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Robert.Jervis_43227 Aug 19

New research reveals gas-powered vehicle investment trend

New research reveals gas-powered vehicle investment trend image
Definite short-term benefits...
In order to track the logistics and supply chain industry’s progress, Ti and the Foundation for Future Supply Chain have established a research programme to track the investments of major LSPs in decarbonisation. The sustainability programme’s goal is to build a comprehensive database tracking all publicly announced investments, operational changes, technology upgrades and target commitments. A number of European road freight providers have been examined as part of this research, revealing a trend of investment into gas-powered vehicles. 

Why gas-powered vehicles?

While a few years ago, logistics providers were investing large sums into electric trucks, reserving vehicles from every fledgling start-up and testing electric vehicles for established manufacturers, advances in electric battery technology have failed to live up to expectations. Last mile delivery still looks like it could be decarbonised through electric vehicles, but batteries simply aren’t capable of powering long-distance freight transportation at the moment, and it doesn’t look like they’re going to be able to do so in the near future. The future of hydrogen vehicle technology is promising but uncertain, and many logistics providers recognise the need to decarbonise sooner rather than later. Gas-powered vehicles do not provide a total elimination of engine emissions like battery-electric or hydrogen vehicles, however, they do provide a reduction in emissions compared to conventional diesel and petrol engines. For this reason, gas-powered vehicles are seen as a short- to medium-term solution to lowering greenhouse gas emissions, with the hope they can provide a stopgap before advances in other technology allows for further reduction.

Which providers have invested?

UPS has been a proponent of gas for at least a decade, having invested over $1bn into alternative fuel and advanced technology since 2009. A not insignificant proportion of that money has gone towards gas trucks and infrastructure. It has invested especially into renewable natural gas (RNG), a renewable source of gas that comes primarily from landfills, animal livestock and wastewater treatment. In 2015, the firm became the biggest user of RNG in the American shipping industry by announcing the purchase of 1.5m gallon equivalents annually. This was followed up by an investment of $100m into gas vehicles and infrastructure in 2016, a further $90m in 2017 and then another $450m in 2020, the latter providing funding for 80m gallon equivalents of RNG per year.

Most other providers haven’t invested as deeply as UPS into gas-powered vehicles, however, all providers tracked have shown at least some interest: DHL Freight purchased four liquefied natural gas (LNG) trucks from IVECO in 2018; FedEx Freight purchased over 100 compressed natural gas tractors in 2016; GEFCO France has been testing natural gas trucks since 2019; Geodis has recently purchased 200 compressed natural gas vehicles from IVECO; and Royal Mail has introduced gas-powered trucks this year, with plans to roll out gas refuelling across the UK. Despite not being as flashy or instantly effective at emission reduction as battery-electric or hydrogen vehicles, providers seem to be warming to gas-powered vehicles.

How effective are they at reducing emissions?

Among logistics providers, similar figures are often touted in regards to gas-powered vehicles. Typically, up to 99% reductions in particulate matter, up to 90% reductions in NOx emissions and, depending on the mix of gas used, a carbon emission reduction from 10% up to 95%. One benefit of gas-powered vehicles is that they can often use mixes of different types of gas, meaning a provider can use a biofuel and fossil fuel mix if there is not enough biofuel readily available. This can mean large fluctuations in carbon reduction, sometimes from journey to journey.

While those numbers sound promising, there is a lot of dispute about just how effective gas-powered road vehicles are by some environmental organisations. The International Council on Clean Transportation (ICTT), an environmental non-profit organisation, is especially sceptical of the impact of the introduction of gas-powered vehicles, claiming that, well-to-wheel and when considering all greenhouse gases (not just carbon and nitrogen), gas vehicles are barely any more environmentally friendly than modern diesel engines.

Transport Environment, another non-profit, concur with the ICCT on their claims around gas being similarly pollutive to diesel. Despite truck manufacturers Scania and IVECO claiming their gas engines produce between 10% and 20% less CO2 emissions, tests conducted by the Netherlands Organisation for Applied Scientific Research (NTO) found that the reduction was nearer 5%. The TNO also found that, in urban situations, the LNG trucks they tested emitted up to five times more NOx pollution than the best diesel truck, and about the same amount of particulate matter as the average diesel engine. While many providers and manufacturers may justify the poor performance of gas vehicles by pointing out the use of renewable natural gas, there are concerns there too.  The ICCT state that, by 2050, biomethane output will only be 7% of total European gas demand. There is a hard limit to biomethane production that could be hit, directly preventing gas vehicles from being as clean as they could be.

Conclusion

Gas-powered vehicles seem to provide a small but noticeable decrease in emissions compared to diesel vehicles, making them a decent option for providers looking to reduce emissions immediately. The technology they use is tried and tested, and they are currently available to purchase with two of the three largest truck manufacturers in the world (VW & Volvo) both offering gas-powered options. However, there are fears that investment in gas infrastructure and development could lead to less investment into total decarbonisation solutions, such as hydrogen or electric. Daimler, the largest manufacturer of trucks in the world, does not offer any natural gas trucks and does not invest in the technology, stating “it’s not worth pursuing natural gas further”. 

At the moment, natural gas occupies a very small proportion of trucking as an industry but it is growing, with alternative fuel trucks experiencing a 5.5% year-on-year growth in sales from 2019 to 2020. It seems most providers will only be pursuing natural gas until hydrogen and electric technology allows for long-distance trucking, but even in that instance, gas-powered vehicles have competition. Biodiesel, made primarily from waste animal and vegetable oils, can often be used in existing diesel engines mixed with a small amount of petroleum diesel. Use is growing for it, with hydrogenated vegetable oils (HVO) becoming the third most used fuel type in Sweden and with Bolloré Luxembourg offering customers the option to use Total’s HVO100 biodiesel.

Overall, gas-powered trucks offer a short-term solution to road logistics providers seeking to reduce their immediate carbon footprint. However, gas does not appear to be as efficient as doing so as some providers report. While gas-powered vehicles can be powered by more environmentally efficient biomethane, the production of renewable natural gas looks as though it will never come close to hitting demand, and competing biofuels may be more simple for firms to switch to in the same timeframe. Firms that have already invested in gas infrastructure will likely continue to, however, the potential for hydrogen and hopeful advancement in battery-electric technology may make gas a poor solution to late adopters.

Source: Transport Intelligence