China-California ZEV Truck Policy Workshop Summary and Highlights

China-US ZEV Policy Lab

China-California ZEV Truck Policy Workshop

Following the recent adoption of Advanced Clean Truck (ACT) rules in California, China’s EV100 and the U.S.-China-Netherlands ZEV Policy Lab (UC Davis-CATARC) co-hosted China- California ZEV Truck Policy Workshop through Zoom on July 29th, California time. There were 127 attendees, representing 38 leading international and domestic manufactures, think-tanks, NGOs, and international organizations from Asia, North America, and Europe.

Yunshi Wang, director of China Center for Energy and Transportation, and Professor Hewu Wang of Tsinghua University and deputy secretary-General of China EV100 presided over the workshop. Medium- and heavy-duty trucks account for 7 percent of China’s vehicle stock but emit 41 percent of the CO2 in the auto sector. With those sobering statistics, Yunshi Wang opened the workshop. Hewu briefed the audience about major policy research work done by EV100. He mentioned that EV 100 has provided over 100 reports to the Chinese government and public; the first report in 2015 established that even under the coal-dominated grid, electric buses in China still reduced emissions then. The report led to the decision by the government to deploy transit e-buses on a large scale.

Mary NicholsMary Nichols, chair of the California Air Resource Board, gave a keynote speech from her now familiar home. Nichols said that the ACT rule has already inspired manufacturers to provide more models for the market. In the U.S., 15 states and the District of Columbia have joined with California to form a partnership and unveiled a joint memorandum of understanding aimed at boosting the market for electric medium- and heavy-duty vehicles and phasing out diesel-powered trucks by 2050. She believes that cooperation with China will accelerate the deployment of ZEVs. She also noted China has experimented in some areas that may be of interest to California, including the widespread deployment of hydrogen and electric charging infrastructure for heavy-duty trucks. Through our exchanges, people from California and the U.S., will see what we can learn from China. We have jointly supported our EV makers. Tesla is opening a factory in China and a well-reputed Chinese company, BYD, is building and marketing its products in California. California is ready to support other nations and territories in their adoption of ZEV policies. Working together, California (or the U.S.) and China will learn the best practices from each other. We will realize our climate targets and control our joint future, including achieving widespread community health benefits, creating more opportunities for manufacturers who are leaders in zero emission trucks, and working together to help build up zero emission supply chains that benefit fleets and consumers.

Wu Zhixin, vice president of China Automotive and Technology Research Center (CATARC) and co-director of the China-U.S.-Netherlands ZEV Policy Lab delivered a congratulatory speech. As a key advisor to the Chinese government, Wu provided a broad overview of China’s efforts in promoting ZEVs presently and for the next 15 years through six programs and activities.

  1. The 2021-2035 New Energy Vehicle Development Plan will be announced soon,
  2. The Energy-saving and New Energy Vehicle Technology Roadmap (Version 2) led by the Society of Automotive Engineers-China is well underway; the findings are similar to those of Version 1.
  3. The Ministry of Industry and Information Technology is promoting new energy
    vehicles (NEVs) in the public sector with a draft policy for comments by other
    ministries.
  4. China has started to deliberate on the Dual Credit Policy for Commercial Vehicles,
    which is led by CATARC.
  5. Five ministries are jointly promoting the demonstration of fuel cell electric vehicles in pilot cities.
  6. China is exploring and promoting battery-swapping business models to reduce the initial cost of battery electric vehicles and increase the reliability of batteries.

Finally, Wu Zhixin explained that China will rely mainly on fuel cell electric vehicles for heavy-duty long-haul trucks while mainly rely on battery electric vehicles for inner-city trucks. Dr. Wu was very happy to see over 120 people from around the world attended the workshop. He wished further cooperation with California.

Sydney Vergis, assistant division chief, Mobile Source Control Division of CARB, gave a detailed description of the California policy. She pointed that Trucks are the largest single source of air pollution from vehicles, responsible for 50% of greenhouse gas emissions, and more than 95% of toxic diesel particulate matter emissions. She demonstrated the different credits for different classes of zero emission trucks and also showed the benefits of the ACT rules for California:

  • Significant air quality and greenhouse gas benefits
  • $5.9 billion in estimated net economic savings to California
  • Additional $8.9 billion in estimated health benefit savings
  • Avoided premature mortality, emergency room visits, hospitalizations, lost workdays
  • Net creation of roughly 7,500 jobs
  • Reduced energy use and petroleum dependenceThe following are websites for more information: ACT rules, staff report, and rule-making documents, and ZEV Fleet Rule.

Zhang Yongwei, secretary-general and chief expert of EV100, just returned to Beijing from Wuhan. Because he had an appointment with the minister of MIIT, he spoke earlier from the airport. Secretary-General Zhang proffered three points for discussion:

  1. In China, the NEV market has expanded into small cities and rural areas.
  2. The new market should also include logistics trucks because of their impact on the environment. The dramatic reduction in battery costs has made e-trucks competitive.
  3. We should learn from California. In the past, we promoted deployment mainly through industrial policy and demanding automakers to market the government- required products, but for trucks, the impact is mainly on environment and climate changes. Therefore, we should learn from Mary Nichols’s CARB to encourage the Ministry of Environment and Ecology to issue a series of environmental policies.

He said he reported to the chairman of EV100, Minister Chen Qingtai, about the progress of this workshop the previous night. Chen Qngtai said he would be on the airplane, so he couldn’t participate in the workshop. Chairman Chen said, “The world is lucky to have California; a place with a government agency that advances toward low-carbon, zero- emission in transportation and vehicles; and a place that continuously innovates and persistently promotes new policies, providing the whole world with examples of a pioneer. I believe that China has benefited greatly from the California experience, so has the world. So please relay again my gratitude to our California friends, not just for this workshop, but for years of exchanges and communications, which we treasure tremendously.”

Cristiano Façanha, global director at CalSTART, described the membership model of his organization and explained that the deployment of ZEVs in California will surge forward in waves. The first wave is the electrification of transit buses just like in China, coming with a lot of gradual improvements and innovation. The second wave will be logistic vehicles with short daily routes. The third wave will be medium freight trucks, and next wave will focus on further innovation in battery and drive-train technology for heavy-duty trucks and tractor trailers. But policy alone is not enough, we need to create a whole eco-system for ZEVs, including policies to encourage investment and incentives. He said that CalSTART has made exchanges with the Society of Automotive Engineers-China and will further cooperate with them.

Cost Difference (ACT-BAU) for Three Truck CategoriesMarshall Miller and Lew Fulton from the Institute of Transportation Studies at UC Davis presented their research findings. After analyzing the fuel and capital costs of the vehicles, they concluded that many technological advances will be required for zero-emission long-haul tractors to compete with conventional internal combustion engine tractors. Getting tractors into compliance with ACT rules rather than following a business-as-usual scenario (BAU) will cost considerably more from 2020 to 2034. However, the cost difference during that period to get all truck categories into compliance with ACT would be $7 billion or only 2.1% more for an ACT than a BAU scenario, and these do not consider operations/maintenance savings they may accrue from ZEVs. More innovations in battery and fuel cells and in charging and refueling, plus scale up to large market volumes, should make these technologies very cost effective within a few years.

Aaron Gillmore, BYD USA’s director of trucks commended CARB’s leadership and hoped that such a policy of sticks will be accompanied by some carrots.

Zhao Dongchang, deputy chief engineer of CATARC’s Automotive Data Center—the person in charge of the drafting of China’s Dual Credit Policy for Passenger Vehicles and the coming NEV Credit Policy for Commercial Vehicles—elaborated on China’s policy thinking and emphasized that there are two key differences in heavy-duty trucks between China and California. First, China has a much larger percentage of heavy-duty trucks (5.4% of the total truck fleet) than California (1.3%). Second, there are almost 1,000 more truck makers in China than in the U.S.. When the idea of an NEV Credit Policy for Trucks was first discussed, there was strong opposition from the auto industry because of the huge cost differences between internal combustion engine vehicles and battery electric vehicles. Now, this opposition voice is much weaker battery costs in China have continuously decreased. Zhao’s group now believes that by 2025 China should reach 7 million NEV sales, including 1 million trucks. Zhao said that those in China are looking forward to learning from California in the implementation of the ACT rules. In China, the discussions are divided into five stages:

  1. Setting up the targets. How high should the targets be?
  2. Policy study: Should there be a NEV Credit or Dual Credit policy?
  3. What size is the potential market, by segments?
  4. What are the available technologies?
  5. Are NEV credits needed to enforce the rule and encourage the selling of NEVs?

Zhao said that in China they are facing two challenges: 1) how high to set the quota; and 2) how to address a market that is fragmented and specific for each vehicle. The people in China need to discuss this with CARB in the future.

The next steps for Zhao’s team is to prioritize technology assessment of heavy-duty trucks and modeling the supply and demand for credits in the heavy-duty sector.

Dan SperlingDan Sperling, CARB board member and the founding director of ITS- Davis, delivered the concluding speech. He mentioned that Minister Wan Gang visited UC Davis when he was the President of Shanghai Tongji University. He said that California has also learned a lot from China, and China is ahead of California in some advanced clean truck technologies. He reiterated that California is a relatively small market and its most important role is to be a leader and model—and to partner with others. One area that both China and California need to innovate in is developing more robust and effective incentive programs. One policy innovation to incentivize more adoption of clean vehicles is Feebates, a policy that applies a fee to the sale of dirty vehicles and uses those funds to provide a rebate to the sale of clean vehicles. China and California both need to adopt such carrot-and-stick policies. He said that we are now standing at a crucial juncture in history, and we have taken a big step forward. If we increase our exchange of information between California and China, we will benefit more from the sharing of the best practices and lessons-learned. We are facing many challenges, but the road ahead is so important. Together we can create a more beautiful world and reach a sustainable future.