The Canadian trucking industry is calling for incentives in the 2008 federal budget to support faster greening of the industry.

Tough new federal fuel and emission standards, mandated in three phases by 2010, will usher in a smog-free era for the industry - eventually.

"We have two problems," says Stephen Laskowski, vice-president of economic and environmental affairs for the Canadian Trucking Alliance (CTA).

Although emissions have been lowered at each of the first two phases in 2002 and 2007, capital and operating costs increased - increases that are hard to swallow in a fiercely competitive industry operating on slim margins.

And because current greener equipment lowers fuel efficiency, more greenhouse gases are produced, says Laskowski, who is also vice-president of the Ontario Trucking Association.

The extra capital and operating costs of green equipment will delay achievement of the smog-free goals, as operators put off buying newer, more expensive equipment as long as possible.

"Certainly incentives would help us in converting sooner rather than later," says Eugene Moser, president of Challenger Motor Freight in Cambridge, Ont., which is in the process of replacing its 1,500-truck fleet with smog-free models.

The new greener engines mandated beginning 2007 cut particulate matter by 90 per cent. But that technology adds about $8,000 to the $130,000 to $135,000 cost for each new unit today, says Moser.

He expects another price bump to cover cost of the 2010 technology, which will cut nitrogen oxide emissions, the main cause of ground-level ozone and smog, by 95 per cent.

Changes to engine standards in 2002 reduced nitrogen oxide emissions by nearly 40 per cent - but added $6,000 to $8,000 to the cost, with a three- to eight-per-cent fuel-efficiency penalty, says Laskowski.

New technology has increased vehicle weight, which both decreases fuel efficiency (thus adding to greenhouse gases) and reduces cargo capacity, both of which increase operating costs, says Laskowski.

Anticipating cost hikes, thrifty companies loaded up on new vehicles in 2006 and 2002 that will go on belching higher levels of smog long after the 2010 regulations for new equipment kick in.

Challenger replaces its trucks every three or four years, says Moser. That means its trucks purchased in 2009 will not be replaced until 2014 - three years after the tougher standards kick in.

But many other firms will have a much longer replacement timeline, says Paul Landry, president of the British Columbia Trucking Association.

"Some of them will put off the capital investment as long as they can. There is a lot going on voluntarily" to increase fuel efficiency, says Landry. "But we'd like to see more."

The CTA is pushing for financial incentives for enviroTrucks - 2007 or newer model year heavy trucks with fuel-efficiency devices installed on tractors and trailers.

"We need the federal government to take the concept behind offering consumers $2,000 if they buy a new light truck that meets fuel-efficiency criteria, to heavy trucks," says Laskowski.

Fuel-efficiency devices - speed-limiter activation, auxiliary power units to eliminate truck idling, fuel-efficient wide-base single tires, aerodynamic enhancements, longer length double-trailer configurations, among others - could improve truck and trailer fuel efficiency by more than 20 per cent.

The CTA says its 14-point environmental strategy would reduce nitrogen-oxide emissions by 140 million kilograms, equivalent to removing almost 90,000 trucks from the road; reduce particular-matter emissions by three million kg, equivalent to a reduction of more than 100,000 trucks; and remove almost 11 million tonnes in greenhouse gases, which equals a reduction of more than 45,000 trucks.

But fuel-efficiency equipment, too, comes with a price-tag.The auxiliary power units, which reduce the amount of fuel used in heating and cooling the cab, also cost about $8,000.

"The expense is onerous," says Gene Orlick, a director of the Alberta Motor Transport Association, and owner of Orlick's Transport of Calgary, which owns 120 trailers and leases 30 trucks that do not yet have the new engines.

Orlick also worries about extra costs and delays as the industry adjusts to new maintenance requirements. The engines are designed to shut down if not regularly maintained.

"I can see trucks scattered over North America not running because someone didn't do the maintenance properly."

Not only are trucking companies spending more money on fuel, but the effects of lower fuel economy across the whole industry is also a concern. "It's a non-renewable resource that's being overused," says Orlick.

Finally, with margins so slim, trucking firms will eventually have to pass on costs to their customers, says Laskowski.

This will further stress specific industries, such as Ontario's manufacturing sector, which is already experiencing plant shutdowns and massive layoffs due to lowered demand as the Canadian dollar hits parity with the U.S. dollar.

(Sharon Adams can be reached at sharon@businessedge.ca)