Transportation & Logistics Analysis

Road transport: which energy solutions can lower the industry's carbon footprint?

May 17 2019

Although trucking will remain a widely used mean for shipping goods in Europe, the industry will have to lower its carbon footprint by 2030. The transition will be made possible by a broad range of energy solutions, from diesel fuel all the way to hydrogen fuel cells.

In 2018, the European Commission decided to create rules regarding greenhouse gas emissions from trucks. The rule, which would require a 30% reduction of greenhouse gas emissions by 2030, is well on its way to becoming law. After being the topic of an informal agreement between the European Parliament and the Romanian Council president in February, the rule was adopted by the Parliament on April 18 with 474 yes votes, 47 no votes, and 11 abstentions (--> See the full text)

Many energy solutions

By the year 2030, the growth rate of goods shipments should follow the GDP’s growth rate, and this increase in volume will largely be taken on by road transport. Trucking will therefore remain an important and dominant tool for the mobility of goods. How will the market respond to this growth while respecting European pollution requirements? Today we see the old guard and the new guard fighting again, highlighting just how many energy solutions exist for trucking.

Diesel fuel

On the one hand you have the proponents of diesel fuel who claim, and have data to back them, that diesel engines have made tremendous progress in terms of efficiency, fuel consumption, and reducing their environmental impact. In 2018, during a conference organized by ATC Research, Alan Schaeffer, executive director of the Diesel Technology Forum indicated that: “in the past 15 years, truck and engine manufacturers have brought diesel engine emissions close to zero. The transition towards diesel with low sulfur content, combined with the improvement of combustion, turbo-charging, and high-pressure injection, along with the addition of cutting-edge emission treatment systems like selective catalytic reduction (SCR) and diesel particulate filters all make today’s heavy truck diesel engines produce close to no emissions”.

Gas and biofuel

However, a number of carriers are currently testing other solutions like natural gas engines (liquid or compressed). This type of fuel is widely developed in Italy, and is struggling to gain traction in France due to the scare availability of supply solutions. Although plenty of studies support their use, natural gas vehicles don’t benefit from a general consensus, which could make diesel seem obsolete. In Germany, the government decided to freeze taxes on this type of fuel, which could incentivize investments.

Globally, the share of biofuel used in shipping is constantly growing. The rate of incorporation varies from continent to continent, but Latin America always has the highest one at about 10% (of total energy), followed by North America and Europe with a respective share of over 6% and 4% (of total energy). Today, in Europe, only Finland, Sweden, and Austria have reached the 2020 goal set by the ENR Directive from the European Commission (Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources) of having 10% of the total energy consumed by the shipping industry come from renewable sources. France is in 4th place (with an 8.9% incorporation rate).

Electric solutions and hydrogen

Electric solutions with batteries seem to be losing traction because of their poor autonomy. According to Forbes, a minute of charge lets you drive 5 km, when a minute of diesel fueling yields over 30 km of autonomy.

The real novelty on the market is hydrogen fuel cells powered batteries. According to their makers they have a completely neutral carbon footprint, are extremely efficient (power, range, and charging time), and create a new business model.

Hyundai is planning to deliver 1600 hydrogen trucks to Switzerland and Europe in 2023, with a 7-minute charge yielding 400 km of autonomy.

During its April 2019 Arizona show, NIKOLA presented 2 versions of its hydrogen truck (one made for the US market available in 2022, and one for the European market available in 2023). Their business model consists in renting a truck on a 7-year lease, including maintenance and hydrogen fuel. This is incredibly disruptive as the value proposition completely eliminates the financial risks created by gas price volatility, and freezes equipment costs, but this will also go against the current model in which carriers are also equipment resellers. 

Hydrogen production costs seem very high, because its extraction is energy intensive. However, new methods are currently emerging. Haffner Energy, a renewable energy startup, has developed Hynoca, a hydrogen production technology using biomass and organic waste. The startup explains that hydrogen could cost the same price as tax-free diesel by 2025.

A European scale

In conclusion, technological and industrial innovations can truly support the EU’s political ambition to adopt impactful climate policies. As always, the fuel supply and distribution network will be the key to the success or failure of any endeavor. The movement will be incredibly fast, and with the dense international connections, it is safe to say that any rollout will go well beyond any national border and be decidedly European.

Photo credit: Anne Kerriou

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With more than 20 years of experience in the international supply chain, William works as a road transportation expert for Upply. Entrepreneur by nature, he has successively worked in operational and functional management among various industries, such as chemistry, automotive and building materials; alternately shipper and service provider.
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