EPA SmartWay and Clean Truck Standards save U.S. businesses millions


American businesses benefit tremendously from the robust voluntary and regulatory programs of the U.S. Environmental Protection Agency. These programs are now under threat of massive budget cuts and regulatory rollbacks.  In the coming weeks and months, the experts at EDF+Business will examine what a weakened EPA means for business.

It’s safe to say that the EPA isn’t having the best week. Whether it was new administrator Scott Pruitt vowing to slash climate and water protections at CPAC or this week’s reveal that President Trump wants to slash a reported 24 percent of its budget, the EPA has taken a beating recently. However, what may not be as obvious is that slashing EPA’s budget and reducing funding to key programs actually hurts businesses that have greatly benefitted from EPA programs.

A key example of how the EPA bolsters business is freight. In the freight world, the EPA has done a lot for companies’ bottom lines while protecting human health and that of the planet. Companies seeking to

reduce freight costs and achieve sustainability goals across supply chains receive immense value from the EPA.  Two key programs that provide this value are the U.S. EPA SmartWay program and the Heavy-Duty Truck Greenhouse Gas Program.

A compelling value proposition for business

SmartWay was created in 2004 as a key part of the Bush Administration’s approach to addressing clean energy and climate change. The program has grown from fifteen companies at its start to nearly 4,000 companies today. The program attracts strong private sector participation because it offers a clear and compelling value proposition: freight shippers gain access to information that enables them todifferentiate between freight carriers on emissions performance.

Jason Mathers, Director, Supply Chain

This saves shippers money and cuts carbon emissions. Freight carriers participate in the program to gain access to large shippers, such as Apple, Colgate-Palmolive and Target.

The EPA SmartWay program is not only a popular program that is delivering billions of dollars of annual savings to the U.S. economy, it is also a core strategy for companies to reduce their freight emissions. The agency has calculated that since 2004, SmartWay partners have saved:

  • 72.8 million metric tons of carbon emissions
  • Over 7 billion gallons of fuel
  • $24.9 billion in fuel costs

To put it in perspective, the reduction of 72.8 million tons of emissions is roughly the equivalent to taking 15 million cars off the road annually. The $25 billion in aggregate savings from this one program is more than three times the annual budget of the entire EPA.

Given the strong value proposition of the program, it is no surprise that many companies with existing science-based targets on climate emission reductions participate in EPA SmartWay, including: Coca-Cola Enterprises, Dell, Diageo, General Mills, Hewlett Packard Enterprise, Ingersoll-Rand, Kellogg Company, Nestlé, PepsiCo, Procter & Gamble Company and Walmart.

Clean fuel driving a healthy U.S. economy

Another key program that is saving companies billions is the Heavy-Duty Truck Greenhouse Gas Program. This program supports long-term cost savings and emission reductions through clear, protective emission standards with significant lead time.

The first generation of this program, running from 2014 to 2017, was finalized in August 2011 and will cut oil consumption by more than 20 billion gallons, save a truck’s owner up to $73,000, deliver more than $50 billion in net benefits for the U.S. economy, and cut carbon dioxide pollution by 270 million metric tons.

The program was created with the broad support of the trucking industry and many other key stakeholders. Among the diverse groups that supported the standards were the American Trucking Association, Engine Manufacturers Association, Truck Manufacturers Association, and the United Auto Workers. The industry has embraced the new and improved trucks too.

The success of the first generation effort spurred the agency to launch a second phase that was finalized in August 2016. This effort stands to be a major success as well. The program is estimated to save:

  • 1.1 billion metric tons of carbon pollution
  • 550,000 tons of nitrous oxides and 32,000 tons of particulate matter (aka: harmful air pollutants)
  • 2 billion barrels of oil
  • $170 billion in fuel costs

This latest phase is also big hit with leading companies. More than 300 companies called for strong final standards during the rulemaking process, including PepsiCo and Walmart (two of the largest trucking fleets in the U.S.), mid-size trucking companies RFX Global and Dillon Transport, and large customers of trucking services General Mills, Campbell’s Soup, and IKEA. Innovative manufacturers, equipment manufacturers, and freight shippers have also called for strong standards.

The corporate support for these standards was so impressive that the New York Times issued an editorial illustrating a rare agreement on climate rules.

Every company that sells goods in the market benefits immensely from these two programs and many others from the U.S. EPA. Programs like EPA SmartWay and the Heavy Truck Greenhouse Gas Standards are saving companies and consumers billions of dollars annually, and are integral to corporate efforts to cut carbon emissions.

Looking ahead

In his remarks to EPA employees on his first day on the job, Pruitt acknowledged that “we as an agency and we as a nation can be both pro-energy and jobs and pro-environment…we don’t have to choose”. My hope is that this is a signal of open mindedness to a path forward would allow further improvements to the environment and the economy rather than roll-backs on vital programs and protections.

Perpetuating the belief that the EPA and business are at odds will not only hurt the environment, but would endanger American prosperity.

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More Efficient Trucks Will Improve the Bottom Line

Here in the United States, the Environmental Protection Agency and the Department of Transportation will unveil new fuel efficiency and greenhouse gas standards for big trucks soon, according to the New York Times. At first glance, many companies might conclude that these new polices do not impact them. They’d be mistaken. In fact, they would be overlooking an enormous opportunity to cut costs while delivering real-world progress on sustainability.

Impact-of-fuel-efficiency-updated-5-15-low-rezThe fact is that nearly every company in the United States is reliant on heavy trucks, which move 70% of U.S. freight. Brands and manufacturers use trucks to bring in supplies and ship out final products. Retailers and grocers count on trucks to keep the shelves stocked. Technology companies need trucks to deliver the hardware that powers their online services. Even Major League Baseball has turned its dependence on trucking into a quasi-holiday.

More efficient trucks matter to all business because they will cut supply chain costs. Last year, American businesses spent $657 billion dollars on trucking services. A lot of that money went to pay for fuel – the top cost for trucking, accounting for nearly 40% of all costs. Read more

Walmart, General Mills and Anheuser-Busch Make Greening Freight a Priority

green freightSpring is high season for corporate responsibility reports, with some of the world’s most recognizable brands — including Kellogg’s, Walmart, Anheuser-Busch, Apple, Adidas, General Mills, H&M, Lowes, CVS and Hershey’s — releasing their latest updates. While each company has its own unique sustainability challenges and priorities, every one of them has a global supply chain that requires an extensive logistics network to move goods from manufacturing facilities to end customers.

What reading these reports told me is that greening freight operations is becoming a key priority for these companies, with three trends in particular standing out to me:

1. Tracking logistics emissions is a standard practice. Seven out of the ten recently released reports included data on fuel use or greenhouse gas emissions associated with freight transportation. Several companies were tracking only emissions from outbound freight transportation, presumably because of a lack of visibility into inbound moves. Adidas, one of the three that did not include information on emissions or fuel use from freight movement, did include a detailed breakdown of moves by transport modes and emissions from distribution centers and other facilities.

2. Setting performance goals is a well-accepted practice. Four of the ten companies have performance-based goals to improve environmental impact associated with freight transportation. For example:

  • Walmart is seeking to double its fleet efficiency compared to 2005, and is currently 87% of the way to meeting this impressive goal.
  • General Mills has a goal to reduce fuel use for its outbound moves by 35% compared to its 2005 consumption. The company has made considerable progress too, reducing fuel use by 22% compared to 2005.
  • Anheuser-Busch set a goal in 2014 to reduce greenhouse gases from its global logistics operations by 15% per hectoliter sold. Its goal has a broad scope too, including inbound and outbound transportation as well as warehousing.

3. Seeking to shape external factors is a leadership practice. Much of the impact of moving freight is beyond the operational control of these companies. They have limited influence on the availability of low-impact fuels, the efficiency of freight equipment or the capacity of intermodal systems. In addition to focusing on the factors freight shippers can control, leading companies are trying to shape the overall system to provide more low-impact choices. Read more

Advancing on the Green Freight Journey: Discover Your Next Steps at RILA Sustainability

freightContainers-100x133Every product that ends up on a retail shelf or is sold online has a freight footprint. The annual impact of freight across U.S. retail and consumer goods supply chains is significant – over 160 million metrics tons of greenhouse emissions. Or, more than ten times Walmart’s 2010 scope 1 & 2 emissions in the United States.

There are ample opportunities for retailers and their suppliers to improve efficiency, reduce costs and emissions from their freight supply chain. These companies can get more products on each truckload, move more cargo by rail, and collaborate with other companies to find shipping efficiencies.

To capture the most savings opportunities, companies need a long-term plan of action with common key performance indicators (KPIs) and goals shared between logistics teams and corporate sustainability officers.

EDF created our Green Freight Journey model to be a framework that companies can use to manage supply chain freight emissions. The Green Freight Journey has five steps:

Green Freight Journey

  • Step One: Get Started, where a company assembles the right group of internal stakeholders and defines its objectives and key metrics.
  • Step Two: Create Momentum, where a company launches a pilot effort to improve performance in one key area. It leverages the results of the pilot to increase internal visibility about the strong value of green freight initiatives.
  • Step Three: Accelerate Performance, where a company expands the scope of its green freight efforts from one or two projects to a system-wide effort to reduce costs and emissions.
  • Step Four: Declare a Goal, where a company sets a multi-year goal to drive internal focus and resource allocation.
  • Step Five: Raise the Bar, having accomplished its first generation green freight goal, a company assess and sets a new longer term improvement target.

If you are attending RILA Sustainability later this month, visit the EDF booth (NP6) in the exhibit hall to learn more how your company can leverage the Green Freight Journey framework to identify and implement cost and emission reductions project. In addition to the EDF Green Freight Handbook, we will available at our booth have a benchmarking survey for companies to help them assess their next step on the Green Freight Journey.

EDF Honored to Receive EPA SmartWay Affiliate Challenge Award

EDF has been a long-time supporter of the U.S. Environmental Protection Agency’s (EPA’s) SmartWay Program and we are proud to announce that tomorrow EPA will honor EDF with an Affiliate Challenge Award. This award not only recognizes our commitment to the program, but also our significant efforts to promote, advance, and strengthen SmartWay. The voluntary program is a public-private initiative that promotes freight sustainability through efficiency and fuel reductions. The program first began with a focus on reducing fuel consumption from long-haul trucks, and in 2011 was expanded to increase sustainability from the trucking sector operating around marine ports.

Over the course of its 10-year history, SmartWay Partners have saved 120.7 million barrels of oil. This is equivalent to taking over 10 million cars off the road for an entire year and has helped to protect the health and well-being of locals residing close to transportation hubs. Additionally, the SmartWay Program has reduced 51.6 million metric tons of carbon dioxide so far, which contributes to our nation’s economic and energy security. EDF is excited about these achievements and proud to support these clean air efforts.

Freight Sustainability Forum in Dallas Engages Leaders on Supply Chain Solutions

Developing tomorrow’s innovative sustainable supply chain strategies requires knowledge, collaborative spirit, and creative thinking. EDF is helping to integrate these elements into the transportation network by highlighting successful sustainability practices already employed by industry leaders.

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At a recent freight forum co-hosted by EDF, the Las Colinas Chamber of Commerce, and the U.S.-Mexico Chamber of Commerce, we learned about best practices for co-loading heavy and lightweight freight in a single container, funding opportunities available through the Diesel Emissions Reduction Act (DERA), and intermodal strategies in key corridors. The freight transportation stakeholders in attendance ranged from cargo owners with global supply chains to international logistics providers to regional business associations.

The overarching theme of the forum was that securing emissions reductions from freight transportation is achievable through operational changes, partnerships, funding availability, and technology improvements. While many within the freight transportation community know that opportunities exist to increase sustainability and efficiency within the supply chain, not everyone implements these best management practices. Whether you are a logistics provider in Mexico, a shipper based in Texas, a global carrier or another transportation stakeholder, you play an important role in greening our logistics.

EDF also plays an important role, with a long history of working with companies to help them find ways they can improve their supply chain sustainability and efficiency, with new partnerships kicking off in the coming months. This year, we are beginning a supply chain logistics pilot as part of our highly successful Climate Corps program. We are also working on a marine port environmental performance metrics program that will help recognize top performers and share best management practices to reduce emissions. Together, all of our efforts are helping improve efficiency, reduce emissions, save costs, and protect public health.

This forum served as a launchpad for great ideas and new programs and partnerships like Climate Corps logistics and port metrics. Next time, we can share your success story!

Taking Freight Efficiency to the Next Level: Boise's Success Story

When it comes to logistics, strategies that reduce carbon emissions also reduce transportation costs. Boise, a leading manufacturer of packaging and paper products in the United States, launched two initiatives to do just that – shifting from road to rail transport and making more efficient use of rail transport.

Together, these initiatives have resulted in a combined 60 percent reduction in the company’s CO2 emissions from transportation related activities, as well as cost savings on the targeted shipments.

Carbon emissions from freight transportation are on pace to grow 40 percent by 2040 – the equivalent of carbon emissions produced by 39 million passenger vehicles on the road today.

Leading shippers, like Boise, are making changes to put us on a more sustainable path. Boise’s story is the third in a series of EDF and MIT case studies about carbon-efficient logistics.

In the Carload Direct Initiative, Boise switched from using a combination of rail and truck to send products to one of its customers, OfficeMax, to sending shipments exclusively by train.  Both Boise and OfficeMax facilities are directly accessible by rail, so the two companies collaborated to make the switch. More than 200 carloads were shipped via rail direct from Boise manufacturing facilities to OfficeMax distribution centers in 2011.

Taking efficiency to the next level, Boise launched a Three-Tier Pallet Initiative to increase the volume of products in each rail shipment. Prior to this project, railcars were loaded two pallets high, leaving a space from the top of the second pallet to the roof of the railcar.  The company introduced a half-pallet size to take advantage of the extra space in rail cars. This increased railcar utilization by 14 percent and also provided the customer greater order flexibility.

The two initiatives have yielded combined carbon emission reductions of more than 2,800 tonnes of CO2, the equivalent of saving over 313,000 gallons of fuel.

The Boise story is one of efficiency and collaboration. The Caterpillar case study describes how Caterpillar was able to collaborate with suppliers to consolidate inbound shipments and eliminate truck miles. The Ocean Spray case study described how Ocean Spray was able to collaborate with a competitor to make use of empty backhaul on rail.

Collaborative distribution presents a huge opportunity for companies to reduce costs and carbon emissions. Sure, collaboration has its challenges – coordinating schedules and order sizes, protecting data, adjustments to inventory, etc.

Still, leaders are finding solutions to these challenges.

Get started today – talk to your logistics team, your sustainability team, and your logistics service providers – thinking strategically about logistics will save you money and improve your environmental performance.

To read the full MIT version click here. To read the EDF summary version click here.