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Why alternative truck fuels are coming sooner than you think
A new shipping regulation could create huge incentives for haulage companies to move to new ways of powering their fleets
The idea of the new regulation is simple: For the shipping industry to clean up its act. However, the consequences could be far reaching and unforeseen.
The regulation, widely known as IMO 2020 after the International Maritime Organisation and the date of introduction set for 1st January next year, demands that ships reduce sulphur released from burning fuel. Currently the limit is set at 3.5% of the emissions released but will be cut down to 0.5%. The net result of this is that big expenditure is going to have to be made to make ships around the world comply and one of the easier ways of doing this is to switch fuels.
Currently, cargo ships overwhelmingly use marine diesel oil. It burns a heavy fuel oil alongside diesel but now this is going to be far less feasible unless companies installing scrubbing mechanisms. This means that ships are going to be using diesel far more and cutting out heavy fuel oil.
The upshot of this is that hauliers and ship owners are going to be buying the same fuel mix and the competition is going to drive up prices.
The cost for shipping companies is set to be in the billions of dollars as they refit ships and switch fuels, but the biggest cost proportionally could fall on the shoulders of truckers. According to Reuters, the price of diesel could go up by as much as 100% and operating costs across the supply chain will rise.
Alongside the current environment of tariffs, this means a lot of costs for shippers to eat. There is also the possibility of a much larger extension of carbon trading credits and other regulatory pressure for lower emissions across the board. These factors, alongside IMO 2020, ups the ante for far more innovation to tackle the issue.
It is no longer just a case of burnishing one’s environmental credentials, there is now a soaring economic incentive to look at alternative fuels for the trucking sector.
There is an explosion of investment into electric trucks, such as from Scania (read about that here) and Daimler, but the technology comes with limitations currently, most of which are pretty big and fundamental. Range, charge times, weight and cost are all boundaries to getting large electric trucks onto the road in a meaningful way. Although the research into batteries is intensive, it will be necessary to look at alternatives as well.
UPS may be leading the way, investing into a variety of fuels but putting the most eggs into the basket of natural gas so far. Natural gas is abundant and burns more cleanly than diesel, although transportation, infrastructure and refilling can be issues. This has led to UPS inking a seven-year deal with Clean Energy fuels for renewable natural gas and aims to have alternative fuels make up 40% of its fleet’s energy mix by 2025.
It has, nonetheless, also made deals with Tesla and Daimler for their electric trucks and also looked into biodiesel, demonstrating that hauliers and logistics companies may need to consider a mix to mitigate the upcoming costs.
There are also fuel cells, which we talked about here. However, they have their own set of downsides, much like batteries, and won’t be mature for some years. For an excellent summary of the issues the tech has, watch this video from Real Engineering.
Whilst it is not yet possible to say what fuel will come to dominate the future energy mix for trucking, it seems likely that the timeline for development and implementation of alternatives is about to be supercharged. The big bump in diesel costs that lies just around the corner is going to be met with changing policies from governments to create powerful winds for change.