ESG & Industry Updates

Transportation Decarbonization: Medium & Heavy Duty Vehicles

Posted by Kelly Burke on Jan 30, 2023 1:07:12 PM

As we have been discussing, the US National Blueprint for Transportation Decarbonization breaks the Transportation sector into seven categories, each of which has its own targets for emission reduction/elimination, and strategies for how those declines in emissions will be achieved. The second segment by emission % is Medium- and Heavy-Duty Vehicles.

For the purposes of the Decarbonization Blueprint, “Medium and Heavy Duty On-Road Trucks and Buses” includes everything from heavy-duty pickup trucks to long haul semi’s (and everything in between). MHDV make up approximately 5% of vehicles, but they are responsible for 21% of transportation emissions. A further 50% of those emissions are from heavy duty trucks that make up about 10% of the total MHDV category. So when we are talking about this category’s emissions, most of the effective action that can be taken should be focused on a small segment of the total. The other simultaneous focus for MHDV category is the social and environmental justice issue. Where the emissions from light duty vehicles are more ubiquitous, the emissions from MHDV are often concentrated in major urban areas and along disadvantaged corridors within the country.

In terms of the numbers, 81% of the MHDV segment is diesel powered, and unlike light duty vehicles, there is not really a clear ability to easily pivot to EV or hydrogen options (outside of potentially in some of the lighter vehicles that run smaller ranges without heavy freight – like postal trucks). So the suite of zero emission options for the MHDV segment will necessarily be more varied than LDV or other segments where there is less variation in use and function for the vehicles in question. That means a LOT of research & development. Additionally, turnover and replacement timelines for heavy duty vehicles are substantially longer than those for light vehicles, so all the proposed new changes would end up slow rolling out on newer vehicles over time. This is where renewable diesel options will likely become a key factor in pushing MHDV toward hitting emissions goals.

In November of 2022, the US joined the “Global Memorandum of Understanding on Zero Emission Medium- and Heavy-Duty Vehicles” introduced at COP26 which agrees that we will be on a path to 100% new zero-emission MHDV by 2040 at the latest, with a target of 30% by 2030. In January 2023, the EPA announced their “Final Rule and Related Materials for Control of Air Pollution from New Motor Vehicles: Heavy Duty Engine and Vehicle Standards” that sets new emission standards for HD vehicles in line with the Decarbonization plan (you can read that EPA rule here: Control of Air Pollution From New Motor Vehicles: Heavy-Duty Engine and Vehicle Standards )

All of this to say that despite the lack of current technology with which to make the changes required to hit emissions targets, it appears all the rules and regulations coming out across Federal Agencies are intending to follow through on the goals set. This portion of the policy obviously carries serious implications for trucking and transportation companies across the board in terms of their equipment purchasing, maintenance of current options, etc. This is definitely a portion of the plan that is still very much unsettled in terms of immediate and longer range impacts. We will keep a close eye on developments and continue to keep you informed of major changes that impact the industry.

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Topics: EPA, carbon emissions, emissons, Biden Administration, paris accord, decarbonization

Transportation DeCarbonization Blueprint: Light Duty Vehicles

Posted by Kelly Burke on Jan 20, 2023 10:41:32 AM

The US National Blueprint for Transportation Decarbonization splits the Transportation sector into seven categories of focus: Light-Duty Vehicles, Medium- and Heavy-Duty Vehicles, Off-Road, Rail, Maritime, Aviation, and Pipelines. We will discuss the major items involved in each of these, from largest % of carbon share to least, starting with Light Duty Vehicles.

Light-Duty Vehicles produce 49% of current transportation emissions (of note, for the purposes of the Blueprint “current” refers to 2019 levels due to the pandemic and related shutdowns making 2020 & 2021 data unreliable/useless).

The United States has over 280 million light duty vehicles on the road and these vehicles:

  • Account for 75% of passenger transport miles,
  • Account for 50% of total transportation energy use and emissions
  • Consume over 120 billion gallons of gasoline annually
  • Emit over 1,000 MMT CO2 annually

As we are all aware, Light Duty Vehicles (LDV) in the US have been subject to increasingly strict emissions requirements over the past few decades, and we have seen a massive increase in the availability of electric vehicles (EV) as well. To put specific numbers on it, in the past 15 years, LDVs have seen a 30% improvement in fuel economy (some of the ultimate impact of this however was mitigated by the trend toward larger, more fuel intensive passenger vehicles during that time period). EV have seen an explosion in popularity, it used to be you’d see a Prius or Volt here or there, now you would be hard pressed to drive to Boston without getting stuck behind a Tesla or two. Again, in terms of specific numbers, EV sales reached over half a million vehicles sold, bringing the total to 4.5% of market share in 2021 (18% in California!).

One of the major focuses of the blueprint in the LDV sector is the promotion of EV and zero emission vehicles, with an obvious preference for EV adoption. In tandem with EV adoption, there is a necessary push for charging infrastructure to make them a more feasible option for consumers. The goal is to have 50% new light duty EV sales by 2030, which would be a major step down the road to the ultimate goal of 100% EV adoption.

There is also an included focus on “Funding Research and Innovation” in this section of the Blueprint, which largely functions as an acknowledgement that we aren’t quite there on battery life and battery cost. Part of the legislative language in the Bipartisan Infrastructure Bill (BIL) and Inflation Reduction Act (IRA) included large investments toward the development of a reliable EV manufacturing supply chain. The legislation also references research and development aimed at achieving price parity between EV and traditional combustion engine vehicles to make them more accessible to the average consumer in terms of price, practicality, and maintenance costs over time. Studies indicate that battery cost has dropped 90% from 2010 to 2020, and projections indicate that when the price reaches $100/kwh the MSRP on EV will hit parity with combustion engine vehicles. The legislation mentioned above intends to fund the research on battery technology to make those price levels reality.

So that is the overview, the major takeaways being that the major goals for this section are:

  • “Achieve 50% of new vehicle sales being zero-emission by 2030, supporting a pathway for full adoption, and ensure that new internal combustion engines are as efficient as possible.”
  • “Deploy 500,000 EV chargers by 2030”
  • “Ensure 100% of Federal Fleet procurement be zero-emission by 2027”

Obviously, for the purposes of energy suppliers, particularly at the consumer level, the growth of EV adoption implies a longer-term shift in the mix of gasoline demand and delivery, especially to stations and municipalities. Actual changes in market share of EV and zero-emission vehicles is something to watch.

Next up, medium- and heavy-duty trucks and buses.

Stay Tuned!

 

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Topics: EV Charger, EPA, carbon emissions, emissons, Biden Administration, ev, dot, decarbonization

Biden Admin Releases US National Blueprint for Transportation Decarbonization

Posted by Kelly Burke on Jan 13, 2023 8:09:33 AM

January 10th, 2023 the Biden Administration released the US National Blueprint for Transportation Decarbonization.

The Blueprint is an interagency developed framework of strategies and actions to take carbon emissions out of the Transportation sector by 2050, developed by the Department of Energy (DOE), the Department of Transportation (DOT), Housing and Urban Development (HUD), and the Environmental Protection Agency (EPA). It’s the conclusion essentially of the memorandum of understanding (MOU) between those departments that they would develop the outline to drive policy decisions and regulatory updates focused on the goal of decarbonization in the sector through 2050 in a cooperative manner between federal agencies.

Another way to think about it is the blueprint is basically what the plan is for implementing actions for the investments created by the Bipartisan Infrastructure Law (BIL) from November 2022, and the Inflation Reduction Act (IRA) from August 2022. These bills established billions in funding for infrastructure and outlined aggressive action on climate change (respectively). The blueprint developed is part of the process for allocating where investment and change happens to push the country toward the enormous mitigations in emissions that the BIL and IRA legislation attempted to make possible.

As we’ve discussed previously, the Transportation sector is the nations largest source of greenhouse gas, and accounts for a third of all domestic GHG emissions, so emissions mitigation/elimination across this sector is obviously a goal in the context of Climate Change. The blueprint additionally sought to develop action plans for the sector with environmental justice in mind – the concentration of emissions and negative impacts from the transportation sector have historically been concentrated in low income, urban, and minority areas of the country and that is an additional factor that needs to be addressed.

The strategies in the blueprint are aimed at ensuring the US hits both the President’s stated commitments on emissions reduction, and the US Nationally Determined Contribution under the Paris Agreement. In order to hit both 2030 targets and 2050 goals, there is a mix of short- and long-term recommendations.

The report specifically seeks to

  1. “Increase convenience by Implementing System Level and Design Solutions”
  2. “Improve Efficiency through mode shift and More Efficient Vehicles”
  3. “Transition to Clean Options by Deploying Zero-Emission Vehicles and Fuels”

The method for doing so is split into strategies, goals, and action plans by transportation subset (or mode). They are:

  1. Light-Duty Vehicles (49% of current emissions)
  2. Medium- and Heavy-Duty On-Road Trucks and Buses (21% of current emissions)
  3. Off-Road Vehicles and Mobile Equipment (10% of current emissions)
  4. Rail (2% of current emissions)
  5. Maritime Vessels (3% of current emissions)
  6. Aviation (11% of current emissions)
  7. Pipelines (4% of current emissions)

We will go through each mode individually, and highlight what we think the important takeaways are for each in terms of what things may impact energy suppliers either directly or via end users (customers) over the upcoming weeks.

Definitely a topic to keep an eye on, because if the U.S. intends to hit the lofty goals on emissions reduction it set itself, there will likely need to be some big big changes out there in the market.

Stay tuned!

 

 

 

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Topics: EPA, climate change, carbon emissions, dot, decarbonization

California Hydrogen Blending Study Shows Potential Obstacles

Posted by Kelly Burke on Jan 9, 2023 10:23:14 AM

Another avenue being looked into for decarbonization in the US is hydrogen blending. Hydrogen blending would use existing natural gas infrastructure for transport, which obviously makes it very appealing from an infrastructure & logistics standpoint as the majority would already be in place.

However, it isn’t clear exactly what impacts hydrogen might have on said infrastructure, and if it would behave similarly to pure natural gas, or we would see issues with pipeline degradation or operational risks like leaks. California is looking into the issue thoroughly.

The “Hydrogen Impacts Study” commissioned by the CPUC (California Public Utilities Commission) published its results on hydrogen blending impacts in July. The study found that:

  • Hydrogen blends of up to 5% in the natural gas stream are generally safe, but higher blends result in a greater chance of pipeline leaks and embrittlement of steel pipes.
  • Blends of above 5% would require modification of existing appliances to avoid malfunctions, and blends of more than 20% would raise the risk of plastic pipe leaks and subsequent ignition of gas outside the pipeline
  • Due to the lower energy content of hydrogen, more hydrogen-blended natural gas would need to be supplied to consumers to deliver the same amount of energy that they currently use with pure natural gas.

The study concluded that real world demonstrations will be necessary to determine safe levels, and ensure that risks like ignition are eliminated. Southern California Gas, San Diego Gas & Electric, and Southwest Gas filed a joint application with CPUC to implement demonstration projects. The projects seek to use a phased up approach to determine safe levels and assess if hydrogen blending is a feasible next step towards decarbonization for California.

I wrote an article for Oil & Energy Magazine last month on Hydrogen Blended Natural Gas and the projects in California. If you would like to read more details on the blending and the pilot demonstration programs you can read that article in its entirety here: Study on 'Hydrogen Blending Impacts' Reveals Potential Obstacles

 

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Topics: renewable energy, hydrogen, decarbonization

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