Transportation & Logistics Analysis

Road transport: the driving forces of energy transition

November 10 2022

SPECIAL REPORT 2/3. The energy transition in road freight transport is stimulated by an increasingly restrictive regulatory environment and by an increase in demand from shippers for the greening of supply chains.

The European Union's roadmap is clear: to achieve climate neutrality by 2050. An objective which implies the almost total decarbonisation of road transport. Four solutions enable the decarbonisation of heavy goods vehicles: biogas (but not natural gas), biofuels, electric batteries, and low-carbon hydrogen.

A CO2-intensive sector

Even though the road transport sector has begun its energy transition, diesel remains massively predominant. Its environmental impact is far from marginal: trucks and buses account for only 2.5% of vehicles in use in Europe, but they are responsible for more than a quarter of road transport CO2 emissions and 6% of the EU's total emissions.

In France, road transport represents the largest greenhouse gas (GHG) emitting sector, with 31% of direct emissions in 2019. Approximately 40% of emissions can be attributed to freight transport (of which 21% are from HGVs and 16% from LGVs).

European constraints

Under the European Green Deal launched in December 2019, the EU is gradually putting in place increasingly binding legislation through the Package "Fit for 55". It aims to reduce net greenhouse gas emissions by at least 55% from 2030 compared to 1990 levels. Each EU country is required to put in place the necessary actions to comply with this collective ambition. To meet its climate objectives of carbon neutrality by 2050, France has adopted a roadmap, the National Low Carbon Strategy, which defines a trajectory for reducing greenhouse gas emissions per sector and sets short- and medium-term objectives.

At the end of November 2022, the Commission is due to adopt new CO2 emission standards for trucks and buses, which could reinforce those set in 2019. As things stand today, from 2025 onwards truck manufacturers are required to deliver new trucks with CO2 emission levels that are 15% lower than those of 2019 and then from 2030 they must emit 30% less.

These stringent quotas have pushed manufacturers to invest heavily in electric motorisation, the only one capable of offsetting the emissions of the diesel trucks that will continue to be marketed, since the reduction in emissions is calculated at a global level.

But according to many environmental NGOs, this strategy will not be enough. "If these targets are maintained, emissions from trucks and buses will actually increase by 32% compared to 1990, due to the expected increase in traffic," said Stef Cornelis, director of the NGO Transport & Environment Germany. This figure is based on the expected 44% increase in heavy vehicle traffic in the EU between 2020 and 2050.

Environmental NGOs are therefore calling for an outright ban on the sale of CO2-emitting trucks in 2035, which would exclude any engine other than electric, as will be the case for cars. According to them, this would be the only way to achieve climate neutrality in 2050, considering the long life of vehicles.

The pressure on truck manufacturers is therefore expected to increase. This pressure will potentially have very significant consequences for carriers since electric models currently cost 2 to 3 times the price of a diesel truck (excluding aid).

Local constraints

The regulatory framework is also tightening at a local level, particularly for access to city centres, with very concrete and immediate consequences for carriers. Germany, France, Italy, Belgium, The Netherlands, Spain... the number of LEZs (Low Emission Zones) has exploded in recent years in Europe, with 13 countries already involved. According to a study by EIT Urban Mobility, the number of cities with restricted zones, mainly in the form of LEZs, increased by 40% in 3 years, from 228 to 320 in 2022.

In France, the mobility policy law of December 2019 (LOM law) requires all cities with more than 150,000 inhabitants to have a mLEZ (m for mobility) by 31 December 2024. In September 2022, France had 11 mLEZs and this figure will reach 45 by 2025.

Access to the Mobility Low Emission Zones (mLEZs) depends on a regulation issued by each agglomeration concerned. It is based on the Crit'Air certificate which classifies vehicles according to their CO2 emission rate. Diesel vehicles, which correspond to Crit'Air 2 and higher depending on the date of marketing, will gradually be banned from driving in city centres by 2030.

However, some obligations are considered "unfeasible" by transport professionals. The Greater Paris mLEZ planned to ban diesel vehicles from July 2023, before postponing the date for the first time to 1st January 2024, then "after the Olympic Games" which will take place during that summer. "More than 61,000 trucks, making up 97% of the fleet, will no longer be able to travel within the metropolis," said the Trade Federation TLF. Such a large percentage raises the question of possible alternatives.

Only Crit'Air 0 and Crit'Air 1 certified vehicles will be allowed in. Only electric trucks are certified as Crit'Air 0. The remaining challenge concerns the Crit'Air 1, whose perimeter is evolving. Vehicles powered by NGV come under this category. However, the surge in gas prices is complicating the situation. Moreover, since April 2022, restricted B100 vehicles (equipped with a sensor that allows it to run only on B100 biodiesel) also benefit from the Crit'Air 1 certificates which allows them to travel in mLEZs, in the same way as NGV trucks. Many manufacturers are applying for XTL/HVO eligibility for Crit’air 1 certification, but this has not yet been approved. In case of a favourable reply, several manufacturers are ready to offer restricted models.

While waiting to have a clearer vision on the subject, the industry is arguing for an easing of the timetable, especially since some alternative solutions are controversial (see infobox).

Growing pressure from shippers

In France, all companies listed on the stock exchange, as well as those with a turnover of more than 100 million euros and/or a payroll of more than 500 employees, are required to implement a corporate social responsibility (CSR) reporting approach.

As such, shippers have been made more aware of environmental issues. According to a survey conducted by the bp2r and carbon 4 consulting firms among around 100 shippers in 2021, 70% of these companies had set greenhouse gas reduction targets over a defined timeframe (88% for large companies). Four elements aimed at stimulating the process were highlighted: stricter regulations and higher taxation; environmental awareness within company management; the relevance and availability of a less carbon-based technological offer; and the risk to their image vis-à-vis their customers.

However, for the moment, freight transport is still largely under the radar, as shown by a study of the CSR reports of the 40 largest French companies listed on the stock exchange (CAC40), published in October 2022 by bp2r. The consulting firm came to a harsh verdict. "Compared to the conclusion of similar work carried out and published in 2017, we note little change… Within the reports, the Supply Chain and transport activities remain relatively unaddressed and still appear as being detached from the general strategy of the companies. Overall, the initiatives are poorly quantified, without real perspective", notes bp2r, stressing that companies must nevertheless play their role in decarbonization" by implementing real CSR strategies and roadmaps that commit them to achieving significant objectives in order to be, at a minimum, aligned with the National Low Carbon Strategy ".

"The implementation of relevant indicators, that represent the company's activity and their management appears to be an essential prerequisite for any serious approach to the question. CSR issues must now be integrated into the heart of transport operations and go beyond the mere scope of the mobility of populations, a subject that is often addressed much more throughly than freight transport, even though its impact on the company's carbon footprint is generally much higher," adds bp2r.

The study reviews different types of possible actions, noting in particular that the use of alternative energies is still relatively undeveloped. However, it highlights the efforts of Carrefour, which converts unsold food products, which cannot be donated or transformed, into biomethane in order to supply a fleet of more than 1, 200 LNG trucks.

Biofuel not so organic?

The "virtuous" aspect of alternative fuels can be tainted depending on their mode of production. The so-called "first generation" B100 fuel, for example, is based on the cultivation of rapeseed and thus directly competes with food crops. "The B100 models were a great success this year because the Crit’air1 classification created new demand. This makes it possible to meet demand on an ad hoc basis, but in the medium to long term, rapeseed may be used for more agricultural purposes," is the analyses of Jean-Michel Mercier, Director of the Industrial Vehicle Observatory (OVI) at BNP Paribas Rental Solutions.

In France, few producers can claim to supply a rapeseed oil guaranteed as "made in France", and some import from abroad, with the risk of GMO production. The same applies to the source of the raw material used to manufacture XTL, sometimes with the use of palm oil or used fats imported by sea. As for Biogas, its production may be debatable. The deployment of thousands of methanisers throughout France has been accompanied by several scandals: pollution of rivers, spreading of polluting residues in fields, large-scale industrial farming projects and even methane leaks, which the IPCC estimates at 5% on average for any project (a figure contested by the industry). These leaks would thus cancel out all the CO2 gains, methane having 25 times more impact on the greenhouse effect than CO2. The transport sector will have to ensure full traceability of the three alternative fuels, at the risk of their use being restricted (by a strong shift in public opinion, for example), which would ruin any investment effort.

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Grégoire Hamon is an economic journalist, specialising in Mobility, Transport & Innovation.
See all its articles