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Reducing emissions in transport - prospects, opportunities and constraints

2024.06.14

Reducing the carbon footprint in the TFL industry is not an easy undertaking even for companies which have incorporated such measures into their strategy. Although technological developments are incredibly rapid and support positive change, decarbonising road transport requires facing technical as well as systemic challenges. One of these is certainly the draft of a new EU regulation which envisages achieving very ambitious reduction targets in heavy transport over the next 16 years. Its entry into force could have a positive impact on reducing emissions. However, the effectiveness of legal solutions will depend on the capacity and availability of support infrastructure and the readiness of the whole sector to change.  

Logistics operators and carriers have been striving to reduce their carbon footprint for a long time, regardless of EU requirements. They are cautiously, although increasingly each year, testing zero- and low-carbon solutions, constantly monitoring the effects they produce. Thus, light-duty electric vehicles are already starting to be utilized for  last mile delivery on a fairly regular basis, while their heavy-duty counterparts, while retaining efficiency, may find use primarily on short- and medium-distance trips. Biofuels are an alternative, however interim solution in the long-term. In practice, however, each of these options has certain limitations and risks that need to be taken into account in the company’s strategic plans.

Drives of the future

For electric-powered trucks, the barriers are primarily the still high purchase price of the tractor, insufficient range and relatively long charging times due to the scarce availability of ultra-fast charging stations. This, in turn, is part of the wider problem of the still underdeveloped Europe-wide network of re-charging points for these modes of transport. Hydrogen technology faces similar obstacles (lack of infrastructure and high purchase price). Although very promising, it is still in the testing phase rather than a market reality.  

The low share of this type of vehicles in the European fleet structure, the reasons for which can be traced back to the above-mentioned challenges, is confirmed by data from the European Automobile Manufacturers' Association (ACEA). In 2023, almost 8,000 electric-powered trucks (BEVs and plug-in hybrids) were registered in Europe, representing approximately50 times fewer than diesel-powered trucks (more than 390,000). One of the leaders is the Netherlands, where more than 1,100 EVs over 3.5 tonnes were registered (representing 7% of all EV registrations in the country). By comparison: Poland may impress with a growth rate of 1,300%, but the absolute numbers show where the market is in the electrification process in real terms. In the past year, 85 electric HGVs were registered in Poland, a marginal number in the total fleet of trucks. It is worth noting that the ACEA list does not specify hydrogen vehicles, which demonstrates their negligible presence in the market - they have been placed in the capacious 'Other' category in the list.

Biofuel potential

Biofuels appear to have a significant advantage over the above solutions. Firstly, they do not require a separate refuelling infrastructure. Secondly, they can be used by internal combustion vehicles, which, with the entry into force of EU legislation covering new vehicles, will not immediately disappear from the roads (here the subject of the age of vehicles used for freight transport returns). Finally, the reduction potential of biofuels - although not 100% zero-emission - is highly satisfactory. Their use can reduce lifecycle emissions by up to 87%. However, they too have their drawbacks, among which are limited availability (only selected countries) and a higher price than coventional diesel. Furthermore, current biofuel production capacity is far below demand, so it seems that this fuel can only be considered as a transitional measure.

Although biofuel production in EU countries has increased by 28% since 2012 (EUROSTAT), its share of total transport still remains small. (The average share of renewable energy in transport increased from 1.6% in 2004 to 9.1% in 2021. Among EU Member States, the share of renewable energy in transport fuel consumption ranged from 30.4% in Sweden or 20.5% in Finland, to around 6% in Poland, Hungary, Latvia, and Lithuania). There may be several reasons for this. The special report 'EU support for sustainable biofuels in transport' points out that biofuels policy lacks a long-term perspective, the biofuels sector faces problems in terms of sustainability, biomass availability and costs, and finally the use of advanced biofuels - which would stimulate production - is growing more slowly than expected. 

Nor should we forget the more sustainable solutions that have been available for years, which include intermodal transport. In this case, the advantage is the already existing infrastructure and the far greater loading capacity, which translates into low emission intensity. On the other hand, the disadvantages are lower flexibility and availability of rail connections (routes) - it must be remembered that such transport must fit into the freight and passenger transport schedule. This potentially increases delivery times, which are difficult to accept in our economic model.

Emissions' true costThe implementation of climate targets is supported by regulations introduced at both EU and national level. These are largely based on the principle of making the cost of services more realistic by the environmental impact. Thus, carriers driving in Germany have been paying a CO2-related tax since 2021, which is included in the price of fuel and, when introduced, resulted in an increase of around 7 euro cents per litre. It should be mentioned here that the so-called carbon tax is not a new tool, as it has been in place in Europe for more than 30 years. It currently covers 21 countries, with locally varying amounts ranging from less than €1 (Ukraine) to €120 (Liechtenstein, Switzerland) per tonne of CO2e, and is levied on different types of greenhouse gases and different sectors of the economy.

Another form of levy is road tolls, gradually being introduced throughout the Community in connection with the Eurovignette Directive, the amount of which is linked to, among other things, the level of exhaust emissions, the EURO standard and the type of drive. From Q4 2023 onwards, the tolls increased successively in Hungary, Germany, Austria, Lithuania and the Czech Republic - in some countries (e.g. Germany) very dramatically. These charges apply to vehicles with little or no alternative propulsion.

In addition to this, the industry across Europe is preparing for the entry into force of a new emissions trading scheme, including for road transport - ETS2, resulting from the revision of the 2003 EU directive. It complements the EU Emissions Trading System, which has been in operation for two decades and extends its scope to include fuels used, among others, in transport, which will not be without impact on the TFL sector. ETS2 is due to take effect in 2027, but preparations for its implementation must start as early as January 2025. The obligation to monitor and report emissions will fall on fuel depots and suppliers, but end users may nevertheless fear a controlled price increase (the directive includes controls to limit spikes in the price of a tonne of CO2 on the allowance exchange).

Demand but also support

The transition to electric and hydrogen-powered transport modes is also to be supported by raising requirements and setting new reduction targets for heavy vehicles. Zero-emission trucks would, according to the European Commission's proposal, account for 45% of new registrations from 2030, 60% from 2035 and as much as 90% from 2040. However, it has limitations: the lack of incentives directed at transport operators and the inadequacy of the infrastructure may make it difficult to achieve the targets set for electromobility development.

Regulation encourages the development of low- and zero-carbon technologies. However, their successful transition to the economy may require an additional system of incentives, in which other financial instruments play a large role, such as tax credits or exemptions for companies investing in zero-emission technologies or lower rates for road use (already evident in emissions-linked road tolls).

Partnership as an impetus for change

Customers are an important actor supporting the decarbonisation efforts of transport companies. Increasingly, they are making their choice of business partners dependent on their direct environmental impact and the services they provide. They are not only interested in the price, but also in whether the carrier or logistics operator is prepared to offer a fully sustainable service or one with a lower impact on the environment. Such services are very often associated with a higher cost. Therefore, openness and understanding on both sides should be at the heart of the successful implementation of decarbonisation projects. Readiness for dialogue facilitates investment decisions directed towards zero-emission modes of transport in the long term.

It is also worth highlighting the potential in new technologies as well as in research and development. Even small innovations, such as improved filling of trucks, better route planning or tools to improve fuel efficiency, can have a measurable effect - especially in the first period. What is needed for this is for companies to be more open to risk and to accept mistakes that may occur.

Author
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Piotr Lachowicz

Group Sustainability Expert

Raben Group