Solar panels. Wind turbines. EVs. As the world moves toward a carbon-free 2030, electricity has emerged as the go-to substitute for carbon-based fuels. But a power source that works for industrial plants, home heating, and automobiles, is proving less than ideal for heavy trucks.
“There are several things preventing the long-haul trucking industry from adopting electric vehicles,” said Brian Guinn, CEO of United Energy Corporation, a diversified oil, and gas producer based in Plano, TX. “One is a lack of a sufficient number of charging stations. Another is the fact that the heavier the load the fewer miles an electric truck can travel before charging is necessary.”
Even if the requisite charging stations are built, using them can prove a costly disruption to truckers’ schedules. “These guys already spend more than three quarters of their lives on the road,” noted Guinn. “If they have to stop an additional two or three times on a typical trip, electric power will not be effective.”
There is also a problem of range in those parts of the country subject to cold seasons. “The batteries have a tendency to degrade in their performance in cold weather,” said Ed Hirs, an energy fellow at University of Houston. “And so, while it's reasonable to assume that electric trucks can shoulder the load in temperate regions such as California, Texas, Arizona, and all across the south, it's not so certain that they will do very well in the northern climates during the winter.”
For all of these reasons, it seems that EVs are a viable option for truckers only if they are traveling relatively short distances and coming back to their home base to charge up. “We will see some city garbage trucks transition to electricity a lot sooner than we will over the road long haul vehicles,” said Guinn.
Even for short haul trucks, though, there remains a capital investment problem. “If you buy a fleet of trucks, you’re hoping to use them for three or four years and then sell them to recoup part of your investment to buy a new fleet,” said Guinn. “The problem with EVs is that the upfront cost of these vehicles is so high that the old investment model no longer works. You're not dealing with engines anymore. You're dealing with rare earth minerals and extremely expensive lithium batteries.” Adding to the problem: EVs do not last as long as traditional vehicles, which might be usable for 15 or 20 years by a number of owners.
In effect, buying EVs that are twice the price of regular vehicles amounts to transferring saved fuel costs to the beginning price of the new equipment. Guinn said that what we might end up with is a kind of “vehicle as a service” model where leasing companies provide such trucks to end users.
But there’s another answer for long haulers: green diesel, also dubbed renewable diesel. This biomass fuel is made from soybeans and other organic feedstocks such as animal fats, cooking oil and vegetable crops. But unlike its biodiesel predecessor, green diesel is virtually chemically identical to petrodiesel. That means it can be used as a “drop in” replacement without modification or blending. That flexibility makes it considerably more attractive than both biodiesel, which must be blended with petrodiesel to work in modern engines, and electricity, which requires the purchase of new trucks.
Despite its attractiveness as a truck fuel, green diesel will take a while to come into its own. The big reason: cost. Green diesel is more expensive to produce than either biodiesel or petrodiesel, due to the need for hydrogen and special equipment. (Much of it now comes from Singapore, but US production is expected to grow significantly).
Because it is so expensive to make, there’s little green diesel currently on the road. “Trucks that are using alternative diesel are likely still using biodiesel, because there are not many facilities that can produce renewable diesel,” said Hirs. “The plants are expensive to build, mainly because you're essentially building a refinery.”
Many truckers might be using biodiesel today and not know it. That’s because up to 5% of the fuel can be blended with traditional ultra-low sulfur diesel fuel at the pump without any labeling requirements from the EPA. Stations offering some form of alternative diesel are heavily concentrated in the Midwest, especially around Illinois and Indiana, and the West coast. There's spotty supply in the Northeast and basically non-existent supply in the southeast.
Why transition from petrodiesel at all? While federal and state low-carbon fuel mandates and incentives can drive change, so can customers. A growing number of companies will only do business with shippers who are emission friendly.
Given these forces, renewable diesel may be on an upward production curve. “There’s an expectation that the green diesel industry is going to grow extremely rapidly, with a lot of new capacity coming online,” said Allen Schaeffer, Executive Director of the Diesel Technology Forum. “Feedstocks are being imported or processed in places like Singapore where they are more readily available.”
The U.S. oil industry has also gotten interested. “Traditional petroleum refiners are getting in the game of producing renewable diesel,” said Schaeffer. “Just last year, six new plants began operation in Texas, Montana, New Mexico, Oklahoma, Wyoming, and Kansas, representing almost 40% of the current U.S. capacity.”
Currently, alternative diesel is playing a limited role, with some experts tracking it at under 5% of total fuel utilization. One problem is cost. But another is source material availability. “There's just not going to be enough available agricultural feedstock to make a wholesale fuel change,” said Hirs.
The U.S. is taking measures to increase production of feedstocks. And if prices escalate for traditional fuel, the price value picture can change. “Green diesel will become more viable if crude oil prices get to $100 to $120 a barrel,” said Hirs. In the meantime, the green diesel industry will continue to need government subsidies until production ramps up to a level where the fuel becomes competitive.
Whatever the challenges today, green diesel will play an important role in the years ahead. “Use of biofuels will enable truckers to continue their work without knowing that the vehicles they have, the maintenance they perform, the fueling station they invested in, have all suddenly lost value because everything has turned into electrification,” said Schaeffer. “Low carbon fuels will enable the industry to leverage its investments well into the future.”
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