good starting point for this process would be the CCWG verification
protocol. Companies with Environmental Management Systems such as ISO
14001 can incorporate the verification into their periodic audits to minimize
the cost. Another idea might be a tiered approach: simplified data reporting
(use EPA standards), user-reported fuel use (unverified — might be audited in
their financial process), and a top level being third-party verified.
• Guidelines should specify how/if third-party verification will be used for data
dissemination or evaluation of SmartWay partners
SmartWay Brand and Recognition
The strength of the SmartWay brand is crucial to its success. As is the case with
another EPA program, ENERGYSTAR and its appliance label, the brand is most
valuable when a high percentage of its target audience is aware of the brand and its
benefits.
The SmartWay audience is its partners and potential partners, namely carriers and
shippers, and any individuals or organizations with an interest in carbon or fuel
reduction or corporate sustainability. The strength of the SmartWay brand can be
measured by two core criteria: (1) the level of brand awareness among its core
audiences, and (2) the willingness of SmartWay partners to promote their
participation—and the participation of others—in the program.
The SmartWay Legacy Fleet workgroup recommends the following:
• EPA should conduct research on the level of awareness among partners and
potential partners, on the partners’ perceived benefits, and to determine its net
promoter score; and
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• Define the SmartWay brand in a way that leverages its strengths and perceived
benefits based on the research: and
• Continue to enhance the tools, resources, awards, and other visibility efforts it
offers to its partners.
Partner Recruiting and Retention
The success and impact of the SmartWay program is driven by an engaged and
growing partner base, commensurate with program resources. The SmartWay program
needs a wide range of industry participation to help generate the emissions reductions
and energy savings projected by EPA. The partnership dynamic depends upon the
carriers who operate the fleets from which the emissions reductions are generated,
while the shippers and logistics firms drive the demand for more efficient freight
services. It is important to include participation of commercial, for-hire carriers as well
as private fleets, including large and small firms and potentially owner operators. It is
also important to work with shippers in the economic sectors which move the most ton-
miles of freight, and the logistics firms which broker the most freight.
While attracting more partners into the program, it is equally as important to retain
existing partners. Partner retention is important to program results because emissions
reductions are calculated from the change in partner performance from year to year.
Partner retention also strengthens the program by maintaining momentum, visibility and
support of longstanding partners who champion and promote the program. The
SmartWay value proposition must remain strong to help partner retention.
To enhance SmartWay membership recruiting efforts, grow participation, and achieve
continued emissions reductions,
The SmartWay Legacy Fleet workgroup recommends the following:
• EPA should continue to expand the visibility and application of the SmartWay
brand in creative and low or no-cost ways to help create more awareness within
industry and enhance brand value for prospective and existing partners; and
• Enhance the visibility of SmartWay with consumers through a package labeling
program which demonstrates that freight is carried in a more sustainable manner
by SmartWay Partners; and
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• Utilize social media to promote the program by EPA and SmartWay Partners;
and
• Expand the SmartWay program to include other modes of freight as
recommended elsewhere in this report; and
• Develop an expert group to advise EPA on new and better ways to market
SmartWay more effectively and grow its partner base.
To enhance SmartWay partner retention, and strengthen the existing program to
achieve continued emissions reductions, EPA should:
• Continue to amplify partner visibility and benefits through the awards and
recognition programs, public service advertisements, and other forums and
venues where partners can be recognized for their commitment and
achievements; and
• Expand collaboration with SmartWay Affiliates by offering more incentives for
them to participate in SmartWay, such as award and recognition opportunities,
engagement with senior EPA officials and enhanced social media; and
• Enhance, streamline and simplify partner educational resources, including
partner report cards, benchmarking and reporting tools; and
• Continue to provide opportunities for regular information exchange and
networking for Partners though webinars, meetings, conferences and other
forums.
Financing
Financing is a critical element in a transition to newer fleets. Given the transient nature
of the transportation business, many operators have difficulty competing in the market
with regard to obtaining loans and financing the purchase of new engines and
maintenance and upkeep of older equipment. Financing provides an incentive for
adoption of newer technologies as well as assistance to the industry in complying with
regulatory requirements. In an effort to facilitate transition to cleaner and more efficient
fleets, EPA should enhance and refine current financing efforts, subject to resource and
budget constraints. The following recommendations highlight opportunities to leverage
existing resources and maximize investments.
The SmartWay Legacy Fleet workgroup recommends the following:
• Implement small scale pilot projects to demonstrate the cost effectiveness of
SmartWay;
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• Reassess allocation of resources across regions and prioritize hotspot or heavily
polluted areas;
• Require more public/private partnerships to distribute burden of cost share;
• Encourage additional credit in scoring rubric for multi-pollutant reductions;
• Work with lenders and others to facilitate financing of replacement trucks, and
adopt minimum eligibility criteria for financing;
• Develop a common application for financing that may be tailored based on
regional considerations;
• Work more closely with individual states to leverage state funds with federal
dollars; and
• Encourage outreach in areas that may be underserved or have special
demographic considerations, for instance minorities or non-English speakers.
Black Carbon
Though the science of black carbon (BC) impact on climate is rapidly developing, BC
emissions have known impacts on public health, the environment, and the Earth’s
climate. Yet as a voluntary and leading edge program, SmartWay has an opportunity to
directly impact BC emissions through its existing focus on particulate matter (in addition
to C02 and NOx emissions). The Agency is capable of distinguishing BC in its
assessment metrics and avoid “double-counting” of BC and particulate matter
reductions. The SmartWay Legacy Fleet workgroup recommends that BC be included in
the assessment metrics for the program as detailed below, with a caveat from one
member that EPA continue to keep abreast of the science as it develops.
According to U.S. EPA’s March 2012 Report to Congress on Black Carbon, 7 BC is a
significant component of particle pollution, which has been linked to adverse health and
environmental impacts through decades of scientific research. Recent work indicates
that BC also plays an important role in climate change; BC has been linked to a range
of climate impacts, including increased temperatures, accelerated ice and snow melt,
and disruptions to precipitation patterns. Importantly, reducing current emissions of BC
may help slow the near-term rate of climate change. A new comprehensive
assessment of BC climate-forcing 8_ estimates that BC, with a total climate forcing of
+1.1 Wm 2 , is the second most important human emission in terms of its climate-forcing
in the present-day atmosphere. Only carbon dioxide has a greater forcing effect,
EPA EPA-450/R-12-001 (March 2012), httm//www.eoa.gov/blackcarbOfl /
8 Bond et al., Bounding the Role of Black Carbon in the Climate System: A Scientific Assessment, Journal of
Geophysical Research: Atmospheres (2013), htto://onlinelibrarv.wi ley.com/doi/10 1002/igrd.50171/abstract )
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according to the results published in this new study. BC reductions are also one of the
short term climate forcing agents that is the focus of a new international coalition under
the United Nations Environment Program that includes the United States and Canada,
called the Climate and Clean Air Coalition 9 .
For mobile sources, both new engine standards (e.g., EPA’s 2007-2010 heavy-duty
highway engine standards) that establish strict performance-based standards and
particulate filter retrofits of existing engines/vehicles (e.g., EPA’s National Clean Diesel
Campaign or California’s Diesel Risk Reduction Program) can help reduce BC
emissions. The availability of ultra-low sulfur fuel is an important enabler to the
deployment of BC reducing technologies such as catalyzed diesel particulate filters in
the on-road or off-road sectors. While many developing countries have already begun
phasing in filter-forcing emissions and fuel standards, BC emissions related to mobile
sources in developing countries are expected to continue to increase. According to the
previously cited reports, diesel engine particulate emissions accounted for 20% of
worldwide BC emissions in the year 2000. Emissions control requirements lag behind
in some regions, as does on-the-ground deployment of diesel particulate filters and low
sulfur fuels. Further or more rapid reductions in BC will benefit from accelerated
deployment of clean engines and fuels.
The SmartWay Legacy Fleet workgroup recommends the following:
• Based on BC’s importance as a climate forcing agent, EPA should consider
enhancements to the SmartWay program that provide partners the opportunity to
receive credits related to black carbon reductions associated with the use of
particulate filters on new and existing engines employed by SmartWay partner
fleets.
• This credit would be in addition to the current SmartWay scoring method that
accounts for reductions in particulate matter (PM) emissions from trucks used in
freight transportation. This additional BC credit would further incentivize fleets to
employ retrofit diesel particulate filters on older engines and/or replace older
trucks with newer, particulate filter-equipped trucks.
• This black carbon reduction credit could also be extended to off-road or
locomotive fleets as part of an expanded SmartWay program. A BC reduction
credit may have more significance outside the U.S. in countries or regions that
9 http://www unep org/ccacf
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have less aggressive engine and fuel standards, and transportation fleets with
low utilization of BC reduction technologies such as diesel particulate filters.
• As part of implementing a BC credit in SmartWay, EPA will need to determine an
appropriate BC credit value based on the available science related to the
estimated climate forcing factor for BC and an averaged BC content of particulate
emissions from diesel or other types of engines used in the SmartWay program.
The BC content of particulates emitted by engines will likely vary by engine type
and engine technology content.
• As part of the international interest in SmartWay-Iike, green freight initiatives,
EPA should strongly encourage the availability of ultra-low sulfur transportation
fuels in developing countries to further facilitate BC reductions from the
transportation sector associated with the use of particulate filters on new and
existing diesel engines.
Operational Strategies
Current EPA SmartWay Tools allow partners to describe a variety of operational
strategies as part of their tool submission. These worksheets are unstructured in nature
and are mostly “for information only” to EPA and are not directly tied to the scoring
system or systematically shared between partners.
There are many practical, cost-saving operational practices that shippers can implement
to meet carbon reduction goals. The report for shippers currently includes placeholders
for reporting miles removed from the system, weight removed from the system, and
modal shift. The criteria should be expanded to include additional carbon-saving
operational strategies that shippers can implement. Below are some of the most widely
used ones:
• Choose the most carbon-efficient transport mode possible.
o Choosing rail over road
o Choosing barge over road
o Choosing ocean over air
• Collaborate with other shippers, competitors, and service providers
o Collaborative distribution
o Co-loading freight
o Backhaul matching
o Flexible customer deadlines to enable consolidation
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• Redesign your logistics network.
o Optimizing for carbon-efficiency
o Strategic location/upgrading of facilities to enable more carbon-efficiency
modes
• Get the most out of every move, every day.
o Container utilization (e.g. matching import/export containers)
o Co-loading freight
o Reducing empty backhaul
o Package redesign for logistics
Partners are already implementing a variety of these strategies and it will be beneficial
to the program to promote them widely, recognize their efforts and to provide resources
for others to learn from these efforts.
SmartWay can also be a catalyzer and promoter of system-wide operational strategies.
For example, matching export containers with import containers for import shippers.
Many large import distribution centers have hundreds of empty containers, on site,
which have to be transported back to the port of origin. This creates opportunities for
shippers to reduce emissions (and congestion) by matching these empty containers
with export loads. Walmart, for example, imports approximately 700,000 containers per
year. If Walmart matched 25% of these it could result in potential fuel savings of
5,250,000 gallons of fuel per year.
The SmartWay Legacy Fleet workgroup recommends the following:
• Raise the bar for environmental performance of Shippers. The current reporting
system should be expanded to include additional and more comprehensive
operational strategies.
• The index for SmartWay Shippers should include establishing a carbon reduction
target and publicly reporting it. Shippers like Nike have taken the lead in setting
goals for supply chain carbon reductions. Nike has set an ambitious goal to
reduce carbon emissions from inbound logistics by 30 percent from 2003 to
2020. Other shippers can, and should, be encouraged to do the same and set
aggressive and achievable goals for their transportation system. With a public
target available, documented operational strategies could be tied to absolute
reductions.
• Ability to formally select (via checklist for example) to capture the operational
strategies being used by partners. Partners will need to submit case studies or
other documented reports to obtain “scoring points” on the strategies.
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Allow all partners to review case studies that outline how companies have
achieved cost and environmental savings. See
http://ctl.mit.edu/research/case studies carbon efficient logistics for an example
on how a case study can be written or submitted. These case studies can be
organized by partner type, year, operational strategy, savings potential, etc. This
will become a repository for others to look for inspiration and support the
improvement of all partners.
As these operational strategies involve multiple parties (e.g. shippers, carriers and
3PLs), a clear reporting structure needs to be defined to avoid “double-counting” of fuel
and/or C02 savings. A “Scope 1” vs. “Scope 3” approach similar to the GHG Protocol,
could be used to differentiate C02 savings from owned assets vs. third-party assets.
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Truck and Rail
The U.S. economy is dependent on the freight sector to move commodities, food and
manufactured goods, both for domestic consumption and for import and export. Over
17 billion tons of freight move each year across 4.1 million miles of roadways and
139,000 miles of railroad. Over $16 trillion worth of freight is shipped yearly, or about
$46 billion worth of freight daily, creating significant economic activity. 10
The trucking and rail sectors dominate freight activity in the U.S., in terms of weight
shipped, energy used and GHG emissions generated from freight activity. Freight
tonnage of trucking alone exceeds all other modes combined (Figure 7). Rail is a
distant second, followed by water, pipeline and multimodal shipping, with air taking a
small fraction. Trucking accounts for about three-fourths of freight transportation
energy consumption. 12 While freight accounts for about one-fourth of total
transportation GHG emissions’ 3 , freight transportation GHGs has grown twice as fast as
that for passenger travel since 1990.14 Trucking accounted for the lion’s share of freight
emissions followed by freight rail, a distant second. 15
10 U.S. Department of Transportation, Research & Innovative Technology Administration Bureau of Transportation
Statistics, Transportation Statistics Annual Report 2012 (Washington, DC: 2013)
http://www.rita.dot.gov/btS/siteS/rita d 0 t.gov.bts/fules/publicatiOfls/traflSpOrtatiOn statistics annual report/201
2/index.html
“U.S. Department of Transportation, Federal Highway Administration Office of Freight Management and
Operations, Freight Facts and Figures 2011 (Washington, DC: 2011) FHWA-HOP-12-002
httQ://www.ops.fhwa.dot.gov/freight/freight analysis/nat freight stats/docs/llfactsfigu res/index.htm
12 US DOT Freight Facts and Figures 2011
13 US DOT Transportation Statistics Annual Report (2012)
‘ US DOT Freight Facts and Figures 2011
15 US DOT Freight Facts and Figures 2011
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Figure 7 — Freight Tonnage by Mode 16
EPA focused its SmartWay efforts on the truck and rail freight modes primarily because
they are the dominant areas of freight activity and have the greatest environmental
impact domestically. By dedicating limited program resources to these modes, EPA
could drive efficiency gains, cost savings and emissions reductions more strategically
than if SmartWay were launched in every mode of the freight sector. While the program
currently includes the participation of the Class I Rail lines, and over 2,300 carrier
partners, it represents a fraction of ground based freight activity in the U.S. The
recommendations that follow are intended to strengthen and grow the impact of the
partnership and the results.
‘ 6 http : //www.ops.fhwa.dot.gov/freight/freight analysis/nat freight stats/docs/l2factsfigu res/pdfs/fff2Ol2 h ighr
es.pdf US DOT Freight Facts and Figures 2012
20000
.
I
-
Million Metric Tons of Freight ( 2011 )
18000
16000
14000
12000
10000
8000
6000
4000
2000
Water Air, air & Multiple Pipeline Other
Truck Modes &
mail
0—
Total Truck Rail
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Vocational Trucks
The Vocational Truck business subsector is a diverse and complex combination of
specialized vehicles and fleet sizes that differs substantially from line-haul truck
applications. Vehicles can range from higher volume city delivery vans and waste
haulers, to low volume, very specialized severe duty vehicles used in energy exploration
and unique combinations of on and off road use as well as use in powering driven
equipment such as pumps, cranes, drill rigs and other specialty work tools. As a result,
the impact of SmartWay technologies can vary widely.
For example, It can be presumed hybrid technologies could have benefit in applications
where energy recovery through braking or repetitive work cycles are a feature of the
product application while technologies such as aerodynamic features and low rolling
resistance tires may have little or no effects in the vehicle’s operation. Ownership
characteristics also vary from large, international parcel delivery firms, to small, owner-
operator severe duty dump trucks, where the freight shipping business case and
shipper/carrier dynamic may not be applicable. More detail on a draft filtering analysis
of this segment is available in Appendix C.
The SmartWay Legacy Fleet workgroup recommends the following:
• EPA should limit its focus on Vocational Trucks to the existing fleet-based focus
on operators of large refuse, delivery or utility truck fleets.
• EPA should put emphasis on specific technologies appropriate to the targeted
Vocational Truck sub-segments to optimize program value. This may include
hybridization for fleets where energy capture, storage and reuse are most
feasible.
• EPA should not attempt extension of the SmartWay program to highly
specialized owner-operator vehicles with non-freight operations where limited
benefit can be expected and program requirements would discourage
participation
• To the extent targeted Vocational Truck applications serve smaller groups of
dominant customers such as utilities, municipalities or other enterprises, EPA
should seek to offer those entities a participation route in SmartWay similar to the
Shipper — Carrier model used in line haul freight.
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Drayage Trucks
Drayage trucks play a critical role in moving freight from ports, railheads and borders via
short haul to distribution hubs. Generally speaking, EPA should focus drayage program
efforts on the medium and larger port drayage carriers (50 + tractors) because data
collection and program requirements may be too onerous for smaller carriers and
individual owner operators.
Generally speaking, drayage owner operators must contract with a licensed motor
carrier because motor carriers have interchange agreements with steamship lines,
railroads and other third party equipment providers in order to use their equipment.
Many large shippers require Electronic Data Interchange (EDI) which is expensive and
beyond the financial and technological capability of owner operators. The lntermodal
Association of North America has data in this area.
The SmartWay Legacy Fleet workgroup recommends the following:
• EPA should consider the development of a web based calculation tool that would
be easier for the medium and smaller drayage carriers to use. Possibly modeling
the tool after some e-commerce web sites would encourage use.
• With respect to the drayage carrier community, the EPA should consider the
development of port metrics. Numerous Marine Terminal Operators are installing
automated technology to process trucks through the Port. Specifically, they are
installing RFID tags on drayage tractors in order to identify the specific tractor as
it enters and leaves the terminal. This technology could be used to measure the
idling time within the terminal as well as the idling or queue time outside of the
terminal.
• EPA could work with importers, exporters, freight forwarders and third party
logistics companies to encourage the use of SmartWay drayage partners.
Logistics
Logistics include a variety of actors that facilitate the movement of goods between
shippers and customers. The current EPA SmartWay program was primarily designed
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to support two of those actors: shippers and carriers. As the program expands to other
actors such as warehouse operators, ports and third party logistics providers, additional
considerations are needed.
Third Party Logistics Providers (3PLsI
In the last 10 years, the Third Party Logistics (3PL) industry has developed a number of
business models that have proved challenging to the SmartWay program. 3PL
business models can be broken down in two ways: non asset based vs. asset light (with
limited internal fleets) and transportation brokerage (where the 3PL contracts with and
selects the carrier and often the mode) vs. shippers agent (where the shipper selects
and contracts directly with the carrier and the 3PL executes the load). These varying
business models have important ramifications in data collection and scope of activities
captured by the EPA SmartWay program. Specifically, there is an added increased
complexity around which shipments to include when reporting data to EPA SmartWay.
In addition, different operating units within a 3PL have specialized functions and are
further broken down by geography or mode.
A salient issue around the participation and measurement of 3PLs is how to incorporate
process and mode selection in the SmartWay data. 3PLs often adjust their operations
by lane (e.g. origin-destination) to obtain higher efficiencies or to support new customer
requirements. For example, when a 3PL switches a truckload lane to an intermodal
lane, how should that mode change be counted? What characteristics qualify as a mode
change? How long should the benefits of a mode change be counted — for 6 months,
for one year?
Another important characteristic of 3PLs is the degree of specialization. If a 3PL
specializes in a specific segment of the industry, the underlying carrier base could have
very different participation rates amongst carriers within the SmartWay program. For
example, a 3PL that has a large mix of LTL transactions will automatically route more
transactions on SmartWay carriers than a 3PL who has a higher mix of TL transactions.
Geography and contracting requirements increase the dimensions that may affect a
3PL’s ability to fit existing SmartWay reporting strategies. More detailed definition and
guidance is needed in order to better enable a comparison across 3PL market
segments.
Other Logistics Actors
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Warehouse operators, ports and freight terminals are part of the logistics network. Fuel
and energy may be consumed at each of these locations. 3PLs, freight forwarders and
shippers have a variety of footprints and strategies to manage these activities, It is
unclear the value of adding these actors to the EPA SmartWay program since (a)
energy consumption and not fuel consumption is often the main driver of GHG
emissions: (b) GHG is not their environmental priority (e.g. pollutants) and (c) other
programs are being designed to support the specific characteristics of those actors (e.g.
BSR and terminal operators)
Thus, EPA should further refine the participation and measurement of logistics
companies in the SmartWay program as described in the recommendations below.
The SmartWay Legacy Fleet workgroup recommends the following:
• Keeping the focus on 3PLs and not branching into other actors of the logistics
system.
• Providing clear definitions and instructions to 3PLs on which transactions to
include when reporting to SmartWay. This should include guidance on how and
whether to report freight moved on their own assets or others and guidance on
whether shipments routed to carriers by shippers should count for a 3PL.
Adopting a “Scope” based model similar to the one adopted by GHG Protocol for
corporate reporting may be a starting point to help refine reporting guidelines.
o Specifically, the “shippers’ agent” model of 3PLs should not be part of the
EPA SmartWay program reporting since those decisions are fully
controlled by the shipper.
• Providing clear definitions and instructions on how to classify and count mode
changes and process improvement changes such as reducing detention time and
increasing load factors for shippers and reducing dead-head miles for carriers.
This is one of the top values a logistics company provides and certainly the most
controllable variable in emission reduction. While a 3PL isn’t choosing which
specific truck will haul each load, they can and do help their customers redesign
lane efficiency.
For this reason it is critical to capture this component. With a clearly defined
methodology in data collection processes and expectations, this true
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representation of the part 3PLs play in reducing emissions and increasing
efficiency would more accurately represent their unique contribution to the
program instead of re-counting previously measured carriers.
• Setting mode specific SmartWay participation goals to accommodate the
different modal focus of 3PLs (LTL, Intermodal, TL, etc.). For example, should
LTL shipments be tendered to SmartWay carriers 85% of the time while
Intermodal shipments should be tendered 95% of the time?
• When reporting and summarizing 3PL performance, SmartWay should
differentiate between carrier fleet sizes in order to avoid a bias toward carriers
with more than 100 trucks in their fleets. Just as mode specific goals should be
more refined, fleet size should be used to differentiate and reflect the potential
utilization by 3PLs. For example, fleets of 100 or more could have a utilization
goal above 70% while fleets of 20 or less could have a utilization goal of more
than 20%.
o Geographical focus also has an important impact in overall 3PL
performance. As such, EPA SmartWay reports should provide the right
level of detail to users of final benchmarking metrics
Small Carriers and Owner Operators
The single biggest area of opportunity to increase participation for SmartWay is in the
small carrier and owner operator segment of the truck load market. However, it has
been well documented that it is more costly on a per truck basis for SmartWay to
manage and approve smaller fleets and owner operators compared to larger fleets.
Participation rates in SmartWay drops considerably once you look past the largest
1,000 trucking companies in the country. There are still tens of thousands of trucking
companies that can benefit by participating in the SmartWay program.
In order to drive increased participation and awareness of the SmartWay program
among small fleets and owner operators, EPA should consider the recommendations
outlined below.
The SmartWay Legacy Fleet workgroup recommends the following:
• Continue to invest in equipment testing and verification. Small carriers and
owner operators find value in quality third party accreditation of the many types of
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technology and products available to improve fuel efficiency and reduce
emissions. This is often the exposure small fleets and owner operators have to
the SmartWay brand and program.
• Identify a more practical entry point for small fleets and owner operators. This
may include submitting self-validated data to a third party (like a 3PL) who can
facilitate their data collection and participation in a way that minimizes the
administrative burden for EPA and the resource constrained small carriers, while
creating value and achieving additional cost savings and emissions reductions.
• Consider a web based tool which would be based on E-Commerce sites and
would be easy to use by smaller carriers with limited resources. This could also
include a “self-reported” designation for very small fleets that certify to a handful
of requirements in order to be considered SmartWay partners.
• Explore facilitating better access to more capital for small fleets through contacts
within government and the NGO community.
• Differentiate between carrier sizes within the TL sector, in order to avoid a bias
toward carriers with more than 100 trucks in their fleets. Just as mode specific
goals should be more refined, fleet size should be used to differentiate and
reflect realistic potential utilization by shippers and 3PL’s. For example, fleets of
100 or more could have a utilization goal above 70% while fleets of 20 or less
could have a utilization goal of more than 20%. This would provide focus for
shippers and 3PL’s to both reach meaningful goals for utilizing small carriers and
owner operators while not creating a potential bias towards large carriers.
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Driver Training
Training that targets fuel efficiency and maintenance offers multiple benefits that help
drivers recognize and change driving habits that waste fuel. While efficiency practices
reduce fuel costs, they can also save longer term maintenance costs, and improve
safety. Even highly experienced truck drivers can boost skills and enhance driving
performance through driver training programs. For example, driving 65 mph instead of
55mph can use up to 20 percent more fuel, idling a typical heavy-duty engine burns
about 0.8 gallons of fuel per hour, and driving with the engine rpm too high can waste
several gallons of fuel each hour. Other common habits that reduce fuel economy are
frequent or improper shifting, too-rapid acceleration, too-frequent stops and starts from
failing to anticipate traffic flow, and taking circuitous routes. Driver training programs
can produce fuel savings of 5% or more, with some studies showing much greater
results.
To support SmartWay partners and industry efforts to enhance driver performance, EPA
collaborated with Natural Resources Canada to create an online training course to help
drivers boost skills and save fuel. This self-directed, multi-media curriculum was
launched in 2011 as the uSmartDrlver E-Learning” program 17 and is available online, for
free to all industry and public.
The SmartWay Legacy Fleet workgroup recommends the following:
• The SmartWay program should be integrated into driver training schools as a good
way to encourage participation in the program. This would generate more
awareness of SmartWay and expand the base of drivers who are knowledgeable
about how to collect and report data.
SrnartWay Designated Trucks
The verification and designation of SmartWay OEM equipment such as SmartWay
trucks and SmartWay technologies, including retrofit technology equipment, play a
critical role in marketplace. The workgroup strongly support EPA’s continued role in
certifying and verifying such technologies.
17 p //fIeetsrfla1tIearfllflg.flrCafl gc.ca/Saba/Web/Mai n
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SmartWay provided substantial and valuable insight into Class 8 over-the-road fuel
efficiency improvement and emission reduction technologies that furthered Agency
understanding of the technical and business models available and utilized by the truck
freight industry. This information provided critical background information for the
Agency’s Phase I Greenhouse Gas and Fuel Efficiency rulemaking that mapped a
regulatory course for a 10% to 20% improvement (depending on truck class) in fuel
efficiency and commensurate GHG reductions from the nations’ medium and heavy-
duty on-highway truck fleets. Many of the SmartWay promoted technologies and
product attributes are now commonplace on the nation’s roads and are being
incorporated in certified configurations aimed at meeting the Phase I rulemaking, for
model years 2014-2018. To further their penetration into the market, it is important
these technologies remain within the SmartWay portfolio of choices as Phase I is
implemented.
With widespread acceptance and integration of these technologies into the nation’s
fleet, it is now opportune for SmartWay to look ahead towards technologies and
attributes that can inform and support the Phase 2 rulemaking in this area. The unique
voluntary and market drive focus of SmartWay provides the Agency with a special
opportunity to examine the practical and economic benefits of new technologies and
understanding of appropriate scope and stringency in the Phase 2 rulemaking.
The SmartWay Legacy Fleet workgroup recommends the following:
• EPA should ensure the SmartWay program is aligned with any regulatory
development program or research initiatives seeking to verify the performance of
fuel saving technologies that might be incorporated in the Phase 2 rulemaking. This
alignment needs to occur across Agency boundaries and governmental
organizational roles & responsibilities.
• EPA should strive to improve and streamline the technology verification process for
all sectors including how to make the process more accessible to all suppliers of
promising technologies, with a view toward cost effective verification. Setting
nominal timeframes for verification should be considered along with a transparent
reporting process for verification status.
• EPA should consider a baseline of efficiency improvement to prioritize verification
and programmatic elements. The workgroup recommends EPA assess
future/emerging technologies that could be part of SmartWay portfolio and support to
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overcome market barriers to adoption of those technologies. This includes
calculating their costs, identifying and addressing market barriers, and quantifying
energy and monetary savings of the SmartWay verified products.
• EPA should refine the baseline level of performance for SmartWay tractor
designation requirements for 2014 and later model year tractors to match the Phase
I rulemaking requirements and recognize decisions that add SmartWay
technologies beyond those included in certified tractor configurations. Higher
performance thresholds might be derived by looking at the bins in the regulation and
pattern the SmartWay designation on the higher efficiency bins with improvement
over time (e.g., raise the bar). The designation may include an updated or
enhanced vehicle identification label to reflect the improved performance.
• EPA should continue the trailer aspect of the SmartWay program adding
programmatic enhancements that could inform and support the Phase 2 rulemaking
that may potentially include future trailer regulation.
• EPA should extend the application spectrum for the SmartWay program by including
aspects of vocational truck utilization such as hybridization in start/stop fleets or in
work tool oriented vehicles that include energy efficiency gain opportunities.
• The work group recommends that any alternative fuel technologies included within
the program be measured against a common fuel performance baseline from
traditional diesel or gasoline fuels. The analysis should be based on energy
efficiency per unit of work performed and consider any non-regulated aspects of the
technology’s emissions impact.
Rail
The U.S. economy depends on a multi-modal transportation system that efficiently links
businesses with consumers, suppliers, and markets. Freight rail transportation meets
this need with a vast network of over 139,000 miles of rail lines, operated by seven
national Class I railroads, 21 regional Class II and 500 local Class Ill railroads. 18 These
18 U.S. Department of Transportation, Research & Innovative Technology Administration Bureau of Transportation
Statistics, Transportation Statistics Annual Report 2012 (Washington, DC: 2013)
httø://www.ruta.dot gov/bts/sites/rita.dOt.ROV. bts/flles/DublucationS/tranSOOrtatiofl statistics annual report/201
2/index.html
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rail operators connect U.S. consumers with agricultural, economic, logistics, and
manufacturing centers domestically and with Canada and Mexico. In 2011, railroads
carried 1.7 trillion freight ton-miles.
The SmartWay Legacy Fleet workgroup recommends the following:
• Because rail lines do not necessarily compete against each other in the same
markets, they do not need to be ranked for comparison purposes. Rail emission
factors should be provided in alpha listings rather than bin rankings.
• Comparing rail freight efficiency to truck freight efficiency is not easily done using
volumetric metrics like TEU-mile for a truck equivalency factor. SmartWay
should use a g/ton-mile or revenue ton-mile metric for comparing truck and rail
freight.
• AU railroads which commit to participate in SmartWay and submit data as
required, should qualify to use the SmartWay Logo as recognition of that
commitment. SmartWay should consider using a second tier logo to indicate
superior environmental performance.
• SmartWay should incorporate operational strategies (e.g., rail lubrication, idle
reduction) into the rail performance benchmarking system.
• SmartWay should revise the rail data reporting timeline to account for the Federal
data reporting requirements (RI Report) which are not due until June each year.
• EPA should enhance the visibility of and recognition for Rail participation the
SmartWay program.
Transportation Refrigeration Units
Transportation Refrigeration Units (TRU) are necessary to carry perishable goods and
prevent their spoilage. These are attached to insulated containers and operate
separately from the main engine via an alternative power source. TRUs produce carbon
dioxide emissions during their operation. They also release refrigerant emissions with
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high global warming potential during the course of their lifetime, both through regular
leakage from valves and hoses as well as irregular leakage from poor servicing
practices and improper disposal. The transport of perishable goods requires that TRUs
operate for long periods of time, including when the vehicle engine may be switched off
and deliveries are being made, resulting in the consumption of significant amounts of
fuel. Furthermore, the climate impacts of refrigerant emissions from TRUs are
unregulated
The SmartWay Legacy Fleet workgroup recommends the following:
• EPA should have Partners account for the use of fuel in refrigerated containers
and trailers in the SmartWay index scoring system.
• Additionally, EPA should incentivize and support the adoption of more efficient
TRU5 and low global warming potential (GWP) refrigerants as specifically
outlined below.
• The priority policy or strategy for TRUs should be to incentivize and
accelerate the upgrade or purchase of refrigeration systems that utilize high
efficiency technologies like electric compressors and other strategies.
Information about the availability and cost of technologies to improve
efficiency of TRU5 is something SmartWay can and should provide. For
instance, a transition to low GWP refrigerants during the purchase of new
equipment should be rewarded with additional credits.
• The operational strategies feature of the SmartWay tools could include credit
for partners checking the leak rates of refrigerants on a routine basis.
• Because low refrigerant charge increases fuel consumption of TRUs, the
regular maintenance of TRUs to ensure proper refrigerant charge and identify
irregular leaks should be given some form of credit in SmartWay.
• Because the efficiency of TRUs can be affected by alternative refrigerants,
and depending on operational conditions, EPA should provide information to
educate potential purchasers regarding the appropriate improved alternative
refrigerants and more efficient systems that make sense for each application.
• As an example for EPA to consider, the Clean Cargo Working Group
incorporates the energy difference for dry container and refrigerated
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containers for ocean going vessels. The methodology determines separate
factors for each trade lane based on these differences. This concept could be
adopted for other modes by developing tables for average fuel consumption
by temperature set points, thus simplifying the process vs. adding fuel use
tracking for TRUs.
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Air and Marine Freight Sectors
Introduction
The marine and air freight sectors represent respectively about 5% and 8%19 of the
energy used to transport goods in the United States. Historically, each sector has
experienced steady growth on a global basis in the 20th century (4.0% per year for
marine [ 1] and 7% per year for air freight [ 2]). This growth was in large part driven by
increasing global specialization, and expanded supply chains. These trends persist for
the maritime sector even through the recent economic recession. During that time,
modal shifts have led to a contraction of air freight volumes that appear be permanent.
Air freight volumes are at approximately 2003 levels and aren’t expected to increase
until the global economy fully recovers. This growth is in large part driven by increasing
global specialization, and expanded supply chains. As SmartvVay seeks to improve the
efficiency of freight transport in the United States, it is critical that the program
understands the market, regulatory and technology drivers underlying the current
performance of the marine and air freight sectors. Engaging in these sectors would
enable the SmartWay program to have a more comprehensive view of goods movement
to and from the United States. SmartWay may have an opportunity to standardize GHG
performance indicators, document and publicize best practices, and promote the most
efficient carriers. SmartWay could leverage industry-led and regulatory efforts with
similar aims, to streamline data collection requirements and amplify the program’s
reach.
It is important to note the substantial differences between the marine and air freight
sectors in terms of scale, market structure, and energy intensity. Domestically, about 10
million metric tons of freight was moved by air in 201020 compared to about 800 million
metric tons of freight moved by ship in the same year 21 . From a metric ton-kilometer
perspective, again domestically, about 18 billion ton-km were carried by air domestically
in 201022 compared to 730 billion ton-km of freight carried by water 23 . Internationally, air
and ocean cargo account for 143 billion 24 and 65 trillion ton-km 25 globally.
‘ Oak Ridge National Laboratory (2012) “TransportatiOn Energy Data Book” Edition 31
20 http://www.transtats. bts.gov/OneWay.aSp?DiSPlaY_Flag=0& rCent_HagO
21 Oak Ridge National Laboratory (2012) “TransportatiOn Energy Data Book” Edition 31
22 BTS “Air Cargo Summary Data” http:/fwww.traflStatS.bt$.gOv/freight.asP Retrieved on January 25, 13
Oak Ridge National Laboratory (2012) “TransportatiOn Energy Data Book” Edition 31
24 World Bank (2013)”WOrld Development Indicators” http://databank.worldbaflk.org/
UNCTAD (2012) “Review of Maritime Transport 2011”
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Two major providers (FedEx and UPS) dominate the domestic air freight market. The
marine sector is somewhat less concentrated with the top 20 operators controlling
nearly 70% of the TEU (twenty-foot equivalent unit) capacity globally 26 . Moving goods
by air emit 47 times as much C02 per ton-mile (32 per metric ton-km) as moving goods
by ship 27 , 28 although airlines account for only 2 percent of the nation’s man-made
greenhouse gas (GHG) emissions. Of course these modes are seldom direct
competitors. Moving goods by air is more expensive than other modes and is often
reserved for high value or highly perishable freight 29 . Marine cargo ranges from bulk
materials and agricultural products to manufactured goods, vehicles and refrigerated
cargos.
As inherently transnational transportation modes, shipping and aviation are regulated by
international United Nations-affiliated bodies. Through the International Maritime
Organization (IMO) and the International Civil Aviation Organization (ICAO), member
states work together to define the rules and regulations that govern shipping and
aviation including environmental performance standards. Both venues have set
standards for criteria pollution emissions. The United Nations Framework Convention
on Climate Change conferred to IMO and ICAO the responsibility for developing sector-
specific approaches to reducing GHG emissions. The IMO has adopted efficiency
standards for new ships starting in 2015 based on an Energy Efficiency Design Index
(EEDI), and Ship Energy Efficiency Management Plan are required to address in-use
fuel consumption. The ICAO is currently developing C02 standards for new aircraft.
Both venues are discussing the possibility of additional market based measures to
further reduce GHG emissions.
26 UNCTAD (2012) “Review of Maritime Transport 2011”
27 Calculated based on energy consumption and ton-mile freight data; emission factors come from Unit Conversion
published by EPA 2004 version
Graphic provided by Edgar Blanco, MIT Center for Transportation & Logistics
29 In fact, in 2010, air shipments accounted for almost a third of the value of all exports (more than any other
transportation sector) and the Bureau of Transportation Statistics confirms that air shipments account for nearly
$1 billion per day in international trade
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Air Cargo
Air Cargo Market Characteristics
The US domestic air cargo market is dominated by two US carriers, FedEx and UPS
that carry a combined 74% of domestic air freight 30 . The next three largest carriers are
based in China and hold a combined 16% of the domestic market, with the remaining
carriers holding 2% or less. FedEx and UPS also hold a significant share of the
worldwide market accounting for 32% of the air cargo. The next three largest cargo
carriers are Cathay Pacific Airways, Korean Airlines and Emirates Airline, which
combined carry another 32% of worldwide air cargo. Remaining carriers each hold 9%
or less of the worldwide market.
FedEx and UPS both publicly stated goals to increase the fuel efficiency of their aircraft
fleets by 20% in 2020, in 2008 and 2009, respectively, on a ton mile basis. By 2011,
FedEx had achieved a 13.8% increase in efficiency, and announced that it had
increased its goal to 30% by 2020. Increases in fuel efficiency have been achieved by
upgrading technology and improved management practices. The specific means of
improving efficiency, and the degrees of success with which they are implemented are
considered to be confidential business information, although they are likely very similar
among the various airlines.
Airlines conserve fuel in many different ways, including reducing and more accurately
measuring onboard weight; cruising longer at higher altitudes; employing greater use of
flight-management systems; redesigning hubs and schedules to alleviate congestion
and conducting more in-depth analyses of weather conditions. Due to the highly
competitive nature of the industry, detailed information sharing is restricted.
The air cargo sector is fiercely competitive and fuel represents a significant percentage
of operating costs. Further, the recent volatility of fuel prices over the last several years
has put added pressure on carriers to maximize the efficiency of their operations.
Generally, fuel is the second largest expense after salaries and fringe benefits, for an air
cargo carrier. There is a strong incentive to reduce fuel use and maximize efficiency,
30 WorId Air Transport Statistics (WATS), 56th Edition
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especially during the recent recession period when market growth has been stagnant or
declining.
Technology in the Air Cargo Sector
The number of suppliers in the airframe and aircraft engine market is limited. Airframes
are supplied by two manufacturers, Airbus and Boeing. There are three manufacturers
of jet aircraft engines for large aircraft, Pratt Whitney, GE, and Rolls Royce. The aircraft
have useful lifetimes that extend beyond thirty years. The list prices of new aircraft
range from $75-$200 million for a narrow-body and $259-$352 million for a wide-body
aircraft, although these prices are typically heavily discounted for large customers 31
With the support of airlines, commercial aircraft and engine manufacturers have made
successive improvements in emissions and fuel efficiency, making today’s airplanes
more aerodynamic and cleaner-burning than any type ever produced, although the pace
of improvement in recent decades has slowed. Between 1960 to 2010, the fuel
efficiency of an average new jet commercial aircraft improved annually by approximately
1.5% on a ton mile basis, with the rate of improvement falling to approximately 1% in
the 1990s and only 0.3% in the 2000s due to the lack of new, more efficient aircraft
models designs being brought to market. 32
Replacing aging aircraft with new equipment is the most expeditious manner in which to
improve aircraft fleet efficiency, but the high costs involved militate against this option as
an ongoing strategy under circumstances that would routinely require scrappage of
equipment prior to the end of its useful life. uMajor advances in aircraft fuel efficiency to
enable the airline industry to more aggressively reduce its greenhouse gas emissions
are dependent on new engine and airframe technologies not yet available in the
marketplace. Unfortunately, in the near future, no major breakthrough in either aircraft
or engine design is expected because of the enormous effort and cost of engineering
research and development.” 33 Despite these challenges, FedEx has been implementing
an aggressive, multi-year aircraft replacement plan and UPS states that it operates
one of the industry’s youngest air fleets 35 . Both of these US dominant carriers (as well
31 Boeing http://www.bOeiflg com/commercial/PriceS/index.html
32 Rutherford, D.; Zeunali, M. “Efficiency Trends for New Commercial Jet Aircraft: 1960 to 2008.” International
Council on Clean Transportation. Updated in May 2011.
33 Aiilunes For America http IIwww airlines org/Pages/21
and-Climate-Solutions aspx
2011 FedEx Global Citizenship Goals & Progress Update pg 5 htt I/about van fedex.com/envurOflmeflt-effICIeflC-V
2011 UPS Sustaunabuluty Report pg 75 httP Ilwww responsibility uos com/Sustainabulitv
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as international carriers) are therefore already highly incentivized to upgrade the
respective fleets for continued fuel efficiency advancements.
It may be possible to incentivize more rapid technology advancement through policy,
regulation and public support. ICAO has projected that the fuel efficiency of new
passenger aircraft, on which much belly freight is carried and from which freighters are
derived or converted, could be improved by 25 to 35% in 2020 relative to an average
aircraft delivered in 2010, and up to 70% in 2030, depending on the level of regulatory
and environmental pressure applied to the sector, and funding available for basic
research 36
Regulatory Environment
Aviation-related greenhouse gas emissions are currently regulated primarily on a
national and regional basis. In the EU, a nominal cost has been applied to greenhouse
gas emissions in the EU under the Emission Trading Scheme (ETS), a cap and trade
model (although the application of the system to intercontinental flights has been
suspended for a year pending ICAO work on a potential global replacement measure).
Australia has a similar domestic program and with the EU has outlined measures to
implement plans that would link their carbon trading schemes as of mid-2015.
In 2013, France will begin to require that all package carriers provide “carbon invoicing”
which will require freight handlers, including air cargo, to provide customers with the
carbon cost involved in the delivery of their packages 37 . The U.K. is now considering
adoption of the French model, too. Cargo carriers must adhere to required carbon
accounting principles, in accordance with these laws. It is hoped that the reporting and
accounting requirements of the laws can be harmonized. Finally, airlines report fairly
extensive data to the government using DOT Form 41 including but not limited to fuel
use; available ton-miles; and revenue ton-miles.
This air transport sector is highly regulated to maintain safety of the system as a whole.
It isn’t a sector that is readily adapted to field testing of innovative technology and
approvals to make modifications come slowly. Those that have been approved and
result in efficiency improvements are adopted relatively quickly when they are
economically justifiable.
Opportunities and Barriers for SmartWay in Air Freight
ICAO, Report of the Independent Experts on the Medium and Long Term Goals for Aviation Fuel Burn Reduction
from Technology. 2010. ENGLISH ISBN 978-92-9231-765-2
37 Article 228 of the Law no 2010-788
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Given the regulatory environment, market structure as well as the business
environment, a traditional voluntary partnership SmartWay program similar to the one
developed for trucks is unlikely to achieve any measurable environmental benefits. To
the greatest extent practicable, the leaders within the sector have already achieved the
increases in efficiency available through management practices and they are replacing
their fleets, as financially feasible. The lack of potential environmental benefits presents
a barrier to the investment of resources by EPA.
However, there does appear to be a demand among shippers for a ‘one-stop-shop” for
assessing the greenhouse gas emissions associated with their freight movement,
across all modes. While there would be resistance to reporting requirements that
created an additional burden, there is an opportunity for EPA to use data that is already
gathered by the US government to develop a tool that would allow calculation of
greenhouse gas emissions by interested shippers. This would allow integration of the
air freight sector into SmartWay and benefit shippers by providing a more holistic view
of their supply chain.
The increasing efforts to track, report, and reduce aviation-related greenhouse gas
emissions provide another opportunity for SmartWay. There is a definite need to
standardize the commonly accepted metrics and accounting systems across the
programs administered by the various regulatory agencies and voluntary associations.
Currently, data retrieval for the EU ETS required programming at the mainframe level.
This can’t be supported under multiple methodologies or reporting boundaries.
The SmartWay Legacy Fleet workgroup recommends the following:
• EPA should consider providing shippers with a means to calculate greenhouse
gas emissions resulting from their air cargo shipments. This would fill a gap in
shippers’ assessments of the greenhouse gas emissions associated with their
supply chain. Requirements to submit additional data or develop new
accounting systems should be avoided.
• EPA should capture the DOT Form 41 data electronically, directly from the DOT
database. Both foreign and domestic airlines are required by Federal law to
submit extensive information to the U.S government on DOT Form 41, so it
would be possible to calculate emission factors for all reporting airlines. The use
of Form 41 will reduce agency and industry burden by eliminating airline data
submissions. In addition, this data would provide a higher level of quality
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assurance because the reports submitted to DOT must tie to the airlines’ GAAP
reporting.
• EPA should provide a membership category for air freight carriers to become
SmartWay Partners.
• EPA should make an effort to bring foreign flag carriers (which also report on
DOT form 41) into the program. The international nature of the air freight sector
would require this broader participation to maximize the utility to the shippers.
This would also significantly improve the relevance of benchmarking efforts.
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Ocean / Marine Cargo
Ocean Market Characteristics
The Ocean or Marine cargo market is more diverse than air transport. Segmentation
and performance differences exist by vessel type/structure, cargo type, and scope of
operations (local, regional or international). The fuel consumption of these segments at
the global scale is presented in Figure 8. These segments can be summarized as
follows:
• Containerized cargo vessels, which are “liner” shipping (run on a strict schedule
of port calls)
• Bulk carriers carry bulk products, including agricultural products such as grain or
fruit. A specialized segment is the refrigerated bulk carrier for perishable
commodities such as agricultural products.
• Tankers carry both crude oil and liquid products.
• Roll-on-Roll-off vessels (RO-RO) which carry vehicles
• General cargo vessels (“break bulk”)
• Barges carry bulk or containerized cargo, and do not have propulsion capability,
so require another vessel (tug) for motive force. These tugs and other inland and
harbor craft are not considered in this analysis, but may present future
needs/opportunities for SmartWay, since they do generate air emissions, operate
in US waters, and are often part of the full supply chain.
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Figure 8 - The share of fuel consumptions by different ship segments 38
In the container industry, market share is concentrated among top carriers: the top 3
operators control nearly 30% of TEU capacity and top 20 operators control nearly
70%. Complexity is multiplied by the participation of many brokers/intermediaries, and
the thousands of shippers globally. Cargo owners and shippers have varying levels of
sophistication regarding fuel cost, efficiencies, emissions profile, and reliability
requirements. Vessel Sharing Agreements and alliances further complicate the market,
as does the rise and prevalence of non-vessel operating common carriers in freight
contracts.
Energy efficiency has become a priority for ocean carriers due to rising fuel costs; fuel
now often represents over 50% of variable operating costs. Significant near-term efforts
to cut costs/limit capacity such as slow-steaming and idling of underutilized vessels
have effects on fuel efficiency and pricing, and have dramatically reduced emissions of
fuel-related greenhouse gases and criteria pollutants per container carried. For
IMO (2009) Second IMO GHG study
UNCTAD (2012) “Review of Maritime Transport 2011”
Vehicle/RO-RO
4% -\
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example, Maersk Line recently announced meeting their 2020 emissions reduction goal
8 years early, and increased their 2020 goal from 25% per container per km to 40%.40 I
Most of the energy consumed I fuel burned in ocean shipping is used by foreign flagged
ships (not US owned or operated). The international owners/operators of these vessels
are less familiar with SmartWay and have expressed concerns about providing detailed
operational data to an arm of the US EPA. These international vessels may spend only
5% of their operational lifetimes in the waters of any one state or country. These factors
are significant considerations for the development of regulatory or voluntary programs in
the ocean cargo sector.
The useful life of a ship can typically reach 30 years, although the average age of the
fleet has been decreasing because of higher scrappage rates and a large number of
new ships delivered to the market in recent years 41 . The EEDI, a metric to benchmark
ship efficiency, only focuses on new ships built after 2013, leaving efficiency of the
legacy fleet to be managed by Ship Energy Efficiency Management Plans and a less-
well defined EEOI, and voluntary reporting systems.
In the United States, the average age of the fleet is older than the global average, due
partly to a slow fleet turn-over. The Jones Act requires domestic ships to be US
manufactured, US crewed, and US flagged, which makes US shipping companies less
inclined to retire older ships. Indeed newer US-built ships are usually much more costly
than those built in South Korea and China, the leading ship building locations. Legacy
fleet issues are even more important when considering the domestic fleet.
Regulatory Environment
International vessels must be registered in a country (“flag state”) which is responsible
for administering requirements, certifying equipment used on board, and technology
verification and inspection.
In addition to adopting the IMO MARPOL VI standards for fuel sulfur, NOx and other air
pollutants and the efficiency requirements for new ships, the US EPA, the Coast Guard
and several US states (notably California) have established regulations for Ocean-going
° http://www.maersklifle CO /l nk/?pagenewS&I,ath/fleWS/fleWS 2 O] 3 Ol 2 S
41 In 2012, the average ship age was 21.90, down from 22.93 in 2009. The average age by deadweight tonnage
(DWT) in 2012 was 11.51, down from 13.95 in 2009. The containership fleet has a relatively younger age, averaging
10.90 per ship and 8.93 per DWT. The data come from UNCTAD Review of Maritime Transport 2011 and 2012.
66
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vessels and Harbor Crafts. Very recent action by France will require C02 to be provided
on shipment manifests. At this time no other countries have applied energy
efficiency/C02 standards to vessels.
Very recently, several countries including the US have floated the idea of monitoring,
reporting, and verification (MRV) as a way to better understand the current fleet’s
energy consumption and as a first step to regulate existing vessels that are not covered
by the EEDI. The MRV concept is still in its infancy but is worth noting in that, if
implemented, it could potentially provide cross-referencing for SmartWay.
Ocean Cargo Industry Action
A number of industry organizations have been considering vessel-related emissions,
and some have established methodologies or initiatives to measure and report address
energy efficiency. These include:
In the container industry, voluntary works began in 2001 to measure and reduce
C02 and other environmental impacts. The Clean Cargo Working Group
(“CCWG”) 42 is a business to business initiative comprised of major shippers,
carriers and NVOCC5, organized as a working group under Business for Social
Responsibility. CCWG is “dedicated to performance improvement in marine
container transport through measurement, evaluation and reporting. CCWG
membership accounts for 60 to 70% of the containers moved globally. The
CCWG has developed methodologies for measuring and reporting emissions on
the basis of grams of C02 per TEU per km. Since 2005 CCWG has conducted
annual environmental performance surveys and a benchmarkiflg study. Industry
averages and descriptions of methodologies have been published. In 2009 a
protocol for third-party verification was developed and most or all CCWG carriers
now have their data and reporting systems verified.
• Other international reporting systems for container vessels include the Clean
Shipping Index 43 (predominantly in Scandinavian countries), and the
Environmental Ship lndex (established by the ports in IAPHIWPCI).
42
http://www.cleanshipPiflgifldex.C0m/
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o The Clean Shipping Index website states that CSI “is a business to
business tool for cargo owners to select clean ships and quality ship
operators. Transport buyers use it to calculate and minimize their
environmental footprint. Ship-owners present the environmental profile of
their fleet to a network of large customers who consider this in
procurement situations. Ship-owners also use it as a bench-marking tool
in order to identify areas for environmental improvement. The aim: a
market demand for clean ships. CSI is driven by a non-profit organization.”
o ESI provides a centralized international data collection and scoring system
for vessels, with the intention being to enable ports to provide incentive
programs to attract cleaner vessels. The current focus is on fuel sulfur
(SOx), engine NOx ratings, and the presence of shore power capability.
Only a very small percentage (less than 3%) of a vessel’s score relates to
fuel/energy efficiency.
• The World Resources Institute (WRI) has defined a Green House Gas Protocol 45
for reporting and calculating supply chain carbon footprint. Industry-specific
methodologies such as the CCWG methodologies mentioned above are based
on these standards.
-. The European Union has commissioned and partially funds a project
(“COFRET”) 46 to define standards for calculating the carbon footprint of freight
transport. The project website states that it “will deliver a methodology for the
calculation of the carbon footprint along the full supply chain. The COFRET
methodology will draw upon existing initiatives already being developed by
various stakeholders in the supply chain so that it is aligned with the needs of
those responsible for shipping and transporting goods by whatever means.”
• Other organizations focus more on transparency and reporting, including the
Carbon War Room and Forum for the Future.
http://www.wri.org/ project/ghg-ProtOC0I
46 http://www.cofret-prOjeCt.eU/
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Opportunities and Barriers for SmartWay in the Ocean Segment
Like the air freight segment, several factors present potential barriers to successful
engagement of ocean carriers in a full SmartWay initiative. These include:
• Resistance by international companies to reporting to a US government entity —
or any individual nation -- instead of the vessel’s flag administration.
• The technology verification components of the existing SmartWay program may
be seen as redundant due to the flag state verification process and port state
inspections; however SmartWay may have a role as a technology clearing-
house. This may not apply to smaller vessels and those vessels operating
predominantly in US waters
• A seemingly small but difficult issue is that US EPA does not use the metric units
used by the rest of the world. (e.g., “grams per ton mile” combines metric and
English units, and is not understood by Europeans, switching between short tons
and metric tons leads to errors). Globally, marine fuel is measured in metric tons,
and distances sailed in kilometers.
An opportunity for SmartWay is the industry-led efforts to understand and address
shipping’s carbon footprint that could serve as a useful entry point for a discussion of
what a SmartWay program could look like for the marine cargo sector.
The SmartWay Legacy Fleet workgroup recommends the following:
• EPA should enhance the existing SmartWay program to include complementary
marine cargo partners, tools, performance benchmarkiflg, ranking and reporting.
o Short-term objective would be to add carriers in these modes to the
SmartWay family of companies and programs.
o Long term goals would include enabling SmartWay Shipper Partners to
assess their existing supply chain impact across multiple modes, and
provide tools to measure and compare the impacts of a variety of
programs and choices such as near-sourcing, mode shifts and other
operational changes.
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• The addition of other freight modes in SmartWay can best be achieved through
reciprocity and/or data-sharing arrangements with existing/established protocols
and data sets.
o SmartWay should collaborate with recognized mode-expert organizations,
focusing initially on the Clean Cargo Working Group, while considering
other global stakeholders.
o SmartWay should not duplicate or conflict with these efforts but
complement or align with them to share data, raise public awareness, and
broaden the participation.
o A concept paper is available describing such an approach. (Appendix 0)
o Coordinating with existing and developing international regulations on
mandatory energy efficiency requirements may require future program
adjustments.
• EPA’s new Ports Initiative should be designed in such a way that SmartWay and
related programs for other modes (e.g. CCWG) are integrated to cover
equipment that is exclusively operated around ports, including vessels, drayage
trucks, port handling equipment and rail.
• EPA could consider a technology clearing house or possible technology
verification program for particular needs, keeping in mind EPA’s and industry’s
resource limitations and preventing redundancy. This is especially important for
the maritime sector, where programs should align where feasible with
international, IMO and US Coast Guard programs, and consider state efforts
such as those in California.
• Continue to refine the methodology and data collection periodically as
international initiatives to monitor, report, and verify energy consumptions from
the maritime sector are unfolding.
Implementation Recommendations
To facilitate the addition of air and marine cargo to the SmartWay network, EPA should
undertake the following actions:
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• SmartWay should commit to a supporting the ongoing global efforts to harmonize
and align stakeholder multi-modal supply chain carbon accounting methodologies,
metrics and tools. Since discussion of such methodologies are developing quickly in
North America, Europe and global organizations. EPA should support and provide
resources for active involvement in the supply chain metrics alignment work now
ramping up globally.
• SmartWay should not duplicate or conflict with these efforts but complement or align
with them to share data, raise public awareness, and broaden the participation.
• Coordinating with existing and developing international regulations on mandatory
energy efficiency requirements may require future program adjustments.
• Since supply chains are global in nature, it is critical that EPA and Smart Way’s
supply chain tools and data be compatible with international standards and metric
units. EPA should develop a strategy to address this critical issue.
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Nonroad Mobile Sources
Workgroup Process
Addressing the subsection of the overall Work Group charge related to nonroad activity
required some deviation from historic SmartWay program knowledge. The sector is
economically and operationally different than the goods movement focus of the legacy
SmartWay program. A subset of workgroup members was created to focus on non road
issues.
Several discovery exercises were undertaken with contributions by the EU Commission,
equipment manufacturers and nonroad equipment users to gain a baseline of sectoral
understanding. The presentations associated with those discovery meetings are
appended to this report as background and in support of the learning that resulted in the
narrative and recommendations described here.
Nonroad Fuel Consumption Overview
The following chart (Figure 9) estimating annual diesel consumption by nonroad
equipment was compiled by TIAX for a study undertaken by the Engine Manufacturers
Association. The base data was from the EPA NONROAD 2005 model. The total
nonroad fuel consumption was estimated to be aboutl2.0 billion gallons per year.
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4.1%
PIonroad 5CR-Urea Study Nonroad ConsumptiOn Estimates Task 1
2014 nonroad diesel consumption distribution using EPA’S equipment
population and use factors and TIAX’s market segments
Forestry Co. .i’daI
2.1% E ipnwnt
1.2%
ConstiucdOfl &
Mining
47.2%
S
12.0 bIllion g.Ilons total
2.7%
10.0%
32.0%
- The share
of annual fuel consumed by nonroad equipment
The following tables (1 and 2) help further illustrate the relative fuel consumption of
nonroad equipment as key components of the transportation sector.
Figure 9
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DIESEL FUEL* . 56.0
Transportation -
IghtDuty Vehicles
t7
Passenger Cais
0.4
Light-Duty Trucks
Ii
Buses
1.5
Medium- and Heavy-Duty Twcks
.33.9
Recreational Boats
0.4
Ships and Boats.
1.0
Rail
4.0
-
Agriéultural Equipment .
4.1
Construction Equipment *
6.7
Other Non-Transportation Mobile
2.7
* includes mining
Table I - U.S. Diesel Fuel Consumption (2011- billions of gallons) 47
For the purpose of SmartWay, nonroad fuel consumption would rank second behind
medium and heavy duty trucks. Using the TIAX report to rank order specific categories
of nonroad equipment, and comparing them to the values in the above table results in
the following rank orders:
Rank
Equipment Type
i
Medium & Heavy Duty Trucks
2
Construction
3 —
Agricultural
4
Rail
Other Non-Transportation Mobile
6
Light Duty Vehicles
7
Buses
Table 2— Rank of equipment type by fuel use
http://www.epa.ROV/Otaa/CI imate/documents/420f13 033 a . pdf Fast Facts, u.s. Transportation Sector
Greenhouse Gas Emissions 1990-2011.
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Overview of Nonroad Equipment Sector GHG Issues
Nonroad GHG Equipment Fuel Consumption and CTh Emissions
With the exception of agricultural applications, for nonroad equipment, the C02 emitted
from the burning of fossil fuels currently accounts for approximately 99% of all GHG
emissions (C02e) emitted in these applications. The unique aspects of agricultural
applications are addressed within a subsector writing included in this section of the
report. For non-agricultural aspects of the nonroad sector it is evident that when
focusing on equipment within the nonroad sectors, mitigating GHG emissions basically
means to minimize fuel consumption for a given amount of work to be performed or
output produced. If the focus is expanded beyond equipment to a work site or farm site
scope, the nonroad sector has varying GHG profiles within subsectors which would
result in different GHG mitigation opportunities.
For the vast majority of nonroad equipment end users, operating costs are a very
important aspect of their business. For example, cost of fuel is second only to labor
costs at most construction job sites. Thus, there is already significant desire and
incentive at the job site level to minimize fuel consumption for the work to be performed.
With some contractors, estimating fuel consumption to complete a project is done in
order to submit a bid to win the project. If the project is then ‘won’, that same fuel
consumption estimate is very closely monitored and managed accordingly, as every
gallon of fuel not consumed relative to the original estimate is dollars to the bottom line.
Energy costs are not a large contributor to farm total production expense as it may be in
the construction subsector. Operating margins on particularly small farms can be less
than ten percent and considering that a farm’s revenue can be affected by many
variables from federal support mechanisms, to food safety and nutrition policies, to
macro and micro economic trends, to weather, farmers have more direct control over
their costs than revenues and continuously seek the optimal use of all of their inputs
including fuels. However, most fuel is consumed by large farms.
Also, the vast majority of noriroad machines are purchased as an investment, in order to
perform work at a job site and farm site to achieve a return on that investment. So, while
the specific subject of mitigating GHG emissions from nonroad equipment sectors may
be relatively new, the subject of fuel efficiency, maximizing productivity and achieving a
return on the investment have been strong motivating forces for both manufacturers and
end users alike for many years.
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It is also important to note unique aspects of certain nonroad subsectors, such as
construction. Construction projects are often complex undertakings of varying duration
in which many players participate. General contractors, sub-contractors, rented and
leased equipment and progressive variation in job-site conditions, participants and work
characteristics make application of traditional SmartvVay concepts even more difficult
that other nonroad sub-sectors with fixed site operational parameters. For that reason,
the work group focused on larger, more manageable and more immediate opportunities
for fuel efficiency improvements and GHG reductions. This is not to be interpreted as a
suggestion that opportunities do not exist in the construction sub-sector, but
examination of how that sub-sector might be addressed needs additional consideration
by the agency and relevant stakeholders not represented on this Work Group.
Discussion with Work Group participants from existing, Goods Movement-focused
aspects of the SmartWay program clearly indicated concern that an extension of the
SmartWay brand without at least some clear delineation of programmatic aspects could
weaken SmartWay’s Goods Movement brand value. While no specific recommendation
of branding for any nonroad voluntary partnership was developed, it was clear existing
partners in the goods movement SmartWay program felt extension of the brand without
some clear modification would weaken the existing brand impact.
Nonroad Equipment and Application Diversity
The world of nonroad equipment and job sites/farm sites is very diverse in terms of:
A) Type of work to be done at any given job site/farm sites,
B) Amount of work to be done,
C) Wide variety of different types of machines,
D) Wide variety of sizes of machines for a given type of work,
E) Different job functions any given machine can possibly perform
F) Wide variety of work cycles and load factors,
G) External factors such as weather, location, local geology and topography.
H) Site specific management issues (such as shift scheduling, management-labor
relations, etc.)
I) Operator experience and skill set (efficiencies)
Any one of these factors may be more or less significant at any one job site/farm site.
However, all these factors when combined together mean there are thousands of
different types and sizes of nonroad machines, work cycles, applications and load
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factors in use today. This basic nonroad machinery diversity (type, size, job function,
application, load factor, work cycle) gets further compounded because of the longevity
of many nonroad machines and because of the evolution of engine technologies to
address criteria pollutants. For example, electronic engines are typically optimized to
provide the best performance (fuel efficiency and emissions) in the operating ranges in
which a given machine is needed to operate; whereas older mechanical injection diesel
engines are not as flexible. Further complicating the diversity picture is the relatively low
volume of any single configuration produced. Unlike automobiles or even on-highway
trucks, in which single platforms are produced in unit volumes that can reach hundreds
of thousands and/or up to more than one million units per year, most nonroad product
platforms are produced in much lower volumes.
Potential Application of SmartWay Methodology to Nonroad Equipment Sectors
Potential Methodology for a Pilot Nonroad GHG ‘SmartWay-style’ Project
With the fundamental ‘SmartWay’ program elements described elsewhere, conducting a
pilot project within an applicable sub-sector based on the results of the filter is
suggested as an important step to understand potential application to the nonroad
sector. Due to the extensive diversity within the nonroad sector it appears prudent to
identify a couple of key nonroad sectors for a pilot project and to find key sector end
users willing to work with EPA on investigating and implementing pilot project elements.
Familiarity with nonroad sectors suggests the SmartWay concept might be applicable to
a variety of nonroad job sites and sectors, focused primarily on fixed site sub-sectors
where reporting and control is subject to less variability due to transient job site and
ambient conditions. Examples are mining, quarry & aggregate and solid waste
management. As such, for a pilot project investigative effort, end users in a couple of
these sub-sectors could be asked to donate their time and resources to assist,
supplement and share EPA’s time and resources, in exploring a pilot GHG SmartWay
concept.
Job Site / Farm Site Level Focus vs. Equipment Level Focus
Optimizing work to be performed at the job site/farm site ‘operations’ level while
minimizing fuel consumption is the main ‘point of economic action’ for the vast majority
of end users. Thus, the ‘job site/farm site’ level is suggested as the main focus for a pilot
project. Decisions and actions at this ‘job site/farm site’ level drive both end users and
equipment manufacturers to focus on maximizing productivity and minimizing costs
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(including fuel), while doing so with an adequate return on their investment. This job
site/farm site level focus on productivity and efficiency has the potential to encompass
many areas of potential GHG improvement, including:
> Fuel Selection
> Machine Components
> Machine Design
> Machine Selection and Utilization at a Job Site/Farm Site
> Operator Productivity
> Job Site and Machine Maintenance
> Operational Strategies, such as Coordination and Integration
> Site lay-out and design
> Site production priorities
All these general subjects above have the potential to meaningfully affect job site/farm
site productivity and fuel efficiency, and thus GHG emissions on a per work performed
or per output produced basis. Therefore, opportunities for GHG mitigation can also be a
function of these subjects and not be limited to just CO2 reduction but all GHG reduction
as is the case in the agricultural subsector.
As a result of all these subjects having potential bearing on GHG mitigation, the
nonroad GHG baseline measurements in this pilot GHG SmartWay project should be
determined at the job site/farm site level.
Carbon Footprint Analysis (COij for Nonroad Equipment
The ‘energy’ footprint can be established for nonroad equipment at a job-site/farm site
level basis for any one point in time, by documenting the fuel and electrical energy
consumption of the nonroad mobile equipment for that period of time. Some job
sites/farm sites may know their actual energy (fuel or electricity) consumption machine
by machine, on a daily basis. Other job sites may only know their energy purchases for
a given period of time (daily, weekly or monthly) based on invoice data.
Since the vast majority of nonroad mobile equipment at a job site/farm site does not run
on electricity, the proposed pilot SmartWay project should focus on the carbon (C02)
footprint created by the nonroad mobile equipment using liquid or gaseous fuels,
primarily diesel fuel in the case of nonroad mobile equipment. So, by knowing the type
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and amount of liquid or gaseous fuels consumed at a job site/farm site, this can be
translated into a carbon footprint for nonroad mobile equipment at a job site/farm site.
Whether the fuel consumption is known machine-by-machine on a daily basis or just
from fuel purchases, either approach could be used to calculate the carbon footprint of
the nonroad mobile equipment at a job site/farm site. The primary difference between
the two may be the degree of accuracy. Knowing the actual fuel consumed on a daily
basis on a machine-by-machine basis at a job site/farm site may provide a more
accurate carbon footprint than one based on fuel purchases. This greater granularity
also helps to better identify and prioritize sources, and thus specific opportunities for
improvement.
For those job sites/farm sites that know their actual fuel consumption on a daily basis,
this information can come from a couple possible different sources:
> Daily re-fueling information and records kept by site management
> Some machines are capable of estimating the fuel used; and this fuel consumption
data is available to job site management.
A carbon footprint analysis based on fuel purchases needs to take into consideration
the amount of fuel in on-site inventory/storage in order to arrive at a calculation of actual
fuel consumption. The basic equation for this would be:
Fuel consumption (for any given period) = Fuel on-hand in on-site inventory at the
beginning of the period + New Fuel purchases — Fuel on-hand at the end of the period
In summary, machine-by-machine fuel accounting, coupled with information on the work
performed at the site/output produced and the work conditions of the job site, will be
important to reduce the carbon footprint and account for the benefit of those
improvements.
The ‘SmartWay’ concept to be investigated for possible applicability to nonroad mobile
equipment sectors is intended to be a voluntary program, just like EPA’s SmartWay
Transport Partnership program has been since 2004. There are four fundamental steps
that appear essential for any proposed nonroad SmartWay program. These steps are
also very similar, conceptually, to those basic steps used in EPA’s SmartWay Transport
Partnership. These four basic steps proposed for this pilot nonroad concept and
programs are:
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1. Assess the job site/farm site and perform an equipment carbon footprint analysis for
the site in order to establish the C02 emissions baseline associated with fuels
consumed in the nonroad mobile equipment used on the site
2. Set a multi-year improvement objective versus the baseline
3. Develop an Improvement Plan to achieve the objective
4. Monitor results and Report Periodically
It is acknowledged that a shortcoming in this approach — as mentioned at the beginning
— is that this footprint will only reflect a point in time. For some non-road sectors such
as agriculture and surface coal, whose fuel usage at the same job sitelfarm site can
vary from season to season or year to year due to coal seam geology, weather, or crop
planted, a one year baseline may not be representative of typical conditions from which
to set a multi-year improvement objective against.
This nonroad SmartWay GHG pilot project initiative would require a learning curve by all
involved to properly develop, investigate and quantify the most promising C02 mitigation
opportunities for selected nonroad equipment sectors. Since this nonroad pilot C02
initiative is new and since a learning curve will be required, this pilot project concept
would likely require a multi-phase pilot. The first phase (Phase I) could primarily
comprise the following components:
Phase I:
> Equipment Carbon (C02) Footprint Analysis of the equipment job site/farm site per
output produced/work done
> Investigate possible C02 baseline metrics and measurements on an output
produced/work done basis
> Discussion and Identification of possible C02 mitigation strategies, best practices and
technologies at the job site/farm site level per output produced/work done
> Discussion of prioritization process for the various jobsite/farm site C02 mitigation
opportunities
Based on learning from Phase 1 process, future efforts are likely to be focused on the
following areas:
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> More thorough estimation or quantification of the C02 benefits of the most promising
equipment C02 mitigation ideas used on a job site/farm site
> Estimation or quantification of costs of implementing the priorities identified
> Review of alternatives and applicability of the SmartWay concept for nonroad sectors
and ability to measure performance relative to baseline
> Summarize findings and results
Within the current Work Group process, three specific sectors were discussed in greater
detail and prompt specific recommendations. These sectors are Agriculture, Surface
Coal Mining and Quarry & Aggregate Production. Following are recommendations
related to those three subsectors.
The SmartWay Legacy Fleet workgroup recommends the following:
• EPA can apply the public-private partnership model to the nonroad sector to
accelerate energy efficiency gains and emission reductions. This partnership should
not impact the SmartWay brand equity but could be a similar type of branded
program.
• Any market based incentive program that is developed for nonroad sector should
take account of unique sub-sector characteristics. This report identifies three such
sub-sectors and some of those unique characteristics
• Establishment of a nonroad market-based program should be preceded with pilot
projects in targeted sub-sectors to properly design the program for effective impact
and strong voluntary participation.
Agriculture
Market characteristics unique to the nonroad agricultural sector
Agriculture is an incredibly complex system and analysis of market context and drivers
within this sector are equally complex. The business of agriculture is to produce food
and fiber from the soil. Agricultural equipment is the capital tools used to reduce labor
and increase yields. The basic operations are soil preparation, planting, chemical
application and harvesting. Agricultural equipment can be categorized as tractors,
combines and other. The other equipment includes seeding, chemical application
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equipment and other types of harvesting equipment. In the U.S. while there are only
three full line engine powered equipment manufacturers in this sector, the diversity of
the equipment utilized, the commodities produced, and the operations performed is
immense. Farm conditions are highly variable at the individual farm site level (soil
conditions, weather, rainfall, topography, etc.). In addition, a farm site may be “fixed”
but the crop produced from season to season and/or year to year can be variable. In
regards to equipment usage, equipment can move from one fixed farm site to another
fixed farm site based on work to be accomplished, e.g. custom harvesters, and the
machinery is used in various combinations. For example, tractors work in combination
with their implements, and it is that combination which performs the work. This
complexity highlights the importance of flexibility in any program design to maximize
potential environmental benefits.
Improvements in engine, equipment and production operational efficiency continue to
make the agricultural sector overall more fuel efficient and it is expected by the industry
to continue. Whether the focus is at the engine level — which the industry has been
focused on since emission regulations were effective in 1996 or at the operational level,
this focus on productivity and efficiency has already brought about a large reduction in
the amount of diesel fuel used to grow row crops. Mold board plowing and crop residue
disking operations have mostly been eliminated. Mechanical cultivation to control
weeds has been replaced by herbicides. Insecticide applications have been replaced
by resistant seeds.
Many row crops are planted using no till operations. The number of farm operators has
decreased and the size of the average farm operation has increased. This has created
a demand for higher-powered equipment which is more efficient and provides for more
productive operations.
Unlike the other nonroad sectors at the farm site level — the level at which a pilot for the
nonroad sector is being recommended — the greenhouse gas emissions profile
drastically changes and the additional greenhouse gases of CH4 and N20 need to be
considered if meaningful GHG emissions reductions from the agricultural sector are the
program objective. Considering all greenhouse gas emissions within the agricultural
sector, C02 emissions are not the most prevalent greenhouse gas. 4849
httD://www.sou rceuk.net/art lcle/12/12018/RreeflhOuse gas emissions from farms.html . UK averages for
agriculture: 51% N20, 35% CH4, and 20% C02.
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In addition, unlike the other nonroad sectors, there are already numerous and diverse
energy efficiency activities present in the agricultural sector led by other U.S.
government agencies, non-governmental agencies, grower groups, European
agricultural machinery and engineering groups, and universities. These activities range
from data collection, baseline energy indicators by crop, calculator tools, pilot carbon
footprint projects, other voluntary programs, and financial assistance for energy
efficiency improvements. For additional detail on the unique aspects of the agricultural
sector as it relates to the SmartWay program please see Appendix E.
htto://www.eoa -lnventorv-2012 S.pdf and
Iture.htrnL Inventory of U.S. Greenhouse Gas
Emissions and Sinks: 1990-2011. Agricultural sector is 0.6% of U.S. C02 emissions compared to 8% of total U.S.
Greenhouse Gas Emissions by Economic Sector based entirely on its N20 and CH4 contribution.
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The SmartWay Legacy Fleet workgroup recommends the following:
• Determine appropriate roles and responsibilities between the USDA and EPA in
regards to a voluntary program to improve efficiency and emissions within the
agriculture sector. The USDA has already completed extensive preliminary work on
various climate-related programs (NRCS, regional climate hubs), tools (RUSLE2,
COMET-FARM), and research (Agricultural Resource Management surveys). The
EPA should be pragmatic about the added value an EPA-led SmartWay initiative
targeting the agricultural sector would bring. The EPA should consider letting the
USDA take the lead in this activity because it is foreseen that a crop production-
based model, much like the activities USDA is already involved with, is a better
approach to promoting and accurately quantifying reduced fuel consumption in the
production of agricultural products.
• Beyond the USDA, benchmark existing energy programs and pilots which include
energy efficiency and GHG emissions reductions, such as Field to Market 50 , to
understand what work has already been done to avoid duplication and maximize
investment of EPA time and resources.
• If after determining roles with other governmental agencies and benchmarking
existing work in this area, the EPA were to still take the lead on a SmartWay-like
initiative within the agriculture sector, consider the following:
o Clearly define program goals and objectives to avoid confusion due to the
complexity of greenhouse gas emissions associated with this sector and to
maximize the environmental benefit of any voluntary program. For the
agricultural sector, the scope of any program at the farm site level needs to
be clear — is the objective to reduce fuel usage, reduce all greenhouse gas
emissions, or reduce only C02 emissions.
o Explore the market mechanism of agricultural sustainability value chain pull in
pilot design as the market mechanism of fuel costs being a primary
production cost are not the same as on-road and other nonroad sector.
° http://www.fieldtomarket.OrgI
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o Engage appropriate stakeholders such as the American Farm Bureau to
ensure their understanding of the EPA’s intentions, Grower Groups such as
the United Soybean Board, equipment manufacturers with engines along with
implement manufacturers, and established/effective local community
agricultural networks.
o Consider limiting the scope of a SmartWay-like pilot in the agricultural sector
to the ‘goods movement’, i.e. transport from farm gate to market. Examine
via a pilot if an expansion in marketing and awareness of the transport/goods
movement model could increase participation in the current SmartWay
program among agricultural producers from farm gate to market where there
is already similarity with the heavy duty on-road SmartWay program.
o Use agriculture-specific marketing and attention.
o Ensure a consistent and rigorous evaluation method of energy and cost
savings in the program.
• Harmonize any U.S. government voluntary program to reduce emissions in the
agricultural sector with those activities already occurring in Europe. Since
equipment manufacturers in the US and EU are mostly the same and the only
difference is the government agencies administering regulations, it is critical that
these regulatory agencies work together to ensure alignment of any voluntary
GHG/C02 reduction programs.
Surface Coal
The surface coal sector is focused on productivity and operating costs. It analyzes fuel
usage per unit of production, not simplistically “fuel consumption.” It engages in a high
number of operating hours per year, with high average duty cycles and load factors. It is
not transient in nature and is typically located in remote areas. Substantial variation is
observed across the sector, dictated by coal seam geology, specific site conditions, rate
of production and capital availability. The sector’s fuel burn rate is affected by the age of
the machine, manufacturer, engine design and Tier classification, and operator
efficiency. Ongoing equipment upgrades and replacements make it difficult to establish
a single baseline emission level from which to measure trending and progress toward
lowering emissions. Furthermore, advances in systems, processes and availability of
85
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valid data to measure and estimate fuel use require a flexible approach to accurately
measure emissions reductions.
Fuel efficiency improvements are possible through recent technological advancements.
Engaging in a voluntary, economically viable Demonstration which incorporates
flexibility into the metrics, processes and procedures for maximizing fuel efficiency
measures, could lead to a reduced equipment carbon footprint at the jobsite level. A
successful Demonstration could ideally lead to more reliable metrics and sector Best
Management Practices.
The SmartWay Legacy Fleet workgroup recommends the following:
• Establish a pilot project to evaluate the prospects for broader initiative
• Develop highly adaptable system for the sector, accommodating site variation.
• Promote the following techniques and activities that have potential to lower the
sector’s carbon footprint:
o Equipment Idle Time Management: establish standard defining when to
idle/run vs. idle/shut-off equipment
o Haul Road Audit: review long-term haul roads at sites to ensure of the most
direct route, the least stops, and good construction practices
o Communicate Fuel Conservation (e.g., Tires): engage in top-down
management initiative to establish Conservation Best Practices
o Tire Program: implement program to monitor all pneumatic tire pressures and
temperature — Smart Valve Stems
o Fuel Additive: use fuel additive mixed with diesel to improve energy efficiency
and reduce consumption
o Fuel Management System: create a fueling data system that might
automatically send fuel amounts into a database when equipment is fueled to
identify possible engine issues or bad practices.
Quarry & Aggregate
The aggregates sector has have long established operational metrics that are used to
measure productivity. Fuel consumption on a Cost per Ton (CPT) basis has been
looked at for years. In the last ten to twelve years industry has seen improvements in
the areas of operator training, larger and more productive machines that burn less fuel,
worksite efficiencies, and fuel tracking programs. Yet, these tools have not been
utilized widely in partnerships or with one another to deliver a consistent outcome.
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An opportunity with a SmartWay Pilot, as described above, is to better align these long
established metrics with the effect they can have (positively and negatively) on
emissions. Done correctly, especially at a large site, a focused program could lead to
improvements that result in reduced fuel consumption. Once this is achieved and is
proven to be sustainable, companies can begin to build on the successes and influence
other positive outcomes in this arena.
The SmartWay Legacy Fleet workgroup recommends the following:
• Establish a pilot project to evaluate the prospects for a broader initiative
• A defined focus on the carbon footprint of mobile equipment that primarily burns
diesel fuel.
• Establish baseline GHG emissions at quarry locations.
• Establish a methodology that can help operators develop a metric to minimize fuel
consumption for the work that they perform.
• Work with equipment manufacturers to find a balance between emissions reduction
and fuel efficiency for equipment in this sector.
• Identify an economic driver for this sector.
• Develop a highly customizable system. No two quarry sites are the same, so
flexibility needs to be built into the system.
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Appendices
88
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A) Workgroup Members and Participants
Workgroup Supporting
Name Organization Member Participant
Berry, Dave Swift Transportation x
Bird, Alison FedEx x
Blanco, Dr. Edgar Massachusetts Institute of Technology x
Bowling, Mike Peabody Energy x
Burget,Wanda Peabody Energy x
Coyle, Gerard Evans Delive,y x
Craft, Dr. Elena Environmental Defense Fund x
Craig, Jason CH Robinson x
Flint, Steve New York State Dept. of Environmental Conservation x
Fry, Eric Peabody Energy x
Gautam, Dr. Mridul University of Nevada, Rena x
Gehring, Jack Caterpillar x
Goff, Terry Caterpillar Co-Chair
Grimshaw, Jacky Center for Neighborhood Technology x
Howard, Joanne Deem & Co. x
lannotti, Joseph New York State Dept. of Environmental Conservation x
Kamakate, Fanta International Council for Clean Transportation x
Kassel, Rich Gladstein Associates x
Kedzie, Glen American Trucking Associations x
Kindberg, Dr. Lee Maersk Line x
Kiiesch, James American Honda x
Kubsh, Dr. Joseph Manufacturers of Emission Controls Association x
Lemmons, John Waste Management x
Lutsey, Nic International Council for Clean Transportation
Mann, Roy Case New Holland x
Meese, John Waste Management x
Mormino, Brian Cummins x
Nath, Rick CSX x
Norsworthy, Marcelo Environmental Defense Fund x
Polovick, Buddy Environmental Protection Agency Co-Chair
Sakal, Ichiro American Honda x
Siegel, Adam Retail !ndustiy Leaders Association x
Symon, James New York State Dept of Environmental Conservation x
Van Ness, Jim Luck Stone Quarry x
Mitchel, Randal Waste Management x
Walters, Chris Case New Holland x
Yeager, Jackie Cummins x
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B). Workgroup Process Roadmap
Workgroup(s)
initiation
Develop common
recommendations
Aim for consensus
on
recommendations
Affirmation of EPA
Charge and
beginning of
discussion
Discuss group
perspectives
Write
recommend aflons
Present final
recommendations
to MSTRS
Establish theme.s
and areas for
discovery
Discovery
briefings and
presentations
Review and revise
recommendations
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C) Sector Evaluation Filtering Tool - Worksheet Template
MSTRS Sector Evaluation Process
Evaluator: (name here)
Step 1: Identify Sector (or subsector) for assessment: Vocational Truck
Step 2: Begin Evaluation with Filtering Questions
Does answer
Questions . Support EPA
- n - -: Engagement?
Notes
for this sector? X or No?
example?
Other important
considerations related to this
question?
sector?
refuse & delivery), Many Owner-Operators Limited
work orders
Refuse & delivery fleets provide
an opportunity, with some
major players (e.g., Waste
Management, FedEx, UPS)
already participating in
SmartWay
in this sector to drive uniform technologies
Limited
Service)
As above
is limiting the use of fuel saving
L . d
and diminishes the value of fuel efficiency in imi e
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Is information not freely flowing between manufacturers and end-users?
• No for new equipment purchasers
N
0
Are there useful market similarities between this sector and others?
• Similarities with nonroad in specialized nature and use of vehicles
N
0
Are shipper/carrier market dynamics present? Is there a notable market mechanism
where carriers hire shippers to move goods or work on their behalf?
LL
‘
What is the share of fuel use from this sector? Compared to all mobile sectors?
• Section 1.2 of the RIA
(http://www.era.Qov/otaQ/climate/documentsl420rl 1901 .Ddf) has some basic
statistics on vocational vehicle GHG and sales. See below,
Limited
Within the general vocational
truck segment, it can be
presumed a further breakdown
of fuel use would show refuse
and delivery are a large portion
of the vocational fuel use.
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Figure 1-5 below shows the relative contributions of GHG emissions from the
different vehicle categories in 2005. Sleeper cab tractors contributed the most GHG
emissions of these categories at about 39 percent of the total heavy-duty CO 2 emissions, as
Figure 1-5 CO 2 Euussio.s from Hea -Dviy Truck Category 1*2005’
HO
1.2.1 Heavy-Duty Vehicle Sales
Although not first in terms of GHG emissions, Class 2b and 3 pickup trucks and vans
are first in terms of sales volumes, with sales of over 1.3 milhon units in 2005. or nearly 66
percent of the heavy-duty market. Saks of Class 2b-8 vocational vehicles are the second
most numerous, selling over one-half million units in 2005, or nearly 25 percent of the heavy-
duty market. Since 2005, sales of all heavy-duty trucks have decreased as the economy
contracted, and EPA’s MOVES modd, using sales growth from the 2011 Animal Energy
Outlook for combination tractors and vocational vehicles along with CSM Woddwide
forecasts for HD pickup trucks and vans, reflects a slow recovery in sales. Figure 1-6 and
Figure 1-7 show the sales volumes used in MOVES for 2005 and projected sales for 2014
icspcthvcly, icflctiing thr ui&kct sluwdowu id ic*uvciy, while T ibIc 1-2 shuw 1cs
projections by market segment for 2014 20186
Table 1-2 Saks Pro ecths by Market Seg.ieat 2014-2018
SALES
ES11MATES
28/3
PICKIJPS/VANS
VOCA11ONAI.
VEHIQ.ES
COMBINATiON
TRACTORS
TOTAL
2014
784,780
563,004
179,087
1,526,871
2015
729,845
529,533
157,103
1,416,481
2016
712,328
508,856
144,533
1,365,717
2017
708,054
511,068
148,286
1,367,408
2018
716,549
531,001
160,979
1,408,529
puckups/vans_. .
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What Fuel Efficiency improvements have been made in last 10 years?
• 5% at the engine, but highly variable in application
• Additional improvements in vehicle system efficiency, particularly in refuse due
to the larger cost contribution of labor
Limited
Cost Alignment
• Fuel represents % of cost varies across the sector with higher % of cost
presumed_in_the_delivery_sector
No
Not as high as Class 8 over-
the-road fleets
,,
E
Does pollution profile from this sector differ from other sectors under consideration?
e.g., is it a primary source of GHG, black carbon or criteria pollutants as compared to
other mobile sources? What are target concerns?
• Near zero criteria emissions 2007 & later
No
Have emissions performance improved notably in last 10 years?
• Fleet is subject to near zero On-Highway Standards
No
Are regulations on horizon that would address emissions notably in next 10 years?
• On-Highway GHG rule
No
What is profile of Legacy fleet in this sector, e.g., how long does fleet stay in operation
before retrofit, repower or fleet turnover?
• Relatively long life with diminished utilization
No
.
5
o
.
f
Are readily available technologies with verifiable efficiency and emission improvement
not widely adopted?
• Traditional SmartWay technologies often inappropriate or ineffective in this
applications (e.g. aerodynamics, low rolling resistance tires)
• At current new product emission levels, natural gas conversion does not
provide an emissions advantage for new products .... Retrofits can provide an
advantage for older products
No
What is the Equipment Development Cycle?
• Longer than Class 8 Over the Road due to application specific development
requirements
No
Are operational or best management practices with verifiable efficiency and emission
improvement not widely adopted?
• Within fleet operations such as refuse & delivery fleets, best practices are well-
Limited
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U)
U i
C
0
known and well-adopted, less so with owner-operators and in the typical
owner-operator operation, fleet best practices may not be relevant
Are there well established methodologies to estimate improvements in efficiency and
emissions?
• Fleet efficiencies, x, but little for job-by-job operators other than driving
techniques
Limited
Could a Pilot Program be designed which adequately demonstrates appreciable,
measureable reduction in fuel consumption?
• Unlikely due to variation of application except in large fleets
No
Refuse & delivery fleets already
participate in Smartvvay, so
little advantage for an
incremental program pilot for
these fleets
Are reporting tools in place that create transparency currently?
• To the extent fleets are in SmartWay x nothing for smaller users
Limited
Are there any other organizations or industry led initiatives to address efficiency?
• No
Limited
Do other organizations or industry led initiatives address efficiency, better or more
reliably as compared to SmartWay?
•__No
Limited
Are there opportunities for partnerships with industry stakeholders?
• Very limited the majority of vehicles are in small businesses with limited
industry association involvement
What are the potential barriers to success?
• Limited to non-existent “back office” capabilities for owner-operators
Limited
Limited
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Step 3:
Continue assessment with Prioritization Matrix
Prioritization
Assessment
CoñsideràtionslObservations and notes
Impact (Low/Med/High)
Low
Consider magnitude of reductions and/or % of improvement in
efficiency or reductions
Likelihood of Success (Low/Med/High)
Low
Consider barriers to success
Place one “X” in the appropriate quadrant in any position, corner or side that represents assessment.
a)
—I
C.)
(5
E
I ’-
0
a)
0
-J
X (Large refuse &
delivery fleets, but these
X
(Owner-Operators)
fleets already have
SmartWay participation
paths)
Low
Likelihood of Success
High
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Step 4:
Make Decisions on Type of Engagement
of Engagement Assessment
ConsideratiOns/Observations
this Sector in
Large refuse & delivery fleets already engages, bulk
of owner-
No.
operator users have limited resources to engage and
limited
benefit is
Demonstration? No
As above
type of engagement may
current Maturity of Effort to plan next steps
1, 2 or 3) Assessment Considerations/Observations
None -
None
Phase 1: Launch and General Involvement
• This initial step should aim to include as many partners as possible in the sector
• Explore activities and services which could be established or developed for the sector to improve efficiency and
reduce emissions
Phase 2: Expanded, Practical Tools and Information
• The next step in maturity should be focused on enhancing and simplifying the tools to be user friendly and
validating accurate and science-based information
• Value added elements may be included such as technology verification and supply chain sustainability initiatives
• Goal is to accelerate development and adoption of cost-effective technologies and best practices
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Phase 3: Technology and Operational Leadership —
• The final evolution of the program should drive technology and operational excellence by creatingiclasses of
industry and sector leaders
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D) SmartWay Reciprocity Agreement with Clean Cargo Working Group
Clean Cargo and SmartWay share a commitment to having consistent and transparent
methodologies for freight transport. CCWG is an international group formed in 2001-
2002, and includes carrier members handling 60-70 percent of the global container
movement.
• Annual Clean Cargo reporting and benchmark studies started in 2005, with
methodologies developed by the carriers and reviewed and tested by the shipper
members. The 2012 benchmark study included over 2000 vessels.
• Verification protocols were developed and tested in 2009-2010, and now most
CCWG carrier members’ C02 emissions factors are third-party verified.
• CCWG has worked recently to align and harmonize supply chain calculations
across modes and across the world.
Opportunity: By establishing a cooperative agreement with CCWG, SmartWay could
gain quick access to verified marine data, trade lane industry averages and other
information. Possible options for data and tool sharing include:
• BSR could provide aggregate trade lane figures for C02 (already public) and
potentially other metrics (SOx in particular)
• Upon a carrier’s agreement, BSR or the carriers could provide some form of that
carrier’s data to SmartWay (e.g. entire data set, data from specific vessels/trade
lanes/indicators, some or all of the KPI/scoring outputs)
• SmartWay could accept carrier data in CCWG format directly from carriers
(without BSR involvement) so that carriers don’t have to re-format their data;
some adjustments to tools and methodology to facilitate this could be discussed
Strengths:
1. Both groups are committed to understandings
and reducing the environmental impact of
cargo movement,
2. Discussions have shown good alignment in
purpose and approach.
3. Both groups have proven methodologies for
their modes (truck/rail vs. marine)
Weaknesses
1. SmartWay has been US-focused,
whereas CCWG has always been
global.
2. Some international companies have
concerns sharing business-sensitive
data with a US governmental entity.
Opportunities:
1. CCWG data, verification protocols and
experience could jump-start initiatives
SmartWay has hoped to provide,
2. BSR can serve as a trusted intermediate to
address any concerns about data
confidentiality by international carriers
Threats
1. If methods are not aligned by leading
groups like SmartWay and CCWG,
competing methodologies will spring up
creating confusion.
2
_______________________________________
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E) Agricultural Sector Additional Detail
SCOPE CLARITY NEEDED ON PROGRAM OUTCOMES
The charge for the MSTRS SmartWay Legacy Fleet Workgroup is to improve upon
ways to ucut fuel use and emissions in goods movement . Specifically for the nonroad
sector, the purpose of the request was to drive further “emission reductions and
enhanced energy security”. If considering greenhouse gas emissions from only
nonroad agricultural equipment , C02 would be the most prevalent. However at the farm
site level- the level at which a pilot for the nonroad sector is being recommended-the
greenhouse gas emissions profile drastically changes and the additional greenhouse
gases of CH4 and N20 need to be considered if meaningful GHG emissions reductions
from the agricultural sector are the program objective. Considering all greenhouse gas
emissions within the agricultural sector, C02 emissions are not the most prevalent
greenhouse gas. 51 52
Activities within the agricultural sector — the cultivation of crops and livestock for food —
contribute to greenhouse gas (GHG) emissions in a variety of ways:
• Carbon dioxide (C02) emissions from on-farm energy use, including both
stationary and mobile sources such as operation of farm equipment, pumping
irrigation water, crop drying utilizing various energy products (diesel, electricity,
gasoline, natural gas, and liquefied petroleum gas), and transport from farms to
point of sale.
• Nitrous oxide (N20) emissions through various agricultural soils practices such as
fertilizer application, and methods of irrigation and tillage.
• Methane (CH4) from livestock enteric fermentation
• CH4 and N20 from manure management
• CH4 from rice cultivation
• CH4 and N20 from burning crop residues
51 http://www.sourceuk net/article/12/12018/greenhouse gas emissions from farms.html . UK averages for
agriculture: 51% N20, 35% CH , and 20% C02.
52 http ://www.epa.gov/climatechange/Downloads/ghgemissions/US.GHG-lnventorv-2012-ES.Ddf and
htt ://www.epa.gov/climatechange/ghgemissions/sources/agricuIture. h _ tinE . Inventory of U.S. Greenhouse Gas
Emissions and Sinks: 1990-2011. Agricultural sector is 0.6% of U.S. CO 2 emissions compared to 8% of total U.S.
Greenhouse Gas Emissions by Economic Sector based entirely on its N20 and CH4 contribution.
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In addition, some agricultural practices have the potential to sequester carbon dioxide in
the soil such as intensification of crop production by limiting the use of bare-summer
fallow in semi-arid regions, increased hay production, adoption of conservation tillage,
improved forest and timber management practices, and the further use of wood
products resulting in the long-term storage of carbon.
MARKET MECHANISMS CONSIDERATIONS
Agriculture is an incredibly complex system and analysis of market context and drivers
within this sector are equally complex.
For other subsectors of the non road sector, it has been reported that fuel costs are
second only to labor costs at most job sites. This is not the same for the agricultural
sector and farm sites. According to the 2007 USDA Census of Agriculture, energy
expenses (gasoline, fuels, and oils purchased for the farm business) accounted for only
5.4% of U.S. farmers’ total production expenses. 53
In context, comparing that to 2002 census data where energy expenses accounted for
3.9% of U.S. farmers’ total production expenses, this represents a 93% cost increase in
energy expenses (from $6.7B in 2002 to $12.9B in 2007). Considering that for small
farms especially, operating margins are typically less than ten percent; these rising
energy costs can have an impact on the survival of many small farms.
Looking at it from a different data set than the USDA Census of Agriculture energy
expenses, the TIAX study discussed in the nonroad overview section, estimated
agricultural fuel consumption in farm site mobile sources that consumed diesel at 3.84
billion gallons/year. A subgroup member used United States Department of Agriculture
(USDA) data for the year 2006 to calculate agricultural fuel consumption from the crop
and livestock perspective. The crop data were US cropland acres and the fuel
consumption per acre for specific crops. In addition livestock production data were also
used. The result was 3.22 billion gallons/year. The top three crops consuming the
greatest total fuel were hay, corn and soybeans. A recent Purdue University study
reported the fuel consumption per acre to grow corn was less than one-half that
previously reported by the USDA. Using this estimate of 3.22 billion gallons/year and
httD://www.agcensus.usd a.gov/Publications/2007/On line Highlights/Fact Sheets/Economics/economucs.pdf
http://www.aceee.orgJresearch-reoOrt/ieOSl ACEEE, Brown, Elliott, and Nadel “Energy Efficiency Programs in
Agriculture: Design, Success, and Lessons Learned”, January 2005, Report Number 1E051.
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an average net cost of diesel fuel of $2.50/gallon, the total annual agricultural fuel cost
would be $8.05 billion. This would be only 2 percent of USDA reported annual
agricultural cash farm receipts.
Both data sources highlight that unlike the other nonroad sectors being discussed, fuel
costs are not a primary production cost at farm sites.
In addition, considering that a farm’s revenue can be affected by many variables from
federal support mechanisms, to food safety and nutrition policies, to macro and micro
economic trends, to weather, farmers have more direct control over their costs than
revenues and continuously seek the optimal use of all their inputs including fuels. The
nonroad equipment marketplace has consistently demanded machine productivity and
efficiency improvements because fuel consumption is a primary operating cost and
concern. There are many examples of how concern for fuel efficiency drives agricultural
equipment manufacturers to design and produce fuel efficient and productive equipment
across their diverse product lines.
An emerging market mechanism for the agricultural sector is the issue of agricultural
sustainability which is creating pull from food, fiber and retail companies across their
value chains and calling for farm sites to optimize their usage of natural resources and
minimize their environmental footprints.
CURRENT EFFORTS
The purpose of this section is to highlight the numerous and diverse energy efficiency
activities already present in the agricultural sector to avoid duplication with any future
EPA program. The items noted are not an exhaustive list. These present opportunities
for the EPA to evaluate existing tools and lessons learned to determine if the resources,
technical knowledge base, and established local networks should be leveraged in an
EPA program.
U.S. Activities
In 2005, an American Council for an Energy-Efficiency Economy (ACEEE) report 55
identified and reviewed a total of 52 programs nationwide that promote energy efficiency
in the agriculture sector. These programs varied based on geographic scope, focus
(technology, farm-type, or both), energy focus (efficiency or renewable), program scope,
htt ://www.aceee.org/research-report/ueO51 ACEEE, Brown, Elliott, and Nadel “Energy Efficiency Programs in
Agriculture Design, Success, and Lessons Learned”, January 2005, Report Number lE051.
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and type. This report highlighted the numerous and diverse activities already underway
in the agricultural sector focused on energy efficiency.
The ACEEE report analyzed these 52 programs and made the following
recommendations for what made an energy efficiency program successful in the
agriculture sector and should be considered for any future energy programs in this
sector. We include these recommendations here for consideration of any SmartWay
pilot design:
• Clearly define program goals and objectives. Agriculture programs that promote
energy efficiency often also have other non-energy goals.
• “Know thy implementer ”: Agriculture programs that met their goals most often
were locally implemented or were designed to appear that way. Local
community networks are extraordinarily important for program credibility within
the agriculture sector.
• Multi-sector programs were able to make progress in the agriculture sector but
they need agriculture-specific marketing and attention.
• Evaluation of energy or cost savings benefits of the programs is critical.
Overall, the programs evaluated in the report contained flexibility and a mixture of
benefits resulting from them. In the agriculture sector, energy efficiency was often
presented as part of a group of benefits that benefit the farmer.
Field to Market
Field to Market is a collaborative stakeholder group of producers, agribusinesses, food,
fiber and retail companies, conservation organizations, universities, and agency
partners that are working together to define, measure, and develop a supply-chain
system for agricultural sustainability. 56 This organization has developed three main
outputs to learn from:
• Baseline indicators 57 for six crops (corn, cotton, potato, rice, soybeans, and
wheat) from 1980-2011 which include energy use and greenhouse gas
emissions. The Energy Use Indicator was developed using data from several
56 http://www.fieldtomarket.org /
Field to Market (2012 V2) Environmental and Socioeconomic Indicators for Measuring Outcomes of On-Farm
Agricultural Production in the United States. Second Report, (Version 2), December 2012 Available at:
www fieldtomarket org httD://www.fieldtomarket.org/report/national-2/PNT NatReDort A27.ødf
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USDA sources including Agriculture Resource Management (ARMs) surveys and
Agricultural Chemical Usage reports, as well as other sources such as university
crop enterprise budgets, the Greenhouse Gas Regulated Emissions and Energy
Use in Transportation (GREET 1 .8d) model from Argonne National Laboratory,
the Farm and Ranch Irrigation Survey, and the Agricultural Census. In the case
of equipment operation, a combination of ARMs data on tillage practices as well
as national level data for tillage practices from the Conservation Technology
Information Center (CTIC) were used with data on energy consumption from
NRCS and ERS. The results of this baseline indicators study from 1980-2011
showed energy use and greenhouse gas emissions per unit of production
decreasing for all six crops.
The FieldPrint Calculator 58 which is a simple tool designed to help farmers look at
how their crop production operations impact the sustainability of their farms. It
provides general information based on the practices that are most likely to
influence energy use, climate impact, soil loss, and water use at a farm site. The
output FieldPrint value can be compared to county, state and national averages
and different scenarios can be run. The Energy Use Resource metric within the
FieldPrint Calculator accounts for the total (direct and embedded) energy in crop
production. The Energy Use Resource Fieldprint is in units of energy amount per
unit of production, such as BTU per bushel in the case of corn. The Energy Use
Resource consists of direct and embedded energy subtotals. The direct energy
subtotal includes tillage and equipment operation, manure application, irrigation
systems, transportation, and drying. The embedded energy subtotal includes
seed, fertilizer and lime, and crop protectants. The direct energy values for tillage
and equipment operation and manure application are from the RUSLE2 model,
while irrigation systems, transportation, and drying are calculated from published
formulations that require user entries. The embedded energies for seed and crop
protectants are calculated, while the energy for fertilizer and lime is from the
“Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation
(GREET)” model.
• Pilot Proiects . Currently, Field to Market has five projects 59 in the field and
several pilots that are just getting started that have been created through
58 http : //www fieldtomarket.org/fieldprint-calculator/info/#energv
httQ://www.fieldtomarket.orglfrom - the-field !
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partnerships among member companies, organizations, and growers. One
example of these pilot projects to provide context is one sponsored by Bunge
and Kellogg Company to work toward completing the carbon and water footprint
for Kellogg’s Frosted Flakes. Working with corn farmers in Nebraska, the project
is capturing the environmental inputs and impacts of growing the corn used in the
Kellogg’s Frosted Flakes supply chain through collecting multiple years of data
using the Fieldprint Calculator. Results from the initial pilot year informed
Fieldprint Calculator improvements, in addition to giving farmers an opportunity to
compare their inputs, outputs, practices and environmental impacts in a
confidential but meaningful format. Bunge and Kellogg continue working directly
with farmers, as well as local partners, such as National Resource and
Conservation Service (NRCS), National Corn Growers Association (NCGA),
Nebraska Corn Board and the University of Nebraska Extension Service, to
gather data for additional years while continually increasing the value of the Field
to Market work for both the growers and the entire supply chain. These
demonstration projects provide valuable insight on the hurdles, limitations, and
benefits of growers developing a sustainability baseline of their fields.
Energy Title of the Farm Bill
The Energy Title of the Farm Bill includes the Rural Energy for America (REAP)
program. The REAP program provides financial assistance to agricultural producers to
purchase, install, and construct renewable energy systems and make energy efficiency
improvements. This, for example, is leveraged in another EPA voluntary program
entitled AgSTAR 6061 which is a voluntary outreach and educational program that
promotes the recovery and use of methane from animal manure.
USDA
In any further exploration of a public-private market based partnership model in the
agricultural nonroad sector, we recommend the USDA’s tools and resources be
investigated fully.
In addition to USDA data sources such as RUSLE2, ARMS, and census reports being
used in Field to Market research, calculators such as Energy Estimator - Tillage 62
60 h //www.epa.gov/agstar /
‘ p://www.epa.gov/agstar/tooIs/oroiect-dev/index.htmI
62 http://ecat.sc.egov.usda.gov /
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provided by the National Resources Conservation Service (NRCS) estimates diesel fuel
use and costs in the production of key crops by area and compares potential energy
savings between conventional tillage and alternative tillage systems. The crops covered
were identified by NRCS agronomists along with the estimated typical fuel use
associated with common tillage systems. The Energy Estimator provides a magnitude
of diesel fuel savings under different levels of tillage.
A USDA example which is closer to the EPA’s SmartWay on-road activities is Oregon’s
USDA NRCS Conservation Stewardship Program which contains an Energy
Enhancement Activity for Fuel Use Reduction for Field Operations 63 . Participants in this
Conservation Stewardship Program can document their baseline fuel consumption for
all field operations using the USDA’s RUSLE2 program. This baseline is compared with
fuel consumption for the planned reduced field operations, also calculated with
RUSLE2. Activity credit is given if the estimated reduction in fuel use between the
present and the planned is greater than 20%.
In addition to these existing USDA programs and tools, Agriculture Secretary Tom
Vilsack outlined the following additional climate solutions that the USDA is developing
on 5 June 2013:
• Regional Climate HubsM : Working in partnership with producers and foresters
and other agencies, the hubs will serve as a source of regional data and
interpretation of climate change forecasts for hazard and adaptation planning for
agriculture and natural resource management. The Hubs will build capacity within
USDA to deliver information and guidance on technologies and risk management
practices at regional and local scales.
• “ Carbon Management and Evaluation Tool, ” also known as COMET-FARM 65
which is a free online tool that will help producers estimate the ‘carbon footprint’
for all or part of their farm/ranch operation and then allows evaluation of different
options for reducing GHG emissions and sequestering more carbon. The system
uses information on management practices together with spatially-explicit
information on climate and soil conditions from USDA databases (which are
http : //www or.nrcs.usda.gov/Drograms/csp/csD data/2013/Enhancem ents/EN R/ENRO1 FY13.pdf
http://www usda.gov/oce/clumate change/regional hubs htm
‘ httQ://cometfarm.nrel.colostate.edu /
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provided automatically in the tool) to run a series of models for each potential
source of greenhouse gas emissions.
• Uniform. Science-Based Cover Croi, Guidance based on local climate data,
tillage management and soil information to account for daily crop growth and use
of soil moisture. With this information, experts determined the latest possible time
to terminate a cover crop to minimize risk to the cash crop yield. RMA, NRCS
and FSA will all uniformly refer producers to these guidelines, and will use them
to administer programs.
American Farm Bureau
In response to President Obama’s Climate Action Plan released 25 June 2013, the
American Farm Bureau updated their climate change issue document 66 . Key points
relative to a SmartWay-like program follow:
• The Farm Bureau supports the following:
1. Market-based solutions, rather than federal or state emission limits, being used
to achieve a reduction in GHG emissions from any sources
2. Alternative energy sources, which will minimize atmospheric pollution
• In regards to the USDA’s new regional climate hubs, the Farm Bureau believes
that having the technology, traits and production practices will be more beneficial
than burdening the economy with additional regulations.
Nebraska Tractor Test
From the equipment side, test data on tractor performance is available through the
Nebraska Tractor Test Laboratory in Lincoln, NE. This data provides customers
baseline information on tractor performance on a laboratory power-take-off
dynamometer and on a tractive effort dynamometer. The real world relevance of this
data can be considered only anecdotally, but not directly indicative of real-world
performance 67
http://www.fb.org/issues/docs/climate13.pdf
67 Robert Grisso, Nebraska Tractor Test Data Shows Current Models Are 10-15% More Efficient
(“Your tractor is likely more efficient than models bought 20 years ago. ... Bobby Grisso .. found that
models tested in 2000 averaged 16.5 horsepower-hours per gallon compared to an average of 14.5
for models tested in 1980.”); see Robert Grisso et al., Predicting Tractor Fuel Consumption, 20
Applied Engineering in Agric. 553, 558 (2004) (“During the past 20 years of tractor testing, improved
fuel efficiency from NTTL reports was shown. A 4.8% decrease in average annual specific volumetric
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European Union Activities
CEMA, the European association representing the agricultural machinery industry,
supports the reduction of energy consumption and greenhouse gas emissions in the
agriculture sector through a voluntary approach that takes into account the complexity
and diversity of the sector. CEMA advocates that energy savings in the agricultural
sector come from the combination/interaction of improvements in the following four
areas:
1. Machine Efficiency: Optimization of engine, transmission, hydraulics, tires, etc.
2. Process efficiency: Selecting the best machine or combination of machines for
application.
3. Operations efficiency: Training of machine operators and providing enhanced
information to minimize fuel used to complete the work.
4. Alternative Energy Sources: Use of biofuels, electric drives, solar panels, hybrid
drives, etc.
CEMA, along with VDMA — the German Engineering Federation, is investigating
sponsoring a university research project that will collectively study each of these four
areas for a particular crop for a particular region in Europe, for example wheat. The
research would employ commercial software to calculate equipment C02 emissions in
each agricultural step in producing the crop. The desired output is a C02 per ton of
crop, i.e. wheat, baseline for that crop in that region. The vision is that this process will
be repeated to model additional regions to ultimately develop a typical value for that
crop in the EU. Once a baseline typical value is determined, simulation would be used
to model the effects of new technology offered by industry with the plan that the
baseline would be updated every four years.
Current Efforts Summary
The overall efforts of the agricultural sector to improve efficiency and reduce emissions
are at an all-time high.
fuel consumption, for the data used in the ASAE Standards, was estimated.”); Noel D. Un & Kelly
Day, Energy Efficiency, Technological Change and the Dieselization of Agriculture in the United
States, 16 Transp. Planning & Tech. 221, 224-25 (1992) (“Beginning in 1975, there is an identifiable
improvement in diesel fuel powered equipment energy efficiency. Using annual data.. from the
Nebraska Tractor Tests ... significant trends in energy efficiency across horsepower categories are
apparent.”).
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• Tools to track operational activities are becoming more and more widespread.
These tools show promise and could be a strong starting point for reviewing the
key hurdle of reporting in extending SmartWay into this sector.
• Information on land use and fuel use is available from USDA.
Many barriers can be envisioned that will need to be evaluated when deciding on the
opportunity the agricultural section provides to SmartWay. The variation in farming
operations could make it challenging to implement a single program/tool that works for
all farm sites. Market-based mechanisms that could drive further emission reductions in
the agricultural sector will not be the same mechanisms as the on-road or other nonroad
sectors and still needs to be developed further.
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