1. Evan Lloyd, Executive Director Commission for Environmental Cooperation 31 March 2011 Washington, DC
2. The Commission for Environmental Cooperation supports cooperation among the NAFTA partners – Canada, Mexico and the United States – to address environmental issues of continental concern, including the environmental challenges and opportunities presented by continent-wide free trade. Destination Sustainability is the latest independent report of the CEC Secretariat.
17. Advisory Group Destination Sustainability was developed with the assistance of an advisory group of representatives from transportation industries, nongovernmental organizations, and government agencies. Rodolfo Lacy , Research Coordinator, Mario Molina Center Jaun Carlos Camargo Fernandez , Environment Manager, Wal-Mart Mexico Robert Mckinstry , Manager, Policy and Economic Research, the Railway Association of Canada Mark Stehly, Burlington Northern Santa Fe railway
Previous report in same series dealt with Challenges and Opportunities for adoption of Green Building in North America. As with this report on Freight Transportation, our motivation was primarily to examine the opportunity for GHG mitigation. Green Buildings it was noted by the IPCC as perhaps the lowest of the low-hanging fruit in terms of rapid mitigation with existing technology. Freight transportation presents many of the same opportunities.
I expect that you will be familiar with the many, many reports and studies that examine the important role of transportation in terms of either its GHG impact or the opportunities for mitigation. This may be, however, the only to focus exclusively on this issue from the perspective of North America, and the constituent challenges posed by the every-growing integration of the economies of Canada, Mexico and the United States – tied together quite literally by a vast network of road and rail connections. In assembling the report we were guided by an international multi-stakeholder advisory group – some of which we are privileged to have with us this morning, and who I will introduce in a few moments. You will note here just some of the groups represented on our AG. We are also thankful for the extensive input of more than (#) officials from transportation and environmental agencies at the federal, state, and provincial level in each of Canada, Mexico and the United States. I’m also pleased to note that several of these people are with us here today as well. I want to thank our hosts today - Beveridge & Diamond for welcoming us. In case anyone is wondering Beveridge & Diamond are members of the Intelligent Transportation Society of America – from whom we’ll be hearing in just a few moments.
I hope I don’t’ spoil the read – but let me skip straight to the conclusion and state that we find the most important requirement in avoiding the increases in freight-related GHG emissions anticipated as a consequence of continued trade and commercial growth in the NAFTA region is not simply continued progress in cleaner and more-efficient fuels and technologies, but the vision and willingness—at a continental scale—to foster an integrated, intelligent, freight transportation system that will play an integral part in greening the North American economy. We argue that the time for that vision and cooperation among NAFTA countries is now. Moreover, we find that the policies, regulations, incentives, investments and technologies necessary to accomplish sustainable freight transportation – across North America – will also make our economies more efficient, competitive, and energy-secure. As DOT Secretary Ray LaHood said yesterday about President Obama’s plan for America’s energy security… “The transportation sector accounts for two-thirds of the United States’ oil use and contributes one-third of the nation’s greenhouse gas emissions. We have the opportunity, and the obligation, to take action. We can change both the types and the amounts of energy that our transportation systems use while also creating good, high-paying jobs and easing everyone’s burden at the pump.”
The report identifies several key challenges that I will touch upon very briefly. First among these is the simple challenge of growth – in terms of the NAFTA economies, population, and the concomitant increase in demand for more goods and services across each of our three countries. NAFTA zone population is expected to grow from 460 to 540 million by 2030 (and 600 million by 2050). The North American economy will grow by 70–130% between 2005 and 2030. US interstate highway travel demand, measured in VMT is forecast to increase from 690 billion (2002) to 1.3 trillion by 2026. Measured in trucks that another 1.8 million trucks on the road by 2020 Total freight tonnage is expected to nearly double from 2002 levels 15,500 megatonnes (MT) to almost 34,000 MT by 2035. With all this of course comes increasing fuel use, emissions, congestion and impact on transportation infrastructure.
NAFTA Modal shares : By value , about 88% of US trade with Canada and Mexico moves on land. North America is distinguished by the dominant role of trucks in that land transportation (3:1). 2008 – one-half of total truck traffic (value) was handled by just three ports of entry: Detroit-Windsor Laredo – Nuevo Laredo Buffalo – Niagara Falls By volume – or tonnage - Regarding modal shares [of north-south NAFTA-related trade], in 2008, pipelines accounted for 35%, trucks moved 33% of the tonnage of total land trade imports, and rail moved 32% Trucks transported a larger percentage of the tonnage of US land imports from Mexico (74%) than from Canada (25%). By comparison, in 2008, rail transported 33% from Canada and 24% of the tonnage of land imports from Mexico.
Trade – Transportation –Climate Change The transportation sector in North America today is second only to electricity generation in terms of CO2 emissions produced. [North America (2008): 2,636.6 mMT CO 2 emissions from electricity and heat production, 2,004.9 mMT CO 2 from transportation] Data from IEA 2009. Carbon dioxide (CO 2 ) emissions , account for 95% or more of all freight transportation–related GHG emissions. It should be noted that controlling for CO2 has important Air Quality and Human Health co-benefits. Freight is the fastest growing source of emissions in the transport sector US freight-related emissions increased by 74% from 1990 to 2008 Mexico Emissions have grown most rapidly in Mexico Country the most dependent on road transport. Transportation in general makes up the largest part (34%) of Mexico’s Sectoral emissions portfolio. Transport emissions are expected to grow by 70 percent under BAU.
The freight-truck sector is particularly amenable to efficiency improvements as a consequence of new and better technology, driven in part by environmental standards. Earlier last year President Obama announced that the US would establish GHG emissions standards for commercial medium-and-heavy duty vehicles, beginning with model year 2016. For its part Canada has also announced that it will adopt the US standards, with appropriate adjustment for Canadian conditions. As significant as these new standards promise to be – they will not be enough to solve the problem of increasing freight emissions. Of the many challenges identified – one stands out as perhaps the most perplexing and the most emblematic of the difficulty we face. Despite a 42% increase in vehicle miles traveled (VMT) over the period (2007–2030), light-duty vehicle GHG emissions are projected by the US Department of Transportation to decline nearly 12% in response to expected increases in fuel economy from fuel efficiency regulations, advanced technologies, and alternative fuels. Freight trucks , on the other hand, show a projected 20% increase in emissions. Again – much of this increase in freight related emissions growth is the consequence of more trucks – a lot more trucks - even more efficient trucks burning cleaner fuels – moving more goods over more miles to more customers.
Let me just comment on three of these: 1.The Government Accountability Office published a study finding that the costs of freight trucking that are not passed on to the consumer are at least six times greater than the equivalent rail costs and at least nine times greater than the equivalent waterways costs. Many of those are externalized costs passed on to society – like congestion, pollution, and crashes – as well as public costs, like infrastructure maintenance. These externalized and public costs are just another way that taxpayers subsidize highways. The GAO implies that the country’s highway-centric transportation policy could be damaging the economy. “ When prices do not reflect all these costs, one mode may have a cost advantage over the others that distorts competition,” writes the GAO. “As a consequence, the nation could devote more resources than needed to higher cost freight modes, an inefficient outcome that lowers economic well-being.” 5 Transportation is one area in which great progress is being made in terms of new technology. Studies we examined made the case for significant emission cuts - on the order of 48-50% - within five years through existing and emerging vehicle, engine, and transmission technologies. The uptake by the freight industry is particularly challenging however. And at present the EPA says it will likely take until 2030 for all the trucks on the road to have “green” engines. 6 With respect to North America’s competitive position, as many have noted, North America’s transportation infrastructure is not being adequately supported, and transportation systems are not being expanded and modernized at rates comparable to those of global competitors. Investment in world-class infrastructure has become an competitive imperative. And other trading blocs, such as the EU , and rapidly developing countries, notably China , are devoting considerable resources to the improvement of their transportation systems. North America will need to make a comparable investment to maintain and modernize its transportation infrastructure. China spends 9% of its GDP on infrastructure; India 3.5%, the U.S. less than 1% (noting of course that the US still has the most fully developed efficient and productive transportation system. It is losing ground, however, due to age and capacity constraints.)
The primary recommendation is that NAFTA partners should work more closely to foster an integrated, intelligent freight transportation system, a more seamless and efficient set of linkages that bring the three countries - functionally if not literally – closer together. Inefficiencies and border congestion are currently adding costs, exacerbating pollution and compromising productivity in all jurisdictions. To begin we suggest a ministerial-level North American Transportation Forum that will work in cooperation with an industry, expert and stakeholder group to foster a North America transportation system. (There was a 2008 trilateral ministerial declaration committing to closer collaboration as well as a commitment to have officials from the three countries convene a trilateral meeting. Unfortunately, Ministerial meetings have not been held since 2008 and officials have not convened the proposed trilateral meeting.)
The second recommendation may pose a bigger challenge. Needless to say, when we started this enquiry some two years ago we were in a very different policy environment in terms of anticipated climate policy and carbon pricing. Nevertheless we propose a transparent price on carbon to give everyone a clear signal that they should be investing in efficiency and low-carbon alternatives. I should add that we understand that carbon pricing is a necessary-but-not-sufficient ingredient in a necessary portfolio of policies to attract the significant investments into the transition to a low-carbon transportation system. Regardless of which economy-wide GHG mitigation scheme may be adopted, we recommend that an appropriate share of revenues be dedicated to the freight transportation system to ensure modernization and sustainability. This would include examination of the potential for carbon-pricing to contribute to a dedicated NA multi and inter-modal transport infrastructure fund to minimize congestion along corridors and at our borders.
The three countries should re-invest in the transportation system itself—in road, rail and waterway infrastructure that is, in many places, congested and deteriorating. The countries should provide meaningful incentives for advanced fuel-saving technologies and the adoption of intelligent transportation systems.
Transportation agencies, and businesses operating nationally and across international borders, could reduce costs and GHG emissions by managing the transportation system more efficiently. For example, emissions go down (and profits up) if fewer long-haul trucks return empty or travel over routes that are better served by more carbon-efficient rail. We note that the US EPA SmartWay Transport program is considered to be the leading example of a successful market-based initiative to support greening supply chains – and there are opportunities to strengthen and harmonize relations with similar programs in both Canada and Mexico.
Each jurisdiction can improve the training and equipping of drivers to optimize their environmental and economic performance by driving in ways that conserve energy.
Transportation, environmental and statistical agencies in all three countries should work through the North American Transportation Statistics Interchange (NATS-Interchange) to enhance the quality and comparability of freight data, including the measurement of environmental impacts, to better manage freight transportation as a continent-wide system. Simply put it would be easier to improve the whole system if there were a clearer understanding of what needs work - and what may be working well, already.
As mentioned we were guided in this process by an international advisory group – four of whom have joined us here today. It’s my pleasure to introduce Bruce Agnew – Bruce is the Executive Director of the Cascadia Freight Corridor, and chair of our Advisory Group. Bruce will be followed by Nick Nigro , Solutions Fellow at the Pew Center on Global Climate Change Scott Belcher , President and CEO of the Intelligent Transportation Society of America Glen Kedzie , Vice President of Environmental Affairs for the American Trucking Associations
