The road freight transportation sector accounts for 7% of global CO2 emissions, according to the International Energy Agency (IEA), with the US, Europe, China and India accounting for over half of these emissions. While medium and heavy duty trucks represent only a quarter of the total road transport fleet, with the majority being light commercial vehicles, they are responsible for about 50% of the segment’s CO2 emissions. In the IEA’s Net Zero Emissions by 2050 Scenario, heavy duty truck emissions would need to decline 7% from the current state by 2030. While this initially seems reasonable, the number must be examined with respect to freight volume. Despite revisions to estimates due to the COVID-19 pandemic, road freight is still projected to grow by 20-40% until the end of the decade. To account for this, heavy duty truck emission intensity on a per-ton mile basis must see a 30% reduction by 2030 to put us on a path towards a 1.5 degrees Celsius scenario.
Regulation is still the main driver
Decarbonisation drivers of the transportation segment fall into two categories: regulatory or policy push and market pull through customer demand. While these driving forces differ regionally and are shifting over time, regulation is, generally, the main factor today. In Europe, GHG emissions in the heavy duty and, in the future, medium duty segments are regulated; OEMs must prioritise and drive the transition toward ZEV technologies or face the threat of government-issued penalties. The US market has begun a shift toward increased regulatory pressure in recent years, as several states have adopted the Advanced Clean Trucks (ACT) regulation, following in the footsteps of California legislation. The ACT currently imposes ZEV sales targets on OEMs, but additional legislation targeting fleets is under discussion.
While medium and heavy duty trucks represent only a quarter of the total road transport fleet…they are responsible for about 50% of the segment’s CO2 emissions
At the same time, the market pull side must be closely examined. All of the top-ten for-hire and private fleets in the US have committed to sustainability targets or the implementation of measures, driven by increasing pressure from shareholders. Even though many fleets are making such commitments, there is still hesitancy from shippers to pay for decarbonised transport. Consequently, the current market faces somewhat of a deadlock. Many fleets are investing in trials for zero-emission technologies like BEV or fuel cells to determine who is willing to put these technologies into action and what use cases or routes they are suitable for. However, the required investments into vehicles and infrastructure are still too high for carriers to drive the transition singlehandedly—there must be clear demand and willingness to pay from shippers.
Alternative powertrains will play a critical role in the long-term
TCO parity between diesel and BEV is expected by the middle of the decade, depending on the use case; shorter range, return-to-base applications will be the first to become electrified. As electricity prices vary significantly by region, or even between adjacent utility networks, the rollout will also be different by area. Fuel-cell technology is expected to become TCO-positive during the second half of the decade, creating an opportunity to decarbonise long-haul transport where fast-fuelling is a benefit and BEV charging imposes uptime penalties.
Once TCO parity has been achieved, market growth is expected to accelerate. Zero-emission technologies are likely to account for a significant share of new heavy duty trucks sold in 2030: 30-40% in EU, 15-25% in North America, and 15-20% in China. With new sales representing approximately 10% of the overall heavy duty trucks in operation, build-up of a zero-emission vehicle parc will take time. In North America, less than 10% of the heavy duty truck parc will be zero-emission in 2030. Numbers in Europe will be higher due to the already-strong regulatory push, but they are still likely to be below 20%.
To realise these sales penetration rates, all market participants, specifically fleets, fuel providers, infrastructure players and OEMs, must work together in an ecosystem-based approach to develop the market and tackle the challenges of technology costs, infrastructure availability and fuel costs (in the case of hydrogen). It also means that OEMs cannot give up internal combustion engines just yet—a minimum investment will still be required from them.
Fleets also have other measures at their disposal that can be implemented today
While the large-scale deployment of ZEV technologies is a sizeable task that fleets must begin to work on today, its impact on GHG emission levels will only become visible in the long-term, once a more meaningful zero-emission truck parc has been developed. However, fleets currently have other non-powertrain-related measures at their disposal to help reduce GHG emissions. One of the most impactful measures is the conversion from road to rail intermodal transport, as intermodal is more than twice as fuel-efficient than road transport.
OEMs cannot give up internal combustion engines just yet—a minimum investment will still be required from them
Another measure that can be implemented today is the conversion to AMTs. While the technology is already prevalent in the European market, many US heavy duty trucks have yet to adopt it. Fleets are reporting 1-3% improvements in fuel efficiency when switching from manual transmissions to AMT. Other potential measures where telematics and data analytics can help are the reduction of both empty miles and vehicle idling times.
Decarbonising road freight requires commitment from all stakeholders and leveraging multiple measures
While decarbonising the road freight segment to meet Paris Agreement targets seems like a daunting task, all players in the industry are increasing participation and involvement. Zero-emission powertrain technologies are clearly the path forward, but fleets must develop a portfolio of measures that has more immediate impact. One key driver to speed up the decarbonisation transition is commitment from shippers. Making zero-emission transport a purchasing requirement, and the subsequent willingness to pay for it, would be a potential game-changer. Until TCO parity is within reach, regulatory push will still be a requirement.
About the authors: Walter Rentzsch is Senior Project Manager and Wilfried Aulbur is a Senior Parter at Roland Berger Strategy Consultants
