Dupré Logistics


When Will Alternative Fuel Become an Option for the Logistics and Trucking Industries?

Wednesday, May 06, 2015

Fleet owners have a variety of motivations for acquiring hybrids, electrics, and other alternative fuel-powered vehicles, but they face a number of challenges in doing so, like cost of acquisition and infrastructure availability. The focus on fleet sustainability has been building over the past decade as alternative fuels become more prevalent and available, but whether alternative fuels are worth the cost and effort remains debateable.

The Environmental Protection Agency has been advocating alternative fuel and sustainability through its SmartWay program, which champions fuels such as liquefied and compressed natural gas, propane, alcohol, Dimethyl Ether (DME) and electricity. These fuels are attractive to government agencies because of their potential to offer a clean-burning, domestically-produced alternative to imported petroleum.

To accelerate use of fuels derived from renewable sources, Congress established standards under the Energy Policy Act of 2005, which sought to incorporate renewable fuels into the nation’s motor vehicle fuel supply. The Energy Independence and Security Act of 2007 strengthened the focus on renewable fuels by including specific annual volume standards for total renewable fuel and also for the specific renewable fuel categories of cellulosic biofuel, biomass-based diesel, and advanced biofuel.

The EPA claims that commercial freight emissions have grown by 30% since 1990 and are expected to grow another 20% over the next 20 years. Even though heavy-duty trucks make up just 4% of motor vehicles on the road, they emit roughly 25% of the recorded carbon emissions. Alternative fuels are part of the focus towards a sustainable trucking industry.

Vehicle Model Type and Availability

According to the National Renewable Energy Laboratory, the number of light-duty alternative fuel vehicles (AFVs), hybrid electric vehicles (HEVs), and diesel models offered by vehicle manufacturers has grown from 42 in 2000 to 224 in 2015. Since 2003, vehicles capable of using E85 have represented the largest share of models offered, largely because the technology required for E85 vehicles is compatible with gasoline vehicles, and the technology is relatively inexpensive compared to other fuel possibilities.

There are currently eighty-four E85 models offered in 2015, whereas there are only 17 CNG (Dedicated and Bi-fuel) models available, although natural gas is also a popular alternative fuel. The number of available electric vehicles has made huge strides, up from 16 in 2014 to 27 in 2015, and in general, the diversity of ATV being offered is increasing rapidly. However, concern over truck stop electrification sites remains a hindrance to fleets: in 2013, there were only 115 charging sites across the country.

Alternative Fuel Popularity in the Industry

Compressed Natural Gas

Compressed natural gas (CNG) consumption has been increasing steadily since the mid 1990’s, largely due to federal and state government incentives, an increased natural gas supply, and falling natural gas prices. However, only 0.13% of the natural gas consumed in the U.S. in 2013 was used to power vehicles, so there remains much room for growth. Transitioning to CNG is a significant investment for fleets, and the lack of infrastructure and integration costs have prevented widespread adoption of CNG in the industry. CNG trucks are more expensive than comparable diesel models, and fuel for these trucks is not yet readily available in most states. Operating a CNG fleet in most areas means constructing a multi-million-dollar fueling station. Needless to say, many companies cannot afford such infrastructure costs.

Nevertheless, plans to increase CNG’s availability promise to expand the prevalence of natural-gas-powered fleets over the next few years. As infrastructure slowly develops, it will become easier for fleets to make the transition to alternative fuels.

Even now, an estimated 112,000CNG trucksare already on the road, and their environmental impact is substantial. By adding 40 CNG trucks to a fleet, owners can reduce their carbon footprint by approximately 4.2 million pounds per truck annually—the rough equivalent to planting 85,760 trees or taking 364 cars off the road each year. Of course, this estimate might vary after taking natural gas extraction methods into account, but it still appears to be a better alternative than diesel. Although natural gas is still cheaper than diesel, the slimmer price differential means it will take longer for truckers to recover the roughly $50,000 added cost of a natural gas truck, at least for now.

E85 Fuel

E85 is an alternative fuel that is a blend of up to 85% ethanol (corn) and 15% gasoline. E85 use has been growing, as the availability of flex fuel vehicles from major manufacturers has increased, and an increasing number of fueling stations offer E85. Flex fuel vehicles that operate on high-level blends of ethanol continue to be the most frequently acquired vehicles. They can be conveniently refueled on gasoline, making infrastructure less of an issue for E85. As mentioned earlier, vehicle manufacturers offer the flex fuel option most frequently, making acquisition easier and often less costly. The marginal cost increase of acquiring a flex fuel vehicle over a conventional gasoline vehicle is actually minimal or nonexistent. In 2013, there were a total of 19,016 E85 acquisitions, marking a general trend towards increasing use since 1995. Despite E85’s popularity, ethanol still represents a tiny fraction of the U.S. fuels market. The U.S. consumed about 18.96 million barrels of oil per day last year, with ethanol accounting for only about 888,000 of those barrels.

Lower Gas Prices Challenge Alternative Fuels

While lower gas prices have been helpful to the trucking industry at large, the alternative fuel industries are taking a hit. Cheaper fuel costs over the past year have made it easier to rely on diesel rather than looking for alternatives. As diesel costs have reduced and diesel engine efficiencies, measured by miles per gallon (MPG), have improved, the appeal for an alternative to diesel is looking somewhat less attractive. For example, if diesel is available at $2.90 a gallon and a truck achieving 7.5 MPG, it becomes easier to stick with diesel. However, when diesel is at $3.90 a gallon and MPG is at 5.7, fleets may revive their interest in alternative fuels. As gas prices tend to fluctuate, it is inevitable that they will rise before long.

So when exactly will alternative fuels become viable options for the logistics and trucking industries? The answer is uncertain, and really depends on a variety of factors, including fleet size, location and strategy. Fleet owners will need to consider things such as their driving cycles and short haul vs. long hauls when deciding on an alternative fuel plan. The total cost of ownership will factor into what fleets deem the most suitable alternative fuel technology for their services and systems. With the spread of alternative fuel infrastructure and technology over the upcoming years, making the transition to alternative fuels will hopefully become less costly, more efficient, and a more appealing option for more in the trucking industry.

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