USA: California’s Advanced Clean Trucks (ACT) regulation implemented in Maryland
The state of Maryland has announced that it is planning to adopt regulations implementing California’s Advanced Clean Trucks (ACT) regulation under the Code of Maryland Regulations (COMAR) 26.11.43. The regulations will be submitted to the U.S. Environmental Protection Agency (EPA) for approval as part of Maryland’s State Implementation Plan (SIP).
The Advanced Clean Trucks regulation encompasses a mandate for manufacturers to meet zero-emission vehicle (ZEV) sales targets and imposes a one-time reporting obligation on large entities and fleets. Facilitating the advancement and adoption of clean, cutting-edge trucks is supposed to help California Air Resources Board to attain its emission reduction objectives as articulated in the State Implementation Plan (SIP), Sustainable Freight Action Plan, Senate Bill (SB) 350, and Assembly Bill (AB) 32.
To mitigate emissions, the Advanced Clean Trucks (ACT) regulation mandates that original equipment manufacturers (OEMs) of medium- and heavy-duty vehicles progressively increase their annual sales of zero-emissions vehicles (ZEVs) or near-zero-emissions vehicles (NZEVs), such as plug-in electric hybrids, between 2024 and 2035. This regulation employs a cap-and-trade framework, which limits the number of fossil fuel vehicles sold by specifying yearly sales percentage thresholds. Manufacturers can comply with this rule by either generating compliance credits through the sale of ZEVs or NZEVs or engaging in compliance credit trading. ACT defines ZEVs as vehicles that produce no tailpipe emissions, encompassing battery-electric vehicles and hydrogen fuel cell vehicles. Additionally, ACT defines NZEVs as vehicles equipped with an internal combustion engine and an electric energy storage system, including plug-in hybrid vehicles and hydrogen internal combustion engine vehicles.
Original equipment manufacturers (OEMs) that exceed annual sales of 500 vehicles within the state are obliged to annually disclose the quantity of vehicles they sell. On the other hand, OEMs selling 500 or fewer heavy-duty trucks are exempt from this requirement. They are not subject to deficits and are not compelled to sell zero-emissions vehicles (ZEVs) or near-zero-emissions vehicles (NZEVs). These manufacturers have the option to save or engage in credit trading related to ZEVs and NZEVs, and they can voluntarily provide reports on these credits.
OEMs can acquire credits through two methods:
- Selling Near-Zero-Emissions Vehicles (NZEVs) and Zero-Emissions Vehicles (ZEVs).
- Procuring credits to fulfill the requirements of the ACT.
There are four crucial points to understand regarding ACT credits:
- Credits stemming from NZEV sales hold a maximum value of 75 percent of a ZEV credit and can only be applied to address up to half of an OEM’s annual deficits.
- Credits are assigned varying weights according to the vehicle group, contingent on the average emissions factors of each weight category. OEMs can earn credits for the smallest vehicle weight class from 2B to class 3, either under ACT or the Advanced Clean Cars regulation, but not both.
- Deficits are computed based on the total truck sales per OEM. Vehicle groups ranging from Class 2B to Class 3 and the Class 4 category can qualify for ZEV and NZEV credits from any vehicle group or subgroup. Conversely, deficits from Class 7 to Class 8 tractor trucks must be offset using credits from the same vehicle group.
- Credits have the option to be “banked,” meaning they can be saved and utilized in subsequent years to address deficits. Credits accrued between 2021 and 2024 can be employed until 2030. However, once the deficit period commences in 2024, annual credits acquired from 2024 onward can only be banked for a maximum of five years.
The text of the Maryland‘s regulation can be found HERE.
To date, apart from Maryland, five other states have also adopted this rule: Massachusetts, New Jersey, New York, Oregon, and Washington.
To find out more about vehicle regulations in the United States and the implementation of California’s Advanced Clean Trucks (ACT) regulation in Maryland, please contact the Institute for Global Automotive Regulatory Research directly.