ECG — 2024-07-03
News from ECG
The mandate is clear. We are aiming for a carbon neutral Europe by 2050. A world where there is no net release of carbon dioxide (CO2). For us, in the finished vehicle logistics (FVL) industry, this means we do not have emissions of CO2 from our trucks and trains, ships and compounds. But in reality; to get there we need to start somewhere.
On 13 May 2024 the Council of the European Union formally released the CO2 emission standards for heavy duty vehicles, amending some of the existing rules.
For HDVs weighing over 16 tonnes, when compared to 2019/20:
By 2025, must reduce CO2 emissions by 15%.
By 2030, must reduce CO2 emissions by 43%. (Fleets must see an average reduction of 45%).
By 2035, must reduce CO2 emissions by 64%. (Fleets must see an average reduction of 65%).
By 2040, must reduce CO2 emissions by 90%. (Fleets must see an average reduction of 90%)
For HDVs weighing over 7.4 tonnes, when compared to 2019/20:
Until 2025 these are excluded from any CO2 reduction targets.
By 2030, must reduce CO2 emissions by 43%. (Fleets must reduce by 45% on average).
By 2035, must reduce CO2 emissions by 64%. (Fleets must reduce by 65% on average).
By 2040, must reduce CO2 emissions by 90%. (Fleets must reduce by 90% on average).
The penalties are huge. So huge that the average truck manufacturer will be hit by fines of over €90 m should they fail the target by a mere 1% in any year after 2025, says the International Council for Clean Transportation (ICCT).
But that’s truck OEMs, not operators. We buy our trucks, fit them with trailers, and then we move new cars. So how does all the above affect us?
The reality is the overriding aim for carbon neutrality by 2050. This means we, as FVL service providers, have our own internal CO2 reduction targets. Our clients, the OEMs, have their targets to reduce CO2 in their supply chains—which will, going forward, affect their choices in network design and selection of carriers, with emissions becoming a key factor. But hold on—where is the cost element in all of this?
Truck OEMs, that’s Volvo, Daimler, Traton, MAN, Scania and so on, will be heavily constrained by the CO2 reduction mandate above and are expected to limit production to those types of vehicles that meet the mandates. No truck OEM wants to pay the hefty fines.
But the cost element is a huge problem. “The retail price of battery-electric trucks is around 3 times more in comparison to a similar diesel truck today,” says Dr. Hussein Basma of the ICCT, and their expert on heavy duty vehicle electrification, in an exclusive discussion with ECG Business Intelligence.
However, by 2030, an electric heavy-duty truck still wins in the Total Cost of Ownership (TCO) analysis, he emphasises. This means even when compared to diesel, hydrotreated vegetable oil (HVO), fuel cell vehicles (FCV) or even hydrogen fuelled trucks, it is electric trucks that win. Why? “Battery prices have been declining rapidly over the past 10 years; and are expected to further decline over the next decade, making the retail price of BEVs and diesel trucks within the same ballpark. In addition, the expected higher volume productions for electric trucks will help further reduce the retail price. This decline in retail price, coupled with superior energy efficiency, will make electric trucks the most cost-effective truck technology from a TCO perspective, when compared to diesel and other alternatives,” says ICCT’s Dr Hussein Basra.
But today, for those in FVL, are the investments in electric trucks part of the agenda? “No, we do not have any electric car carriers in our fleet,” says Jack Austin, business strategy analyst at BCA. Does BCA have plans to invest in electric car carriers? “We are working with a small number of customers to explore the possibly of using electric car transporters on set routes that they have,” he says.
For set routes electric trucks can today be brought in for use by LSPs, but another issue is the availability of public charging infrastructure for electric HDVs. While the EU Commission has issued targets for alternative fuel infrastructure to Member States, the actual number of publicly available stations today is a mere 2 dozen or so across Europe.
However, while the mandates are clear, the actual infrastructure is shockingly far from capable of supporting the transition to zero emission heavy duty vehicles (HDVs). “Zero-emission charging and hydrogen refilling infrastructure for HDVs in Europe is still in its nascent developmental stages,” says Thomas Fabian, Chief Commercial Vehicles Officer at the European Automobile Manufacturers Association (ACEA), in an exclusive interview with ECG Business Intelligence.
“We estimate that Europe needs at least 50,000 publicly accessible truck chargers by 2030, including about 35,000 megawatt chargers, to meet the CO2 targets for HDVs,” says ACEA’s Fabian.
Today, the estimate of charging stations for heavy duty trucks, i.e. those weighing above 7.4 tonnes, is just 25.
Truck OEMs are now taking it upon themselves to accelerate charging infrastructure for HDVs. Roel Vissers, Chief Commercial Officer of Milence - a joint venture between Daimler Truck, Traton Group and Volvo Group - says the company will build 1,700 charging spots by 2027.
How many charging stations for heavy duty trucks has Milence opened so far in Europe? “3” says Roel Vissers of Milence. And how many charging spots does that mean Milence has created? “32,” says Vissers. Is the target of 1,700 by 2027 real and achievable? “Yes, no problem,” he says. “Today 8 more hubs are in construction with approximately 50 plugs, to be opened before Q4 2024.”
Meanwhile Scania has, on 11 June 2024, announced Erinion, its new charging solutions company with the aim to install 40,000 new charging points by 2030.
But there is another trend that is fast accelerating, a trend to use the existing internal combustion engine trucks but to use them with an alternative fuel. A fuel that is made from organic matter, where a process called hydrotreatment results in a biofuel called ‘hydrotreated vegetable oil’ or HVO.
We asked Hödlmayr why they have chosen to use HVO for some of their trucks? “A significant part of our CO2 footprint is caused by the use of fossil fuels in our transportation. Therefore, we put a special focus on the reduction of these emissions as an integral part of our sustainability strategy. One important technology that is already available on the market is the use of HVO diesel. According to the manufacturer, this 100% biofuel reduces greenhouse gas emissions by at least 80% compared to regular diesel fuels,” says Johannes Alexander Hödlmayr, CEO Hödlmayr International.
And why has BCA chosen to use HVO for some of its car carriers? “HVO was chosen as it required no modifications to the fleet to allow the customers to have their vehicles delivered using HVO-fuelled trucks. BCA runs a flexible network and does not necessarily have dedicated trucks for specific routes. This means that the ability for any of the BCA fleet to use HVO when required allowed the customer to achieve the maximum possible benefit from the CO2 savings. Also, HVO allows the customer to achieve 90%+ reduction in emissions so is a key factor. The flexibility also lends well to the fact that, should alternative options for fuelling become available in the future, it would be possible to move to them as no irreversible changes had been made,” says Jack Austin of BCA.
In fact, CEVA Logistics has 30% of its fleet in UK and Ireland already using HVO. While in France 14 trucks used for logistics flows with Toyota Motor Europe have moved to HVO. But there are challenges.
“The challenges that we've faced include the high cost of HVO100, which is a huge drawback and makes it very difficult to roll out more widely across our fleet, since many of our customers simply cannot afford to pay the additional premium on top of diesel prices,” says Catherine Hughes, MIEMA CEnv, Environment & Sustainability Manager, CEVA Northern Europe.
Meanwhile the International Energy Agency states that the availability of sustainable feedstock for the production of biofuels will be detrimental to its growth. In fact, by 2030 the IEA states that 6% of road transport is expected to be powered by biofuel. But overall supply is limited. So, while HVO is today seeing quick uptick in our sector due to its current availability and ability to be used as a drop in fuel, in the long term it is likely that HVO give way to electric HDVs. “Battery-electric trucks or trucks with fuel cells will not be available for our area of application before 2027. Only then can we gradually begin to replace our current 600 diesel trucks. By 2040, 90% of our trucks should be on the road with alternative drive systems,” says Hödlmayr.
In summary, the dilemma in going alternative is that the current options may only be short term solutions. But the short-term reductions in CO2 emissions that can be achieved will still help the overall goal of carbon neutrality by 2050. Therefore, interim steps can help us reach our ultimate goal and meet both corporate targets as well as those of the European Union legislators.
“It is very clear that zero-emission technologies, such as battery-electric and hydrogen-powered, will have to become the backbone of road transport fast. At the same time, this transition will take time, which means carbon-neutral fuels will have to play a role in decarbonising the fleet that is on the road today and for many years to come,” says Thomas Fabian of ACEA.
ECG Members may access the ECG Business Intelligence report here.