Decarbonizing Long Haul Road Freight:

Opportunities and Challenges

Professor Alan McKinnon

Kühne Logistics UniversityHamburg

CILT Scotland

29th October 2020

bn tonnes of CO2

Remaining CO2 budget to have 2/3 chance of staying within 1.5oC global temperature increase

0

50

100

150

200

250

300

350

400

450

2018 2019 2020 2021 2022 2023 2024 2026 2027 2028 2029

(assuming continuing annual emission rate of 42 Gt CO2)

Steady Stream of Scientific Evidence

https://bit.ly/3h6Xrrp

Source: Prof Ed Hawkins

Guardian 27-10-2020

Impact of Covid19 on CO2 emissions from global freight transport

-36%

tonne-kms

-28%

freight CO2

-30%

freight CO2

temporary Covid19 impact current ambition scenario 2015-2030https://bit.ly/2Vb0FSB

Target reduction in CO2 emissions from freight transport over 15 years achieved in 3 months

https://on.bcg.com/31Vw9A1Source: Boston Consulting Group (2020)

CO2 emissions from EU transport to be reduced by 90% between 2015 and 2050

‘net zero’ target

by 2060 or earlier

28 countries + EU

https://bit.ly/3oCpaFv

Road freight share of global Greenhouse Gas Emissions

very hard sector to decarbonise

Heavy dependence on fossil fuel

High forecast growth rate

global GHG emissions

global energy-related CO2 emissions

global transport CO2 emissions

global freight CO2 emissions

other GHGs other energy-related CO2 58%

other activities

passenger

transport 23%

freight 42%

road 67%other modes

road freight transport 3.8% of global GHG emissions

Based on Smart Freight Centre: https://bit.ly/3jBNPX8

Get rid of trucks and reduce global CO2

emissions by 2 billion tonnes annually?

International Organisations Promoting the Decarbonisation of Trucking

Recent reports on the decarbonisation of road freight transport

Road Freight Decarbonisation Options

1. Reduce the Total Amount of Freight Movement

5. Reduce the Carbon Content of Freight Transport Energy

2. Shift Freight to Lower Carbon Transport Modes

3. Optimise the Utilisation of Vehicle Capacity

4. Increase Energy Efficiency of Freight Transport

Logistics System Design / Supply Chain Restructuring

Vehicle Maintenance

Driving

Vehicle Loading

Vehicle Routing and Scheduling

Vehicle

Technology

Freight Modal Shift

Alternative

Fuels

emissions per vehicle-km

total emissions

total vehicle-kms

25% improvement in efficiency of truck routeing

transfer 30% of road tonne-kms to rail

80% reduction in carbon intensity of rail freight

30% increase in loading of laden trucks

30% reduction in empty running of trucks

50% increase in truck energy efficiency

60% drop in carbon content of truck energy

90% reduction in carbon intensity

Leveraging key freight parameters to achieve a 90% reduction in CO2 emissions

+

+

+

+

+

Decarbonising Road Freight Transport by 2050

0%

10%

20%

30%

40%

50%

60%

70%

80%

Scenario 1 Scenario 2Scenario 1

EU road tkm reference scenario(with constant carbon intensity)

28% more accumulated

CO2 emissions by 2050

100109

117126

134143

151160

100109

117126

134

95

56

16

100109

117

97

77

57

36

16

2015 2020 2025 2030 2035 2040 2045 2050

BAU 2035 peak 2025 peak

BAU trend

2025 peak2035 peak

heavier reliance

on switch to low

carbon energy

Case study: TCO of long-haul truck in Germany

Hydrogen Fuel CellFCEV

Battery ElectricBEV

Catenary ElectricCAT

Synthetic fuelSYNFUEL

Biofuelbiomethane

Intensifying debate over powertrain technologies / energies

hybrids

comparative studies of powertrain technologies use differing criteria and assumptions

great uncertainty e.g. about future rates of electricity decarbonisation and vehicle depreciation

major European truck manufacturers have differing powertrain preferences and strategies

Case study: TCO of long-haul truck in Germany

https://bit.ly/3jlbBX0 https://pwc.to/2HjH9Qe

https://bit.ly/3jqrtrz

Reduce the Carbon Content of Freight Transport Energy

Biofuels

Source: T&E

Life-cycle GHG emissions relative to diesel fuel

34% of EU biodiesel from palm oil

Anaerobic digestion of food and agricultural waste

Biomethane

0 1 2 3 4

Diesel (with averagebiodiesel blend)

Biomethane

kg CO2e / kg

comparison of well-to-wheel emissions

• limited supply• competing demands for available supply• lack of gas refuelling facilities

premature policy support for biodiesel as a decarbonisation fuel

https://bit.ly/31QumeZ

Electrification Scenario for Achieving Zero Carbon Logistics?

• Decarbonise electricity generation

• Electrify all logistical activities

• Ensure there is enough zero carbon electricity to meet demand

International variation in carbon intensity of electricity generation

Source: International Energy Agency (2019)

competing demands for low –carbon electricity

electric cars increase from 3 million today to 300 million by 2040

switch from fossil fuel heating to electric heating in homes

increases domestic electricity demand by 45% by 2040

+ huge growth in air conditioning

Global electricity demand forecast to increase 60% by 2040

11

forecast decline in carbon intensity

of UK electricity

Source: BEIS (2019) https://bit.ly/2MNcF8a

Batteriesbatteries too heavy for long haul trucks?

Over 250 mile range electric truck achieves weight parity with diesel.

Over 300-500 miles weight penalty is 3.5% or less

diesel battery electric

battery recharging times too long?

400 kW/h

recharging speeds accelerating

900 kW/h

fast charge for 400km range in 30 minutes

Cost of lithium ion battery pack

$ per kilowatt-hour

Source: Bloomberg New Energy Finance

800

400

will BEVs be too expensive?

TCO parity with diesel by 2030?

• development of recharging network

• rate of electricity decarbonisation

• availability of battery materials

• residual value of BEVs

https://bit.ly/3mt2VQo

https://bit.ly/3jqrtrz

Tesla electric semi

Capital cost of highway electrification: around €2m per km (for one lane in both directions)

Highway electrification: the e-Highway

60% of heavy truck CO2 emissions in Germany occur on only 2% of road network

89% of truck trips after leaving highway have a length of 50km or less.

Source: Siemens

Trials in California, Germany and Sweden

Oct 2020: Sweden plans to electrify

2000km of highway for trucks by 2030

BDI Study: recommends 4-8000 km of German autobahn network be electrified (out of 13000 km)

phasing the construction of e-Highway infrastructure with ramp-up of trolley

truck manufacture and demand

development, decarbonisation and pricing of supporting

energy infrastructure

UK

https://bit.ly/2TwmjPU

Hydrogen

hydrogen fuel-cell truck

• long range

• rapid refuelling

• limited weight penaltyBlue hydrogen

essentially a fossil-fuel made from natural gas by process of Steam Methane Reforming (SRM)

Green hydrogen Electrolysed from water with low carbon electricitymass produced by 2030?

energy efficiency (WTW)

77%

62%

29%

ERS 3500 wind turbines – 5300km2

hydrogen fuel cell12000 wind turbines18000 km2

comparative land requirements for wind energy

high energy losses in chemical-energy conversions • need to develop hydrogen refuelling network

• time-scale for the transition from blue to green hydrogen?

• fuel-cell technology much less mature than that of batteries

https://bit.ly/328mztt

hydrogen: 3.3 times more energy and cost than ERS

Grey hydrogen

Grey hydrogen with carbon capture and storage

payload weight

trip length

payload weight

trip length

payload weight

trip length

plug-in hybrid

payload weight

trip length

battery electric

battery electric

hydrogen fuel cell

ERS / hybrid

Operational ‘sweet spots’ for different decarbonisation technologies in long haul trucking

Adapted from North American

Council for Freight Efficiency (2019)

• powertrain specialisation may work for some own account operations and specialist hauliers

• general road hauliers seek operational flexibility and ability to carry a variety of products over differing distances

risk of spreading available capital investment in truck manufacturing capacity and alternative energy infrastructures too thinly

Deployment of multiple powertrain technologies: no ‘one-size fits all’

71%

Poland: 22 years to replace fleet at annual renewal rate (2017)

Germany:

Germany Europe +Turkey EU fuel / CO2 standards for new trucks

-15%

-30%

57

48

40

gCO2/tonne-km

penalties per vehicle

sold for non-

compliance

per gCO2 / tkm

2025-2029

€4250

post 2030

€6800

Increasing fuel efficiency of new ICE trucks

70% 90%

Heavy dependence on ICE trucks for next 15-20 years

10 years at annual renewal rate (2014)

size of national truck fleets

time to replace EU28 truck fleet (at 2017 rate)

12.7 years (unweighted)13.9 years weighted by national road tonne-kms

accelerated by regulatory / fiscal pressures?

slowed by: weak financial position post-Covidhigher total cost of ownershipuncertainty about residual valuesinfrastructural provision

2019 2025 2030

https://bit.ly/3ofVZrM https://pwc.to/2HjH9Qe

https://bit.ly/3dJfmV0

https://bit.ly/3kh17Jy

platooning

electrified highways

urban freight consolidation aerodynamic profiling

eco-driver trainingphysical internet

hydrogen fuel cells

hybridisation

synchromodality

down-speeding

high capacity transport

predictive analytics

anti-idling

lightweighting

low rolling resistance

smart cruise controlvehicle automation

online load matching

biofuelsvehicle telematics

preventative maintenance

pollution-routeing

delivery rescheduling

supply chain collaboration battery-powered vehicles

natural gas vehicles nominated day delivery

ease of implementation

CO

2 a

bat

emen

t p

ote

nti

al

low high

low

hightechnological development operational /managerial / regulatory development

Logistics decarbonisation measures: CO2 abatement – implementation graph

ease of implementation

Technology and energy supply bias: under-estimation of the possible contribution from logistics management

Adapted from Cebon (2017)

Improving Energy Efficiency in the Road Freight Transport Sector

vehicle technology: new build + retrofits

change operating practices: e.g. reduce maximum speed

driver training and monitoring

eco-driver training

telematic monitoring

upgrade fuel efficiency of ancillary equipment

e.g. more efficient transport refrigeration units,better insulation, improved operationalprocedures, alternative refrigerants

Truck automation

Truck platooning

Improve vehicle maintenance

40%

45%

50%

55%

60%

65%artics

rigids

all HGVs

20%

22%

24%

26%

28%

30%

32%

34%

artics

rigidsall HGVs

weight-based load factor on laden trips % of empty running

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

3.6

3.8

km/l

itre

artics

rigids

average fuel efficiency of road freight operations

UK Road Freight Trends in Key Decarbonisation Parameters

Source:

UK Department for

Transport

https://bit.ly/3jJckBO

reduce road freight activityimprove loading

energy efficiency

electrify

switch to biofuels

reference scenario

modern truck scenario

Source: International Energy Agency (2017)

Possible Contribution of Logistics Management Options to Road Freight Decarbonisation

demand management can cut CO2 emissions by28% in heavy-road sector

by 2050

Mt CO2 saved by 2040

Source: Energy Transitions Commission (2019)

0 100 200 300

supply chain collaboration

modal shift to rail

optimised fleet / routing

fuel efficient driving

modal shift to shipping

42% contribution of logistics to fuel savings

https://bit.ly/2IQJ5jE

https://bit.ly/3jcc1is

Constraints on Truck Utilisation

Regulatory

Market-related

Inter-functional

Infrastructural

Equipment-related

Demand fluctuations

Unreliable delivery schedules

Vehicle size and weight restrictions

Nature of packaging / handling equipment

Incompatibility of vehicle for back-loading

Uncertainty about transport requirements

Lack of supply chain collaboration

Limited storage capacity at destination

Health and safety regulations

Just-in-Time delivery

Unbalanced traffic flows

Logistical cost trade-offs

Some suppliers have adapted better than others to

the disciplines of just-in-time delivery

Some suppliers have adapted better than others to

the disciplines of just-in-time delivery

Should We Reverse the Just-in-Time Trend?

Relaxing JIT:• more time to consolidate loads and find backhauls• easier for rail and water to compete for freight

But:• JIT is business paradigm that minimizes waste• contributes to energy and CO2 savings in

production, warehousing etc.

Post-Covid greater emphasis on supply chain resilience and possible relaxation of JIT pressures?

High Capacity Transport in Europe 2019

Germany:

25.25 metre 40/44 tonnes

Sweden

25.25 metre 74 tonnes

UK:

trial of 1-2 m longer trailers

Extensive use of double-deck trailers

Finland

34.5 metre 76 tonnes

Netherlands:

25.25m 60 tonne

Denmark:

25.25m 60 tonnes

Norway

25.25 metre 60 tonnes

Spain

25.25 metre 60 tonnes

Flanders

HCT pilot project

Load consolidation cuts truck-kms, fuel use, emissions, accidents and labour demands

Net CO2 savings even after allowance made for modal shift and induced traffic

Relaxing Truck Size and Weight Constraints

UK longer semi-trailer trial

up to 15% more pallets

2013-201837K tonnes of CO2e saved

EU limit4m

5m

Slovenia 4.2m

Finland 4.4m

Ireland 4.65m

UK ‘custom and practice’ 4.9m

Source: ITF (2015)

Gaining extra capacity vertically: UK double-deck trailer – major contributor to UK road freight decarbonisation

Case study48% reduction in CO2 emissions

No national statistics on:

• number of double-deck trailers

• trailer types

• loading

• mileage

• CO2 savings

https://bit.ly/37R9UyK

increases in truck size and /or weight limits since 2013

22

1. Separate delivery operations 2. Groupage by Logistics Provider

3. Collaborative synchronisation

Kg

CO2 /

tonne

1. Separate delivery 43.8

2. Groupage 27.3

3. Collaborative synchronisation 20.3

Nestle – Pepsico Horizontal Collaboration in Benelux

Source: Jacobs et al 2014

EU project:

Supply Chain Collaboration

Deep decarbonisation of freight transport will need much greater sharing of logistics assets

‘Physical encapulation ’ of goods in a new generation of modularised containers’

applying networking of principles of the internet to physical movement of freight

Open, collaborative network with full visibility and incentivized asset sharing

The Physical Internet

a 2050 vision

https://bit.ly/2TzTJ04

What will it take to induce wide and rapid uptake of logistics management options?

World Bank dashboard of carbon pricing initiatives (2020)

If all implemented would cover 22% of global GHG emissions

monetising of GHG emissions: decarbonisation game-changer

Very difficult to apply emissions trading in road freight sector?

setting absolute carbon reduction targets carbon-sensitive road

freight procurementadvise / incentivise / require carriers to

measure / report /reduce emissions

not able to calculate emissions

calculate, breakdown and disclose emissions

only calculate emissions for whole company

Transporeon (2020) survey of 1200 carriers

digital freight platforms

smart infrastructure

smart vehicles

data pooling

digitalisation of logistics

43%

https://bit.ly/2QXOS7T

https://bit.ly/2IRo4W1

https://bit.ly/3jbPdiU https://bit.ly/35h2dil

https://bit.ly/3jmvywx

Marginal Abatement Cost (MAC) analysis for decarbonisation of articulated trucks in the UK by 2040

net CO2 and cost savings

https://srf-optimiser.valuechainlab.com/

https://bit.ly/31TI6Wt

projected reduction in carbon intensity of road freight transport

Global variations in growth of road freight emissions and decarbonisation rates

0

500

1000

1500

2000

2500

2015 2030 2050

OECD non-OECD

tonnes CO2 per vehicle-km

projected increase in CO2 emissions from road freight transport

0.0002

0.0003

0.0004

0.0005

0.0006

0.0007

0.0008

2015 2020 2025 2030 2035 2040 2045 2050

Africa

North America

EU27

Latin America

China

Middle EastIndia

current ambition scenarios for 2030 and 2050

Main growth in road freight emissions in regions with much slower decarbonisation rate than the EU

https://bit.ly/31slD2p

Kühne Logistics University – the KLUWissenschaftliche Hochschule für Logistik und UnternehmensführungGrosser Grasbrook 1720457 Hamburg

tel.: +49 40 328707-271fax: +49 40 328707-109

e-mail: Alan.McKinnon@the-klu.orgwebsite: www.the-klu.org

www.alanmckinnon.co.uk

Professor Alan McKinnon

@alancmckinnon

https://bit.ly/34hp5Pl