Truckers believe that California’s decision to drop a mandate for zero-emissions big rigs is the start of a broader rollback of emissions regulations under the incoming Trump administration.

California’s air regulator on Tuesday dropped a request to the Environmental Protection Agency for a waiver that would have allowed it to force truckers to buy battery-electric and hydrogen fuel cell trucks. The head of the California Air Resources Board said the agency withdrew the request because of concerns the Trump administration would deny it.

California is the leader among states implementing regulations to reduce the number of diesel-powered trucks on the road. Truck manufacturers and carriers believe the Trump administration could slow state campaigns as well as federal regulations due to take effect in the coming years.

“We’re looking to the incoming administration to get in there and put in some guidelines that make sense for reducing emissions and for setting standards that are actually achievable,” said Lisa Yakomin, president of the Association of Bi-State Motor Carriers, which represents truckers that haul containers to and from the Port of New York and New Jersey.

Heavy-duty trucks are one of the biggest sources of pollution on U.S. roads, contributing to climate change as well as respiratory problems and other health issues, especially in low-income areas close to ports and other freight hubs. Trucking industry officials say they support moves toward cleaner fuels, but they say regulations such as California’s strict mandate aren’t workable because the technology and infrastructure for zero-emissions heavy-duty trucks aren’t sufficiently developed.

States like California have said the mandates would stimulate demand and the build-out of needed infrastructure for zero-emission trucking.  

California a few years ago introduced regulations that require manufacturers to sell an increasing number of zero-emissions trucks starting with the 2024 model year. Oregon, Washington, Massachusetts, New York and New Jersey have since enacted similar rules, and other states are introducing similar legislation. 

The requirement that California abandoned was designed to create demand for those zero-emissions big rigs by requiring that truckers who call at California seaports or who operate fleets in the state increasingly buy alternative-fuel trucks.

Truckers say those trucks aren’t ready for widespread use in operations. 

Battery-electric big rigs cost about three times as much as diesel trucks. Truckers say the vehicles are less efficient than diesel trucks because they have limited driving range, require extended down time for charging and can only haul lighter loads due to the weight of their battery. 

Many truckers don’t have access to chargers and they say that regional and national charging networks for heavy-duty big rigs don’t yet exist.

Hydrogen fuel-cell technology, which has some advantages over batteries in terms of its weight and driving range, is years behind development of battery technology. 

Regulators have continued to press on with their zero-emission mandates. The Biden administration developed a federal rule that requires a growing proportion of heavy-duty truck sales to be zero-emissions rigs starting in 2027, so that 25% of long-haul truck sales and 40% of short-haul truck sales are compliant by 2032.

Trump is planning to press for a rollback of tailpipe emissions rules for passenger vehicles, according to oil industry lobbyists, part of an effort to unwind President Biden’s push for the U.S. to adopt electric vehicles. 

“I think the administration is going to do a review of everything that happened under the Biden administration coming out of the EPA and determine what is the right approach,” said Jacqueline Gelb, president of the industry group American Truck Dealers. “We need achievable regulations and the path that we’re currently on right now is not achievable.”

Gelb said the group “has engaged with the Trump transition team” to get the incoming administration to revoke waivers the Biden administration has granted California for some state emissions restrictions.

California regulators say they will continue their efforts to reduce emissions under existing local regulations. These include rules that impose new emissions restrictions on diesel engines and that force warehouses to reduce pollution caused by their operations, including trucking.

Matt Schrap, chief executive of the Harbor Trucking Association, a California industry group, said the state’s withdrawal of its broad mandate won’t “stop localized rules from being promulgated.”

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The closure will affect approximately 600 employees and 300 contractors that currently work at the Los Angeles-area refinery. Politico reported that this closure would also impact 8% of the state’s already tight gasoline production.

Although Phillips 66 spokesperson Al Ortiz denied in an email to Politico that the closure was a response to Newsom’s signing the new law, California’s treatment of its oil industry has undoubtedly been a factor.

The news follows an announcement in August 2024 that Chevron, the second-largest U.S. oil company, will relocate from its California headquarters to Texas. The company, with roots in California dating back to 1879, will transition its headquarters to Houston over the next five years.

Chevron’s move comes as a response to California’s stringent regulations and aggressive climate policies. Chevron’s CEO, Mike Wirth, expressed concerns about the state’s business environment in an interview with The Wall Street Journal.

Wirth argued that California’s policies are detrimental to consumers, discourage investment, and ultimately harm the state’s economy. The relocation of such a prominent company highlights the growing tension between traditional energy firms and states pursuing ambitious climate goals.

California’s Environmental Regulations

Over the years, California has adopted the nation’s most stringent fuel standards. The state requires the production and sale of a unique blend of gasoline, known as California Reformulated Gasoline (CaRFG), which has stricter environmental standards than the federal blends used in most other states. This special formulation reduces emissions of pollutants like volatile organic compounds (VOCs) and sulfur, but it is more expensive to refine, adding to the overall cost of gasoline.

California’s gasoline also contains lower sulfur levels than the national average. Reducing sulfur is costly for refineries because it requires additional processing steps, leading to higher production costs that are passed on to consumers at the pump.

California’s Low Carbon Fuel Standard (LCFS) requires gasoline producers to reduce the carbon intensity of the fuels they sell. This can involve blending more expensive biofuels, investing in cleaner production technologies, or purchasing credits from other companies to meet the carbon intensity reduction targets. The added costs of complying with the LCFS are reflected in the price of gasoline.

Under California’s Cap-and-Trade program, refineries and other large greenhouse gas emitters must buy carbon credits to offset their emissions. These credits increase operational costs for refineries, which in turn raise the price of gasoline. Since this program is unique to California, it adds a cost that refineries in other states don’t have to bear.

Unintended Consequences

California energy producers must also comply with additional regulations, which are primarily designed to lower pollution. However, there are costs associated with these strict regulations, and there have been unintended consequences.

Because of its unique gasoline blend, the state cannot easily import gasoline from other regions in the event of supply disruptions. If a refinery goes offline due to maintenance or an accident, it is difficult to quickly source replacement fuel from outside the state because other regions don’t produce the same gasoline blends. This limited supply flexibility can cause price spikes when there are disruptions, leading to volatility in gasoline prices.

Those prices spikes, in turn, can lead to higher profits for some refiners in the state. If one refinery goes offline for unplanned maintenance, the supply of fuel is suddenly reduced. That will either result in a price spike or outages. Therefore, some refiners may see profits surge as fuel prices spike.

Although these prices spikes have been self-inflicted, California has tried to remedy the situation by suing oil companies and passing additional laws that have tried to prevent these price spikes. At the same time, California has vilified its oil industry for years. This creates a hostile environment for these companies.

California’s Future

Ultimately, California can pass whatever laws it wants with respect to its oil industry, but these companies can also respond. That’s what Chevron, and now Phillips 66, have done.

California’s aggressive environmental policies and stringent regulations on the oil industry have created a complex and challenging landscape for energy companies operating in the state. While these measures aim to reduce emissions and combat climate change, they have also led to unintended consequences such as higher fuel prices, supply vulnerabilities, and a strained relationship with the oil industry.

The recent decisions by major players like Chevron and Phillips 66 to relocate or cease operations in California highlight the delicate balance between environmental goals and economic realities. As the state continues to pursue its ambitious climate agenda, it may need to reassess its approach to ensure a stable energy supply and mitigate the economic impact on consumers.

The ongoing exodus of oil companies from California serves as a cautionary tale for other states considering similar regulatory paths, underscoring the need for a carefully calibrated approach that addresses both environmental concerns and economic stability.

These moves potentially further restrict California’s fuel supply, and will likely lead to even higher prices for California consumers.

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