California’s forklift regulation would have rippling economic impact

California has long been a leader in driving innovation, and often when the Golden State enacts bold rules the nation and other countries follow suit.

Colin Sueyres

The problem arises when California policymakers find ill-suited, unworkable solutions aimed at meeting their ambitious goals. One current example is the California Air Resources Board’s (CARB) proposed regulation that would eliminate internal combustion engine (ICE) forklifts by banning sales of all new forklifts that are not zero-emission by 2026. As currently written, the rule would impact 220,000 ICE forklifts, over half of all forklifts in the state.

The Western Propane Gas Association (WPGA) recently commissioned an economic impact report finding that CARB’s proposed regulation will cost California forklift owners and operators up to $27 billion. These costs include $10.2 billion for the replacement of ICE forklifts (even after factoring salvage value) and $4.6 billion in lost utilization for the premature retirement of currently functional ICE forklifts. In addition, electric charging station costs will exceed $6.3 billion to implement. It is important to note that these costs do not factor in the cost of building power supply upgrades or infrastructure upgrades for the generation, transmission and delivery of electricity.

Many businesses and nonprofits run 24-hour operations that require forklifts. If CARB’s proposed rule is adopted, these organizations will have to purchase multiple EV forklifts to replace just one ICE forklift, as battery electric forklifts require time to charge and cool, and cannot run for 24 hours. CARB’s rule imposes billions of dollars in replacement, maintenance and infrastructure costs that forklift owners, operators, manufacturers, dealers and rental agencies are not able to absorb.

While some costs and impacts can be anticipated with the passage of this rule, there are unintended consequences that have not been accounted for. Some consumers will likely transition vehicles in their fleet from propane-powered forklifts to diesel-powered forklifts during the phase-out windows since the rule does not align with diesel regulations. This would be a huge setback in protecting air quality as propane has 94 percent fewer nitrogen oxide (NOx) and hydrocarbon emissions than diesel. New structures will need to be built or space within a business’s existing floor plan will have to be used to store and charge battery electric forklifts.

Fortunately, there is a cheaper, more feasible and more effective way to meet the state’s air quality goals. WPGA has proposed an alternative pathway to compliance will ensure the state is meeting its greenhouse gas reduction goals while at the same time ensuring that the goods movement sector in critical industries across the state are protected from untenable costs:

• Ensure California has an accurate understanding of how forklifts are utilized within the state and how the rulemaking would affect real-world operations. Currently, there are no standardized databases within California to track actual forklift usage – leading CARB to significantly underestimate the true impact of the rule.
• Increase standards for future NOx forklift emissions that recognize the current trends in capture technology and allow California to still meet its federally-mandated emissions goals without a costly and ineffective one-size-fits-all technology mandate.
• Accelerate the phase-out of older, less efficient, higher emitting pre-2011 model year forklifts to provide an immediate improvement in local air quality and reduce carbon intensity.

On its face, the goal of reducing emissions is important to consumers and many businesses. However, the devil is the details, and CARB’s draconian regulation to eliminate most combustion forklifts would have a rippling economic effect across the state and nation.

In 2022, the total number of battery electric forklifts sold across North America (including the U.S., Canada and Mexico) in 2022 was approximately 225,000. If CARB’s rule goes into effect, the majority of battery electric forklifts being sold in North America would – out of necessity – need to be sold within California just to keep pace with the implementation phase-in of the rule.

Importantly, the adoption of this rule in California could have long-term impacts across the entire nation’s forklift market. Other states could adopt California’s rule and establish identical standards, as many states already do for on-road vehicles. More complicated is the potential shift in the manufacturing trends within the industry as California businesses, nonprofits and government agencies underwrite the development of more robust battery electric lifts that can directly compete with propane-powered lifts in any market in the country.

WPGA will continue to engage with CARB to find a suitable resolution of this rule but would encourage anyone interested in learning more about the rule, its cost and how the propane industry is responding to visit westernpga.org/forklift for more information.

Colin Sueyres is president and CEO of the Western Propane Gas Association. He can be reached at colin@westernpga.org.