California’s attempt to mandate zero-emissions freight trains could create supply-chain chaos and derail the U.S. economy, industry experts say.
The California Air Resources Board (CARB) wants the U.S. EPA to grant permission for it to move ahead with a rule requiring all train engines in operation as of 2035 to be zero emission technology, such as electric or hydrogen fuel cells.
The rule would also phase out locomotives that are more than 23 years old — a far shorter lifespan than current industry standards.
Now, an unusual coalition of union and rail industry interests is coming together to stop this effort in its tracks. Their argument? That the technology to manufacture zero-emissions locomotives barely exists.
“By seeking to enforce zero-emissions locomotive standards that will not be commercially available anytime in the foreseeable future, these regulations would adversely affect not only California but the rest of the country,” wrote Ironworkers Local 433 in a comment to the U.S. EPA. The union says the regulation fails to recognize the “complex, interconnected nature of railroad operations.”
The finalized rule would require freight railroads operating in California to use zero-emissions locomotives for industrial purposes by 2030 and regular use by 2035. Given the interstate nature of freight rail, the rule would have national implications.
“We try not to be alarmist or over the top with our statements, but this rule would be the death knell of short lines in California,” said Chuck Baker, president of the American Short Line Regional Railroad Association (ASLRRA).
Baker’s organization represents short line and regional railroads across North America, which often handle the “first mile/last mile” connections between manufacturers, farmers, etc. moving product on the U.S. rail system.
The obvious issue is that rail traffic is an interstate industry. Once a large market like California mandates battery-electric trains, most of the industry will be forced to comply. And as the Association of American Railroads (AAR) reports, it’s going to be very expensive.
AAR estimates the costs to comply with California’s rule could exceed $13 billion — $8 billion for the major Class I carriers and $5 billion for short line operators. On top of that, the two Class I railroads operating in the state would be required to deposit approximately $1.4 billion into a designated spending account to pay for the regulation.
The individual, larger railroads would also need to invest approximately $800 million each per year to comply with the rule. That’s more than 20 percent of their total current spending — just to comply with a regulation in one state, AAR said.
An analysis from consulting firm The Brattle Group for AAR the state would have to spend hundreds of millions of dollars by 2035 upgrading its electric grid to handle the load of a 100 percent battery-electric locomotive fleet. The analysis also warned the investments won’t be limited to California.
“Notably, because line-haul locomotives operate over the entirety of North America, the need for additional investments in the power system will almost certainly extend beyond California to accommodate charging needed for interstate operation,” the report states.
More than 30 right-leaning policy organizations and individuals submitted a joint comment to the U.S. EPA, laying out the impacts of California’s policy on the cost for labor, production, and shipping. Add in the disruptions in the supply chain, and the inevitable result, they argue, will be American consumers paying more.
Instead of a battery-electric mandate, these free-market groups urge a “more balanced, collaborative, and scientific approach” the includes already-existing technology.
“The primary concern with CARB’s rule is its imposition of deadlines and standards that exceed current technological capabilities,” they wrote the EPA. “Reputable institutions, such as the Alliance for Innovation and Infrastructure, the Competitive Enterprise Institute, The Heritage Foundation, and the Washington Legal Foundation, have emphasized the technological infeasibility of CARB’s emission mandate. Such unrealistic requirements place an excessive burden on manufacturers, railroads, and suppliers. This will hinder economic growth, stifle supply chains, and threaten innovation and investment.”
In comments submitted jointly by six major trade associations representing paper manufacturers, food and beverage companies, consumer brands, and coal companies, the groups highlighted the negative economic impact the rule would have for their members – and for consumers.
“The inevitable increases in transportation costs and introduction of operational inefficiencies for shippers and receivers, especially for those who are rail-dependent or captive, would also result in further inflation,” wrote the Private Railcar Food and Beverage Association, American Forest and Paper Association, Consumer Brands Association, Freight Rail Customer Alliance, National Coal Transportation Association, National Industrial Transportation League, and Western Coal Traffic League.
For the Private Railcar Food and Beverage Association, which is comprised of 16 global food and beverage companies and manufacturers, a lack of adequate rail service would prevent products from Frito-Lay and Pepsi, Molson Coors, KraftHeinz, General Mills, and other companies from getting into consumers’ hands – and mouths.
“All are major rail shippers that rely on the railroads to produce and distribute their food and beverage products that are vital to the health and welfare of our nation and essential to feeding its citizens,” the letter said. “Without adequate rail service, their food and beverages will not be on American store shelves.”
