“Everyone is wondering when that moment will come when everything pivots. But it’s difficult to think there will be one pivot. I think what we will probably see is a thousand little pivots before we get to net zero carbon emissions.”
That was an observation from Shell’s Carlos Maurer during a roundtable discussion on the third annual State of Sustainable Fleets report from clean technology consulting firm Gladstein, Neandross & Associates.
The May 9 roundtable kicked off the Advanced Clean Transportation Expo in Long Beach, California (put on by GNA). The report surveys fleets across North America on the current state of trucking’s transition to net-zero-carbon emissions through the adoption of alternative fuel technologies.
Eric Neandross, GNA CEO, moderated the panel:
- Drew Cullen, senior vice president, fuels and facility services, Penske Transportation Solutions.
- Carlos Maurer, executive vice president, sectors and decarbonization, Shell.
- Mary Aufdemberg, general manager, product strategy and market development, Daimler Trucks North America.
Momentum Growing for Net-Zero Emissions Transition
The report found that fleet use of clean fuels and advanced vehicle technologies is rapidly progressing. The authors surveyed nearly 250 U.S.-based fleets that have used clean fuels and vehicles, including propane, compressed natural gas, battery-electric vehicles, or fuel-cell-electric vehicles. Among that group, nearly 85% report that their use of clean vehicle technologies will grow over the next five years.
“There’s so much engagement and enthusiasm,” said Cullen of the report. “There’s a lot of conviction. And it is refreshing to see. I see it all the time when I talk to customers and OEMs. It just feels like momentum for going to net zero is growing, and I think the report shows that.”
“Every year this report comes out and we hope it will tell us what to do,” Aufdemberg added. “We see that this year, there’s another ‘Fuel of the Future.’ So it tells us that there’s not an ‘easy’ button we can push to get to net zero. There are so many different use cases out there and so many fuel options. We need to be actively involved in pursuing all of them.”
Maurer said that in his talks around the world with political leaders and CEOs, what he hears about most is the struggle to get to net zero. “We are in a time of energy transition,” he said. “And it is a pathway that is not always clear today. I feel like we are on a glide path to net zero, but it will take some time to get there.”
Neandross seized on this to ask panelists about a sense of impatience as the industry waits for new technology to appear on the market.
“Yes,” Cullen agreed. “It is tough to be patient. We’re all trying to figure this out and do the right things.”
Aufdemberg agreed that “this feels slow. And there are still a lot of barriers that we have to break down. But, we’re about to go into production with our new eCascadia electric truck. It generally takes a great deal of time to develop new technologies, and we managed to bring this truck to production before the infrastructure that will support them is in place. It really shows how committed this industry is in growing to net zero.”
Maurer also cautioned that there are many different facets of the discussion. “We are talking about multiple infrastructure systems being developed for any number of new fuels — natural gas, biodiesel, hydrogen, etc. And you’re talking about different pricing models, and so on. I think we’ll see different fuels used in different applications where they are a better fit for the job the truck has to do.”
DTNA, Aufdemberg added, is equally focused on getting total cost of ownership down for customers. “We need scale,” she said. “Battery technology needs to advance, as well as the price and cost need to come down. We’re now looking at hydrogen more. But we need infrastructure. And, at the same time, we need confidence that these fuels or battery systems will get trucks from Point A to Point B to Point C. So, incentives are important. For our customers to use these vehicles in a really efficient business, TCO is very important.”
Maurer said that OEMs and suppliers will have to give customers choices. “The reality is that we’re going to have to invest in and play in many different fuels and work in many different regulatory frameworks.”
Aufdemberg agreed. “There will be different fuels for every market segment. There won’t be one single fuel answer for every single use case, like there is today. Customers need to recognize that they have a lot to learn. We all have a secret sauce that we apply to our products. And, as we all start to connect the dots, we’ll each apply our secret sauce to make this technology our own.”
Do Clean-Truck Regulations Help or Hurt?
Noting that he was putting them on the spot with California Air Resource Board members almost certainly in the audience, Neandross asked if regulations were helping or hurting the industry in its race to net zero.
“Regulations provide motivation — and we all need some of that sometimes,” Aufdemberg said. “It’s always easier to just do what you’ve always done. So we see the need for things like [California’s Advanced Clean Trucks Rule] to help us along. We are building trucks and plan to sell them. But, ultimately, the customer have to want to buy those trucks. So we want them to have fantastic TCO. But just requiring me to sell my unit does not get us across the finish line to net zero. We need something else to help that goes along with ACT.”
As Aufdemberg pointed out, the ACT regulation requires OEMs to sell zero-emission trucks, the report explains. But it also notes that CARB is working on a complementary regulation that will require fleets to buy these ZE technologies. The draft Advanced Clean Fleet (ACF) Rule — expected to be adopted in late 2022 or early 2023 — will require large fleet owners to purchase and operate ZEVs, steadily increasing the proportion of their rolling assets to ZEVs until reaching 100% between 2035 and 2042 (final compliance date varies by application.)
“In some ways the regulations are frightening, and some ways they help us see opportunity,” Cullen said. “We are in the early phase of an energy transition, and a lot of things out of our control still need to come together.”
Maurer pointed out that “we are essentially moving from one fuel feed stock to dozens of feedstocks, and each one will have its own set of regulatory mandates.”
“Any fleet operating today is in a daily battle,” Cullen said. “Drivers, cost of equipment, fuel — all that stuff. It’s really hard for them to think about a rule that’s coming up in a couple years. They know it is out there. But they have much to do to keep the business running satisfactorily that their instinct is to worry about it later.”
Key Sustainable Fleet Report Findings
“We are seeing an incredible acceleration in the investment being made from all sides of the alternative-fuel vehicle market, driven by increasing commitments to environmental sustainability and carbon reduction and to find more cost-effective transportation options given today’s record-breaking gasoline and diesel fuel prices,” said Neandross in a press release issued ahead of the panel discussion.
A key to increased adoption of near- and zero-emission transportation across the public and private sectors, including accompanying fueling and charging infrastructure, is record-setting government funding and legislative support at both the state and federal levels, the 2022 report confirms. While California continues to lead in vehicle and infrastructure funding as well as progressive zero-emission regulations, five other states are following suit with regulations of their own. Oregon, Washington, New Jersey, New York, and Massachusetts have all adopted rules based on California’s that require automakers to sell increasing numbers of zero-emission trucks.
In terms of funding, the report finds that available public incentives for the clean fuel and vehicle market will increase to approximately $20 billion annually across more than 230 programs over the next few years, a nearly seven-fold increase from the previous average of $3 billion. Much of the funding growth is due to the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA).
Other findings in this year’s State of Sustainable Fleets:
- Diesel fuel prices are at an all-time high, further improving economics for alternatives. National average prices at the pump were 19% higher in 2021 than in 2020.
- Battery-electric vehicle demand is ramping up despite supply chain delays and high costs. The report finds that scheduled medium- and heavy-duty battery-electric vehicle deployments will go from dozens to hundreds across this year and next. Fleets are placing record-setting orders. Certain sectors are already seeing early scale, including nearly 1,800 battery-electric school buses ordered or deployed by more than 350 school fleets in the U.S. to date. A few hundred more grant-funded Class 8 battery-electric vehicle orders from major manufacturers were placed in 2021 and early 2022. Orders still far out-pace vehicle deliveries and battery prices remain stubbornly high. Vehicle manufacturers are becoming more involved in the battery-electric ecosystem by providing value-added services to fleets learning to operate in this new and unfamiliar space.
- Compressed natural gas fuel is priced just right. Among surveyed fleets, 79% report that fuel cost savings is a primary advantage for deploying natural gas units. Transit buses, straight trucks (including refuse), and Class 8 tractors are the dominant sectors driving CNG vehicle sales, leading growth in registrations of natural gas vehicles by 3% from 2020 to 2021. Most fleets that have piloted or purchased CNG trucks in the past two years additionally reported equal or better performance on emissions (96% of fleets), noise (87%), fuel supply (67%), and total cost of ownership (57%) as compared to diesel.
- Renewable diesel growth is very strong. Production capacity for renewable diesel increased from 600 million to 800 million gallons per year between late 2020 and mid-2021. By 2025, U.S. production capacity is forecasted to exceed 5 billion gallons annually, a six-fold increase from 2021. The annual survey found that renewable diesel adoption is highest among government fleets, with nearly half of state, county, or municipal fleets reporting renewable diesel usage. •Propane fuel is easy and affordable with its sub-$2-per-gallon cost. Among the more mature clean vehicle platforms highlighted in the report, four states —California, Florida, Michigan, and Texas —accounted for roughly 30% of national demand for propane vehicle fuel. Propane-powered trucks are most often used by state, county, and municipal fleets (43% of such fleet types in the survey). Its usage is also common among smaller fleets, with 35% of propane users in the survey representing fleets with 101-500 vehicles.
- Hydrogen vehicles are on the horizon with larger grant-funded demonstrations beginning now. The report found that total hydrogen heavy-duty vehicle purchases in the U.S. were just under 150 orders in 2021. There were no public hydrogen stations opened outside of California in 2021, but an additional 57 stations, primarily for light-duty hydrogen vehicles, are planned for California, Ohio, New York, Rhode Island, Connecticut, and Massachusetts. Dozens of grant-funded fuel cell electric tractors are now on order by leading fleets.
Report title sponsors are Daimler Truck North America, Penske Transportation Solutions, and Shell Oil. Cummins is a supply chain sponsor of the report.