Interest in alternative fuels, battery-electric vehicles, and fuel cells continues to grow as corporations look to begin their shift away from gasoline- and diesel-based transportation. Now it’s up to suppliers to prove the related economic and environmental benefits.
“The foundation of the sustainable fleet market has now been firmly laid,” concludes the latest State of Sustainable Fleets report by Gladstein, Neandross and Associates. “The rate of growth will be determined by the degree to which each advanced technology and low-carbon fuel can demonstrate economic and environmental sustainability benefits for the end user.”
Here are 10 observations that emerged in the report.
- Commitments to sustainable transportation continue to grow – Last year, PepsiCo and Target were among the corporations to pledge net-zero carbon emissions by 2040. They join earlier commitments made by Amazon, Walmart, Verizon and others.
- Early adopters expect to use more sustainable transportation technologies – “End users have no intention of curbing their planned procurement of sustainable technologies,” the authors say, noting that 85% of surveyed fleets that have used propane, compressed natural gas (CNG), battery-electric vehicles (BEVs), or fuel-cell-electric vehicles (FCEVs) expect to expand on the work.
- Battery costs still present a challenge – Most start-up battery-electric vehicle manufactures have experienced production delays, while traditional OEMs are beginning to deliver the vehicles in small numbers, with significant orders to be fulfilled in 2022 and beyond. But the cost of vehicles, batteries, and infrastructure have not fallen as fast as expected. The cost of heavy-duty vehicle battery packs are still double the price of their light-duty counterparts because of low production volumes, the report notes.
- Fuel cell orders on the rise – Fleet customers have yet to receive fuel-cell-electric vehicles, but the orders across transit and heavy-duty tractor segments quadrupled, and the first Class 8 demonstration trucks were delivered to U.S. fleets. “Although these deliveries are in exceptionally small numbers, the significance of zero-emission vehicles (ZEVs) being implemented in fleet operations is a milestone achievement,” the report says.
- Gasoline and diesel face a rough ride – “There is a growing realization that a fundamental shift away from gasoline- and diesel-based transportation is required to meet these aggressive targets,” says State of Sustainable Fleets. A 2021 Intergovernmental Panel on Climate Change working group – and 20 countries including Canada and the U.S. – agreed to end new direct public investments in international and unbated fossil fuels by the end of 2022. “New ultra-low exhaust standards for HD vehicles adopted by California in 2021 may be unattainable for diesel engine technology without ancillary components, which are costly and can reduce fuel economy,” the report adds.
- Alternative fuel use on the rise – “Traditional alternative fuels and vehicles like natural gas have seen sustained growth, and fuel production announcements suggest more growth,” the report says. Fuel providers are making significant related investments. Shell and Marathon, for example, announced in 2021 that they plan to convert entire refineries to producing low-carbon renewable fuels. And Chevron has identified options including renewable diesel, renewable natural gas, and hydrogen.
- It’s about energy – Known fuel producers are looking beyond saddle tanks alone. “A growing number of infrastructure and fuel suppliers have steadily increased their investments in EV [electric vehicle] charging infrastructure as well as hydrogen fuel production, distribution and fueling locations.” Shell, for example, has committed to operating 500,000 chargers around the world by 2025.
- Gaseous fuels reach a tipping point – Incentives for natural gas and propane vehicles may be declining, but the gaseous fuels have now reached a point where a positive total cost of ownership can be realized without incentives. “This is a significant milestone for the commercial alternative fuel vehicle sector,” the report says. “Fueling infrastructure is inexpensive or available at no cost to an end user … fueling is fast and easy, and fuel cost savings – especially in fuel-intensive MD and HD applications – can provide a very attractive return on investment.”
- Shareholders pushing oil and gas companies to change their ways – Exxon, Chevron and Shell each saw major actions in 2021, pushing them to take responsibility for their role in the climate crisis, take leadership in a clean energy transition, or both. Exxon appointed three board members supported by climate activist investors. Chevron shareholders went against the board and supported a call to include emissions from fuel sold in future reduction targets. And a Dutch court ordered Shell to cut GHG emissions by 45% by 2030.
- Diesel engines may never meet ultra-low emissions standards – “Diesel engines today can meet California’s MY2025 NOx emissions standard of 0.05 g/bhp-hr, however, the industry has not yet achieved the MY2027 NOx emission standard of 0.02 g/bhp-hr through design alone,” says the State of Sustainable Fleets. “Manufacturers have observed that hardware and software changes must be paired with multiple aftertreatment systems to approach the 2027 standard – and that this negatively affects fuel efficiency, and thus TCO and GHG emissions.” But market leaders are showing that the engines will still play a key role in the transition to zero emissions in coming decades. Cummins, for example, is investing in a fuel-agnostic internal combustion engine. Daimler’s goal of 60% of global sales to be ZEVs by 2030 recognizes it will continue to sell plenty of diesel engines through that time.