Transportation is the leading source of greenhouse gas emissions (GHG) in the United States. Freight emissions are an increasing share of total sector emissions, rising from 24% in 1990 to 32% in 2021. They were 60% greater than they were in 1990 in absolute terms.

Moving freight requires heavy duty trucks, trains, ships and planes that present greater challenges for shifting to low- and no-carbon options than for passenger transport, but progress is being made. This article provides an overview of the history of federal and state policies designed to decarbonize freight transport as well as recent U.S. and, in the case of maritime freight and aviation, international developments that are speeding that transition. A companion article examines technical approaches for decarbonizing freight, such as electrification, sustainable liquid fuels, and hydrogen and hydrogen-derived fuels.

Road Freight

Vehicle fuel efficiency standards date back to the oil crises of the 1970s, but the first policies aimed specifically at reducing vehicle GHG emissions date from the 2000s, when California pioneered such standards for vehicles. Congress then established the Renewable Fuel Standard program and California initiated work on its Low Carbon Fuel Standard.

Vehicle Standards

In 2002, California adopted legislation calling for GHG emission standards for passenger vehicles. The law pioneered use of the Clean Air Act to regulate GHG emissions, making use of the state’s unique status under the act to enact stricter vehicle standards than the federal Environmental Protection Agency (EPA). Enforcement of such standards requires a waiver from the EPA, which was granted in 2009.

EPA initiated GHG standards for medium- and heavy-duty (M/HDV) trucks for model years 2014–18 alongside companion fuel economy standards adopted by the National Highway Traffic Safety Administration in 2011; it adopted Phase 2 standards for model years through 2027, in 2016. These standards have significantly improved the efficiency of and reduced GHG emissions from the nation’s truck fleet.

EPA’s 2021 Clean Trucks Plan aims to reduce the emission of GHGs and pollutants responsible for smog and soot. The initial rule, finalized in December 2022, requires heavy-duty engines and vehicles to reduce their emissions of nitrogen oxides (NOx), particulate matter, hydrocarbons, carbon monoxide and air toxics starting with the 2027 model year. This rule will significantly improve local air quality, particularly in low-income and minority communities near transportation hubs and highways, which have long been affected by truck pollution.

In April 2023, EPA proposed two additional rules under the Clean Trucks Plan. Starting with the 2027 model year, these rules will limit GHG and other harmful pollutants from light- and medium-duty vehicles and apply GHG emission standards to heavy-duty vocational trucks, such as buses and dump trucks.

California is establishing requirements for M/HDVs to shift to zero-emission technologies, such as battery and fuel cell electric. Its Advanced Clean Trucks regulation requires manufacturers selling trucks in California to sell an increasing portion of zero-emission vehicles (ZEVs), with percentages based on size class. Seven other states — Colorado, Massachusetts, New Jersey, New York, Oregon, Vermont and Washington — have now adopted the rule, and other states are considering it. California recently adopted the complementary Advanced Clean Fleets rule to accelerate adoption of ZEVs by M/HDV fleet owners in California. Other states will likely follow California’s lead.

California reached an agreement with truck and engine manufacturers that should smooth implementation of the Advanced Clean Trucks and Advanced Clean Fleets regulations. Manufacturers agreed to meet California’s ZEV and pollutant standards even if these standards are challenged in court, and the state agreed to align its NOx standards with federal standards and to provide three years of regulatory stability and four years of lead time on any new requirements.

Federal funding from the Bipartisan Infrastructure Law will also ease implementation of M/HDV regulations by investing in electric vehicle (EV) charging and alternative fuel infrastructure. The law includes $5 billion to help states deploy EV charging infrastructure and $2.5 billion in discretionary grants for charging and fueling infrastructure, including funds dedicated to creating fuel corridors to provide alternative fuels along major highways.

Fuel Standards

Renewable and alternative fuel standards are another approach for reducing GHG emissions and dependence on fossil fuels. The federal Renewable Fuel Standard was created in 2005 to reduce dependence on petroleum fuels by increasing the use of renewable fuels. In 2007, amendments to the standard established targets for renewable fuel use through 2022, set criteria for which fuels qualify, and granted EPA the ability to issue waivers. These targets prioritized advanced biofuels made from waste, which cause significantly less environmental damage than biofuels made from specially grown fuel crops.

Despite these efforts, advanced biofuel production has fallen short. The target for 2021 established in 2007 was 17.5 billion gallons of advanced biofuels, of which 13.5 billion gallons were to be cellulosic (although EPA has consistently waived that requirement). Actual production was just over 5 billion gallons of advanced biofuels, of which less than 600 million gallons was cellulosic.

EPA recently established Renewable Fuel Standard targets for 2023–25 that aim to increase renewable fuel use in the United States by about 15% between 2022 and 2025. As advanced biofuel production has failed to take off, soy-based biodiesel and renewable diesel will drive much of this increase. Given growing global demand for food, feed, fiber and fuel, greater production of crop-based biofuels will increase competition for land use and likely increase global carbon emissions as a result of forest loss.

California’s Low Carbon Fuel Standard (LCFS) takes a different approach to incentivizing alternative fuels with lower carbon intensity than conventional gasoline or diesel fuel; Oregon and Washington have adopted similar programs. The LCFS gives fuels sold in California a carbon intensity (CI) score based on their lifecycle GHG emissions and establishes a benchmark CI that declines over time. The benchmarks aim to reduce the CI of California fuels by 10 percent relative to the CI of gasoline and diesel by 2022 and by 20 percent by 2030. Fuels with a lower CI earn tradeable credits; fuels with CI above the benchmark generate deficits. The number of credits or deficits generated is based on how far below or above the benchmark the fuel’s CI is.

All fuel providers in California must meet the CI benchmark every year. Providers with deficits buy credits, increasing the cost of higher-carbon fuels. Producers of low-carbon fuels can sell the credits they earn, giving them an added revenue stream. These incentives help bring low-carbon fuels, including electricity for EVs, into the market in California. In 2022, the carbon intensity of California’s transportation fuels was 12.6% below the 2010 baseline, exceeding the 10% reduction target.

There has been discussion of a federal LCFS to replace the current Renewable Fuel Standard program. By establishing technology-neutral benchmarks based on the lifecycle GHG emissions of fuels, an LCFS has the potential to deliver significant climate benefits. A critical element of either an improved Renewable Fuel Standard or a national LCFS will be to get the carbon accounting right, being sure to fully account for the carbon opportunity cost of lands dedicated to fuel production.

The Inflation Reduction Act and the Bipartisan Infrastructure Law provide funding for alternative fuel production. The Inflation Reduction Act extends existing tax credits for alternative fuels through 2024, when they will be replaced by a new clean fuel production tax credit for fuels meeting GHG emission requirements; the size of the new credit will depend on the fuel’s GHG emission factor. The Internal Revenue Service is developing guidance on how the GHG emissions will be measured. Getting the carbon accounting correct for these credits will be crucial.

Clean fuel production credits supported by solid accounting together with the funding for charging and alternative fueling infrastructure from the Bipartisan Infrastructure Law will increase the supply and delivery of clean fuels, helping the United States meet ambitious standards.

Rail Freight

The U.S. rail system needs to reduce its emissions and identify and mitigate its vulnerability to climate impacts. To help do so, in April 2022, the Federal Railroad Administration (FRA) issued a climate challenge to the rail industry to commit to reaching net-zero GHG emissions from the nation’s rail system by 2050. The FRA’s Climate and Sustainability Program includes a locomotive replacement initiative and provides funding for low- and zero-emission locomotives. In addition, the Rail Electrification Council, launched by the National Electrical Manufacturers Association in 2020, is working to promote the use of electricity for passenger and freight rail, which offers significant opportunities for reducing rail GHG emissions.

The Bipartisan Infrastructure Law provides $100 billion to upgrade the rail system, including $5 billion in grant funding for the Consolidated Rail Infrastructure and Safety Improvements Program. Improvements in rail infrastructure can increase the safe and efficient movement of freight and improve the system’s resilience in the face of increasing climate impacts.

California is taking the lead on the transition to zero-emission locomotives through the In-Use Locomotive Regulation, adopted in April 2023. This regulation aims to reduce emissions of particulate pollution, NOx and greenhouse gases. It is expected to significantly improve air quality and public health in communities near ports, railyards and rail lines, which are disproportionately low-income and minority communities. By emphasizing direct reductions in locomotive exhaust emissions, the regulation will push the industry beyond a shift to biodiesel and renewable diesel toward the development and deployment of new zero-emission locomotive technologies.

Under the regulations, which will require a Clean Air Act waiver from the EPA to be enforced, rail operators will be required to fund a trust account with a fee based on their California emissions; they can use the funds in their trust account to upgrade to cleaner technologies.

In addition, operational limits on the age and types of locomotives that can be used in California go into effect starting in 2030. Switcher locomotives (locomotives that operate only in and around railyards) built after 2029 and long-distance locomotives built after 2034 will be required to operate in zero-emissions mode in California. Rail operators will be able to develop alternative compliance approaches to achieve the emission reductions expected under the regulation. Once California receives a waiver from EPA, other states will be able to adopt the regulation, as they did with vehicle regulations including the Advanced Clean Trucks rule discussed above.

The combination of improving rail efficiency and safety through investments in modern rail infrastructure and measures to push railways away from the use of diesel fuel can help create a cleaner, safer and more efficient rail system for both passengers and freight.

Maritime Freight and Ports

The International Maritime Organization (IMO) governs international shipping, including setting environmental standards. IMO regulations affect the environmental impacts of shipping, as evidenced by the 77% reduction in sulfur oxide emissions from ships after IMO placed strict limits on the sulfur in the bunker fuel used in ships. IMO recently updated its GHG emissions reduction strategy. It now seeks to reach net-zero GHG emissions from international shipping by around 2050, while taking into account different national circumstances, with “indicative checkpoints” for GHG emission reductions by 2030 and 2040. The strategy also calls for initial uptake of zero or near-zero GHG shipping by 2030 and reductions in the carbon intensity of international shipping by 40% from 2008 levels by 2030. Although the strategy is more ambitious than the previous version, its targets likely fall short of what is needed to limit global warming to 1.5 degrees C. Reaching net-zero emissions from maritime shipping will require significant work in developing clean fuels, improving ship design and investing in supporting infrastructure.

Decarbonizing international shipping will require the development of low- and zero-carbon fuels to replace fossil fuels. Developing a robust supply and distribution system for sustainably produced synthetic liquid fuels will be critical. Such fuels include clean hydrogen and clean hydrogen-derived fuels, such as ammonia or methanol produced with sustainable bio-based feedstocks.

Electrification is unlikely to play a significant role in international shipping, because of the space and weight associated with battery electric approaches. It can, however, play a role in both riverine and coastal shipping and in ports. Electrification of port operations, including associated truck and rail operations, can significantly reduce local air pollution from diesel combustion, providing meaningful health and equity benefits to nearby communities.

EPA and state and local agencies across the country are investing in reducing pollution from port operations while improving the efficiency and enhancing the security of the nation’s ports. The EPA’s Ports Initiative provides funding and technical support and improves collaboration and communication among stakeholders. Port initiatives are also underway across the country, with ports from Houston to Seattle and from New York/New Jersey to Long Beach setting emission reduction targets and taking action. Efforts to establish green shipping corridors are also underway.

Aviation

International aviation is governed by the International Civil Aviation Organization (ICAO). In 2016, it adopted the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which aims to offset the increase in aviation emissions through 2035.

In 2021, International Air Transport Association (IATA) airlines pledged to achieve net zero carbon emissions by 2050. Because of the need for energy-dense fuels in aviation, this sector is a prime candidate for fuels derived from clean hydrogen and sustainable biomass. Both CORSIA and IATA’s Net Zero 2050 pledge will rely heavily on out-of-sector offsets as sustainable aviation fuels are scaled up, so ensuring that any offsets used represent real emission reductions will be critical. In the long term, residual aviation emissions will likely need to be addressed through carbon removal options such as direct air capture.

In the United States, the federal departments of energy, transportation and agriculture launched the Sustainable Aviation Fuel Grand Challenge in 2021. This initiative aims to increase the production and use of sustainable aviation fuels that achieve at least a 50% reduction in lifecycle GHG emissions, with a goal of all aviation fuel meeting this criterion by 2050. The supply of sustainable biomass to support development of sustainable aviation fuels may limit the ability to meet these goals, particularly in the face of competition from other potential biomass uses.

The Inflation Reduction Act provides financial support for deploying sustainable aviation fuels that can help achieve the Grand Challenge goals. It includes the Sustainable Aviation Fuel Credit, set at $1.25 per gallon for fuels with lifecycle GHG emissions at least 50% below fossil jet fuel for fuel sold or used before 2025. Beginning in 2025, sustainable aviation fuels will be eligible for the new clean fuel production tax credit for fuels meeting GHG emission requirements through 2027. The Inflation Reduction Act also includes grant funding for the production and distribution of sustainable aviation fuel and the development and demonstration of low-emission aviation technologies. It also includes a loan program for manufacturing advanced technology vehicles, including aircraft.

As in other sectors, getting the lifecycle carbon accounting right will be critical to maximize the climate benefits of sustainable aviation fuels.

Conclusions

Decarbonizing freight transportation is more challenging than decarbonizing passenger transport, where the shift to EVs continues to gain momentum. Moving tons of freight over long distances requires energy-dense fuels to power trucks, trains, ships and planes.

Significant public and private investments will be needed to develop the fuels and technologies needed to shift toward zero-emission options. These investments will need to be backstopped by a strong regulatory push to provide industry with a clear path forward.

EPA and states such as California are taking important regulatory steps to move freight transport toward zero-emission trucks and trains. Through the Bipartisan Infrastructure Act and Inflation Reduction Act, the federal government is investing heavily in developing and deploying low- and zero-emission fuels and technologies. All these actions are helping decarbonize the U.S. freight system.

Editor’s note: This article is part of WRI's work on clean transportation fuels, which is supported by the UPS Foundation. This article reflects the independent views of the author.