Tougher Emissions Standards on the Horizon
The U.S. Environmental Protection Agency (EPA) published a new rule recently which places tougher emissions standards on heavy-duty engines and vehicles starting with model year 2027. The move was part of the EPA’s larger Clean Truck Plan and a step towards a goal of reducing nitrogen oxides (NOx) by nearly 50% by 2045. At a ceremony to announce the new rules, a fully electric truck was parked in the background. Perhaps a nod to the expected future.
With engine manufacturers having to bear the burden of certification and compliance with the standard, they will almost certainly face increased costs to the manufacturing process. Do not expect these costs to rest with them. Manufacturers will pass these costs along to the end user and while that amount isn’t quantified yet, it is something companies should be thinking about and planning for now. Companies should not only consider cash flow but also strategy. Diesel power has been the choice for most transportation companies because it has been the cheapest option. As fuel costs rise and EPA standards increase the cost of vehicles, companies should consider their options and long-term plan.
A long-term plan may be assisted by a modeling dashboard to show the potential financial impact of your decisions. Reach out to a CLA advisor if you’d like to discuss more.
Nathan is a CPA and has more than ten years of experience providing tax planning, consulting and compliance services to a number of privately held businesses and individuals in a variety of industries, with a special focus on the transportation and logistics industry. He actively communicates with clients and seeks ways to align their individual and business goals with available tax strategies to allow them to make well-informed decisions.
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