Experts often say greenhouse gas emissions are “hard to abate” in the transportation, freight and supply chain industries. The sector’s heavy reliance on fossil fuels means that substantial investments in infrastructure and technology are necessary to get to net-zero emissions.
Issues that make decarbonizing freight difficult include the:
- Higher upfront costs for some sustainable solutions, even if the total costs of ownership are lower.
- Scalability, range, weight and other technological constraints that need to be considered.
- Enormous investments, research and development that have gone into improving economies of scale and efficiency for fossil fuels, which alternative fuels have to compete with.
- Long asset replacement cycles that delay adoption for sustainably fueled trucks, trains, ships and aircraft.
- Uncertainty around the supply and demand for alternative fuels and alternative fuel vehicles, which delays development, production and adoption.
“The primary source of emissions in freight is from fuel combustion, and we have a hundred-year-old, super-hyperefficient, ultra-low-cost means of getting really energy-dense fuel where it needs to be. We have markets built around it. We have pursued efficiency and low cost for such a long time, and we have not built this system with emissions in mind. We’ve never internalized that externality,” said Tyler Cole, director of carbon intelligence at FreightWaves.
An externality is a consequence of commercial activity that is not accounted for. Air pollution is an externality of transportation because vehicle users, not fuel producers, pay for the negative health impacts that air pollution causes due to transportation-related emissions.
Perhaps largest barrier: Upfront cost
Though the cost of many electric vehicles and other sustainable alternatives are known to be less expensive over their lifetimes, the higher upfront costs leave many hesitant to make the leap. Small and midsize carriers may find it more challenging to obtain the capital for these large investments, especially if their profit margins are tighter than larger carriers. And some sustainable alternative fuels are still more expensive over the total cost of ownership.
Solving the cost limitations and getting carriers to make the shift is essential, Moritz Tölke, technical manager at the Smart Freight Center, told FreightWaves in a previous interview. As economies of scale, technological advances and demand for EVs and other sustainable fuels improve, the upfront and total ownership costs are likely to decline.
Technological maturity yet to be reached
Many sustainable solutions have yet to reach technical maturity, and carriers need incentives to move the market toward new technologies and emissions reductions, Tölke said. Range limits, lack of infrastructure and weight constraints need to be improved for EVs, batteries and other alternative fuels.
The costs of sustainable alternative fuels and solutions need to be incentivized so the market can more rapidly scale up production, adoption and efficiency, Tölke said.
The market is just beginning to invest in renewable fuels despite the costs because investors are starting to see the benefits, Cole said. While new investments in renewable fuels and technologies show progress, he noted that investors have put capital toward the fossil fuel industry for roughly a century. It could take some time for renewable and sustainable solutions to catch up.
Asset replacement and diverse operations
“Ships have a very long average life span,” Fernando Rangel Villasana, senior technical manager at the Science Based Targets initiative, told FreightWaves. And maritime isn’t the only mode facing long asset replacement cycles. If companies wait to purchase ocean vessels, aircraft, trucks and trains that can be powered by low-carbon and zero-carbon fuels, it could be another 10- to 30-plus years before those assets would be replaced again. This could lock in decades of additional greenhouse gas emissions.
Not all modes can utilize the same zero-carbon solutions, and even within the same mode of transport, there are many variables that impact which solutions are viable. EVs are generally efficient and effective for delivering freight on consistent, compact routes where vehicles return to the same hub at the end of the shift or day. However, EVs are not yet feasible for most long-haul trucking routes due to technological constraints such as battery range and infrastructure.
“International trade is very diverse,” and the varying shipping routes, schedules and vessel sizes make it difficult to apply universal abatement solutions, Villasana said.
Demand and how to speed transition
Sustainable fuels often face the chicken-and-the-egg dilemma. Companies don’t want to purchase or order assets that run on alternative fuels if there’s no guarantee that the supply of those fuels will be available. Similarly, suppliers don’t want to invest in producing often more expensive alternative fuels until there’s ample demand.
“We need additional demand drivers. Big corporations have started to send that signal through net-zero pledges, through carbon-neutral commitments and through linking emissions reductions to executive pay,” Cole said.
Companies, consumers and governments each have a role to play in decarbonizing freight and supply chains. Tölke argued that companies need more information about alternative fuels and sustainable solutions. He said there are several operational changes companies can make that are more sustainable and just as reliable as current operations, but it’s a challenge to communicate that information.
Consumers have expressed a demand for green products, though it’s hard for them to tell how sustainable products really are because there is little regulation on sustainability claims.
“Governments can certainly regulate emissions reporting. That would help progress things quickly,” Cole said. Government intervention could spur investment in green solutions and provide more guarantees for suppliers and buyers of sustainable fuels. It could also give consumers more confidence about the level of sustainability and amount of emissions associated with the products they purchase.
Accurately measuring greenhouse gas emissions is crucial for decarbonization, Cole said.
“People have just never measured, there’s no demand on freight suppliers to measure and to provide that data. Until the market dictates data be issued from upstream along the supply chain, you can’t manage what you don’t measure,” Cole said.