Editor's note: Analyst Liz Morrison is taking over Transport Weekly while Katie Fehrenbacher is out on leave. This essay is excerpted from the newsletter. Subscribe to receive it Tuesdays.
Last summer, Katie Fehrenbacher wrote about the "State of Sustainable Fleets" report put out by the research team at Gladstein, Neandross and Associates (GNA). A few weeks ago GNA updated its report, with a few significant developments over the last nine months that led the authors to proclaim 2020 "a landmark year for the clean fleet industry."
Consistent with the 2020 report, the data covers the use and development of four clean vehicle technologies: drivetrains powered with propane; compressed natural gas; batteries; and hydrogen fuel cells. The report also spans across sectors — from municipal to urban delivery to long-haul — and includes data related to fleets that have never used one of the four clean vehicle drivetrains. The authors said that perspective helped them learn about perceived or actual barriers to clean fleet technology adoption.
Here are nine high-level findings that will change the landscape of clean fleets for 2021:
- Clean trucks and buses are becoming more competitive. Clean fleets are increasingly able to compete on the key metrics reported to be the most critical for fleet managers: operational performance; range; and total cost of ownership. Notably, every long-haul, delivery and large-scale fleet (defined as fleets operating more than 100,000 vehicles) surveyed for the report said that they plan to increase their use of clean vehicle technologies.
- New state and national policy changes are spurring momentum behind EV adoption. Two major announcements have accelerated the urgency behind sustainable fleet transformation in the past year: California’s announcement of a goal to ban light-duty combustion engine sales by 2035 and phase out medium-duty and heavy-duty combustion engine vehicles entirely after 2045; and the Biden administration’s goal to install 500,000 electric vehicle chargers by 2030. Additionally, California’s Advanced Clean Truck (ACT) Rule, approved in 2020, requires zero-emission vehicle (ZEV) sales from OEMs for the first time, and the proposed Advanced Clean Fleets Rule (expected in 2021) will regulate fleet ZEV purchases.
- The focus on energy efficiency technologies is increasing. A number of OEMs are working towards enhanced fuel economy through products such as trailer skirts and tractor aerodynamics for Class 8 trucks. Some companies are designing trucks to showcase how multiple efficiency technologies can be combined to dramatically improve fuel economy. Such technologies as low-rolling resistance tires and efficient driving practices are proving to be highly effective. For example, the North American Council for Freight Efficiency (NACFE) "Run on Less" cross-country roadshow has shown a fuel efficiency improvement of 7-10 miles per gallon (mpg).
- Renewable diesel and biodiesel usage is expanding. Renewable diesel (RD) production saw a 7 percent increase in 2020 compared to the previous year. Recent investments have the potential to produce 3.8 billion gallons a year in the U.S. by 2025. At this report, six oil refineries in the U.S. are being transformed into renewable diesel plants, and two existing plants are expanding.
- Momentum for propane adoption is dwindling. General Motors exited the liquefied petroleum gas market last year, slashing in half the number of medium-duty propane vehicle models on offer. As a result, orders of propane delivery vehicles in 2020 dropped 1,300 units (66 percent) from a previous five-year annual average. This is important to note, as vehicle adaptability is cited as a primary challenge to adoption of this low-cost and renewable alternative fuel. Momentum may be shifting away from propane towards renewable natural gas (RNG), as it continues its meteoric rise as the top leading sustainable fuel source.
- Renewable natural gas growth is accelerating nationally. An advantage many fleet managers see in natural gas-powered fleets is increased route flexibility and the lack of need for in-route refueling, as opposed to electric vehicles, which currently require relatively frequent recharging. RNG, sourced from organic waste streams, is produced in 29 states across the U.S. and provides the greatest greenhouse gas emission reduction benefits as compared to other renewable technologies. RNG use in on-road transportation increased in California from 69 percent to 92.5 percent of total volume from 2018 to 2020.
Last year, RNG achieved a milestone by becoming the first widely used renewable fuel to achieve carbon negative status in California’s Low Carbon Fuel Standard regulation program. This report predicts that the carbon intensity of California’s RNG will continue to drop due to a growing supply of ultra-low carbon dairy and swine manure. Two other predictions: RNG is likely to completely saturate the national natural gas vehicle fuel market by early 2024, and the average energy weighted carbon intensity of bio-CNG in California is projected to dive to nearly minus-200 by the end of 2023.
- Charging infrastructure is becoming more widely available. Utilities nationwide are increasingly investing in fleet-focused EV charging infrastructure programs. For example, New York state’s Public Service Commission ordered its leading utilities to spend more than $700 million in public infrastructure through 2025, nearly doubling California’s 2019 mandate.
- But infrastructure development remains a massive obstacle. California projects it will need 1.5 million EV chargers by 2030, which is three times the amount the Biden Administration has committed to for the entire nation in that same time period. In addition to the short supply of charging stations, fleet owners are concerned about electricity availability and reliability due to the rise of electricity supply risks from natural disasters, such as the grid failure in Texas due to cold weather.
- Overall cost remains the top challenge to adoption. The vehicle price tag is the top challenge reported by more than three-quarters of electric truck users. Costs (before incentives) typically equal two to three times that of a new diesel vehicle, and batteries remain a high-expense component of the vehicle’s overall price. Although technological advances in EV batteries have brought down the cost over the past several years, it remains the biggest hindrance to adoption.