In 2023, the U.S. Environmental Protection Agency (EPA) plans to announce stronger emissions standards for medium-duty commercial vehicles for 2027 and more stringent greenhouse gas (GHG) emissions standards for heavy-duty vehicles beginning as soon as 2030.
, and government agencies establish higher standards for air quality, petroleum marketers and retailers find themselves navigating new challenges. With this article, you’ll learn where the transportation industry is driving the future of fueling at the intersection of economics and the environment. We’ll focus on 3 alternative energy sources where light-to-heavy-duty fleets are making the greatest strides: Battery-Electric Vehicles (BEVs), Hydrogen Fuel Cell Electric Vehicles (FCEVs) and Renewable Natural Gas (RNG).
Battery-Powered Electric Vehicles (BEVs)
Hybrid electric vehicles represent a milestone in cleaner vehicle production and decarbonization for personal vehicles. Most automakers are working toward full electrification of passenger and fleet vehicles, and companies such as FedEx and Amazon are investing heavily in these technologies. While electric-powered motors work well for small and medium-duty vehicles over short distances, the technology and infrastructure are not able to reliably support longer hauls or heavy-duty trucks yet.
The technology for fully electric heavy-duty vehicles is rapidly improving with anticipated growth on the horizon. Large manufacturers are promising to increase their production of electric vehicles, and policymakers are calling for 50% of new vehicles to be electric by 2030. Retailers who add charging stations to their facilities could take advantage of unique opportunities arising alongside the technology. The different requirements for charging stations go beyond electricity not being transported by truck or stored underground. Charging requires collaboration with the local utility company to ensure demand is available and affordable. It also requires integrated software that provides connectivity between the vehicle, the station, and the electricity provider.
Hydrogen Fuel Cell Electric Vehicles (FCEVs)
An alternative fuel on the horizon for commercial transportation uses hydrogen in fuel cell electric vehicles. Hydrogen, the most abundant element in the universe, accounts for about 75% of all matter. It can be produced from a broad range of sources, including natural gas, nuclear power, and the highly desirable renewables – solar, wind and renewable natural gas. In FCEVs, hydrogen and oxygen react to produce electricity, resulting in a highly efficient, zero-emission option. It features diesel-like range and horsepower, plus instant torque. Providing a fueling experience similar to diesel, drivers won’t have to wait hours to fill up or recharge before hitting the road.
Despite the value FCEVs can offer, hydrogen production is costly and supporting infrastructure is lacking, so this alternative will require more attention before it can be considered a viable solution. Keep an eye on hydrogen prices as initiatives like the U.S. Department of Energy’s Hydrogen Energy Earthshot, or Hydrogen Shot seek to reduce the cost of clean hydrogen by 80% in a decade. If costs decline and the infrastructure expands, hydrogen-powered FCEVs could experience rapid growth.
Renewable Natural Gas (RNG)
RNG, also known as biogas or biomethane, is sourced from existing waste streams like landfills, animal farms, and wastewater. It is then cleaned and conditioned to meet quality standards. RNG is a tried-and-true technology that can reduce (or even negate) carbon emissions and intensity scores. It has gained traction after being adopted by companies such as Amazon, Anheuser Busch, and UPS for freight transportation.
RNG is currently the only “carbon-negative” solution available, meaning it goes beyond standards for carbon neutrality since its production reduces the amount of methane entering the atmosphere. It is the most readily available alternative fuel with infrastructure in place across the country, making RNG an agreeable and accessible solution for commercial fleets. Not surprisingly, this has been the most common fuel option for early adopters.
A Polyfuel Future
As of today, no single fueling alternative meets all` challenges in the transportation industry. With so many variables to account for, fleets are mitigating their risks by adopting multiple fuel types—known as a “polyfuel” strategy. Amazon is building up their light and medium-duty fleets with electric trucks and vans while also investing in renewable natural gas heavy-duty trucks.
The polyfuel strategy involves transitioning parts of a fleet from petroleum-based fuel to one or more alternative fuels. For fleets who want to act, but don’t want to experience the ‘bleeding edge’ of emerging technologies, this allows for a gradual transition with less risk and upfront costs.
As a result, fuel wholesalers and retailers must remain flexible, while preparing for diversification. The fact is, our industry has been disrupted, and we have to adapt to the different demands. We should not expect a single alternative to displace diesel. With the diversification of power generation, we saw growing markets for wind, solar, hydropower, and natural gas decrease demand for coal. A broader variety of fuel sources for transportation makes sense as we provide more options to consumers.
Disruptions in the value chain will occur as participants opt to expand their offerings to align with changing customer needs. We’ll see more bundling with transportation choices that include the costs of vehicle purchases or leases, exclusive fuel contracts and comprehensive maintenance, described as “transportation as a service.” Purchasing a bundled option helps the buyer manage the risk of unpredictable fuel prices and availability as well as ensure a new maintenance system is available with trained resources. We have to consider how the rise of global support for emissions reduction impacts our future. For any fuel to be viable, consumers and fleet operators must be assured they will have reliable options for fuel and service. This is where challenges create opportunities for those who aim to be the preferred fuel supply partner.
Stronger emission standards for commercial vehicles are on the rise and it’s time to adapt to these changes. Companies that are committing to environmental sustainability and finding new ways to run their business will find more success in the coming future. We hope learning about these 3 alternative energy sources and how to incorporate them in your business will help you be more successful as these changes take place.