Two Completely Different Approaches to Decarbonising Heavy Vehicles in California and Australia
This edition looks at California's ACF regulation banning the registration of new diesel trucks from January 2024 and two Australian states' trials with 'zero emissions' vehicles
California Won’t Register New Trucks Unless They Are Zero Emissions from January 2024
California will shortly ban new trucks registration unles they are ‘zero emissions’ as the Advanced Clean Fleets (ACF) regulation will come in force starting from January 2024. The ACF regulation requires all trucks registered through the CARB Online System (required to perform drayage, another word for trucking, activities in California) from January 2024 to be ‘zero-emission’. In an effort to avoid total panic, the regulation does state that “all drayage trucks entering seaports and intermodal railyards would be required to be zero-emission by 2035.” This policy-led push for a transition to alternative fuel (zero-emission is not the right term for these vehicles for reasons I’ll explore in subsequent paragraphs) is an extremely interesting large-scale experiment to follow as its results will likely shape decarbonisation policies in other U.S. states and potentially in other Western countries.
Although ambitious, this steep timeline for transitioning to alternative fuel trucks does face a number of problems. Drayage operators have questioned the capabilities of alternative fuel trucks and the ways in that these trucks would integrate with their existing charging infrastructure. The regulation seems to disproportionately affect operators with smaller operations where the financial burden of purchasing new alternative fuel trucks, installing the charging infrastructure in depots or the decreased productivity costs due to payload or range limitations. The desperation to these changes is evident in one operator’s statement “they might as well be saying, ‘Hey, build a spaceship and go to Mars’”.
One aspect of this accelerated trucking decarbonisation experiment to follow is the compliance response of the trucking industry. Will large companies buy alternative fuel trucks en masse? Will they find ways around the regulation such as using the ZEV Purchase Exemption to continue purchasing diesel trucks – imagine if all trucking distances suddenly increase enough such that the range of available alternative fuel trucks is not operationally acceptable. Will small operators run their diesel trucks to the ground and then quit the business?
The way in which this experiment will unfold is somewhat uncertain but its consequences on logistics chains are less so. The short-term outcome will likely be constrained transport capacity and increased transport costs and disruptions. It hasn’t been long since the transport costs effects of capacity shortages made the headlines of every news site in the world following the Suez Canal obstruction. Unlike that unpredictable event, the consequences of this regulation are predictable. The reasons for the disruptions change but the consequences stay the same.
From an environmental perspective, it is also unclear whether the ACF regulation will generate reductions in emissions. Although California’s grid is one of the most renewable-heavy, it still relies quite heavily on natural gas (~47% of its in state generation). The state also imports 30% of its electricity from other states (around 90 TWh). Unlike California, it’s energy trading partners aren’t necessarily as big investors on renewable energy sources. California estimates its 2023 average emission intensity for electricity used for transportation of 81 g CO2-e/MJ or around 0.29 kg CO2-e/kwh. Certainly better than other places but definitely not zero. Given that the ACF regulation is coming into force in just a few months, calling alternative fuel vehicles ‘zero emissions’ is not appropriate when they’ll clearly contribute to carbon emissions.
Australia’s Softer Approach to Trialling ‘Low and Zero Emissions’ Trucks
Two Australian states have taken a different approach to truck decarbonisation by starting trials where weight limits for trucks on certain corridors would be temporarily lifted to allow companies to use primarily electric trucks. South Australia (SA) and New South Wales (NSW) started schemes where axle-weight limits for ‘low and zero emission trucks’ were increased.
The key issue in Australia has been that the front axle weight of ‘low and zero emissions’ trucks went over the limits (currently 7.1 tonnes) prescribed by the National Heavy Vehicle Regulator (NHVR). Consequently, adopting electric trucks was made more difficult, and usually, on an exceptional basis. The schemes would allow trucks with front axle weights of 7.5 tonnes in SA and 8 tonnes in NSW to travel on certain routes. While both schemes refer to ‘low and zero emissions’ trucks, it is rather obvious that both actually refer to battery electric trucks that are facing weight issues.
The two Australian states’ trial approach heavily contrasts California’s heavy-handed mandate/ban approach. While Australian Federal and State Governments have been strong advocates for policies aiming for Net Zero and to decarbonise all sectors of the economy, the implementation of these policies into actual plans and actions, beyond trials and incentives, has been relatively limited. This is possibly in recognition of the limited truck and battery manufacturing capacity Australia has. Volvo, Kenworth, and Iveco are the key truck producers with a substantial presence in Australia. Truck manufacturing capacity is also not a guarantee that ‘low and zero emission’ trucks would be available on the Australian market.
There is one key issue I see with the SA and NSW schemes and that is their unclear objective. What is the purpose of these trials? Demonstrating that ‘low and zero emissions’ trucks can travel on Australian roads is an inconsequential objective, the answer is yes. Spurring adoption for ‘low and zero emissions’ trucks seems highly unlikely given that both schemes are timebound. Who would risk buying ‘low and zero emissions’ trucks only to risk not being able to use them in a few years? Understanding the impact of ‘low and zero emissions’ trucks on the road infrastructure would be an interesting objective, but this doesn’t seem to be explicitly stated anywhere. Understanding the impact of the additional weight on tyre performance and particulate matter emissions would also be an interesting objective, as this article highlighted quite a serios problem electric vehicles face in this regard. This trial approach definitely recognises the need for caution, it seems to overlook that, generally, a trial is used to demonstrate something. That something is not clear in this case.
In Other News
Germany Can’t Get Enough of Coal
In the context in that the German economy is seeking to decarbonise its transport and industrial sector, this headline “Germany Reactivates Coal Plants for Winter Power Boost” was ironic to say the least. In the same article, the German economy ministry said that “Germany’s goal of coal phase-out ideally in 2030 remains unaffected, as do the nation’s climate goals.” The country’s nuclear powerplants are still shutdown because they were an environmental hazard, yet coal isn’t.
It gets better, German energy company RWE is currently in the process of demolishing a small windpark in Keyenberg to make EXPAND the Lutzerath open pit coal mine in what was described by an RWE spokesperson as ‘paradoxical’. No shit!
The implications of this news are interesting. While multiple sectors of the economy are decarbonising and primarily shifting to electricity either for mobility or manufacturing purposes to reduce emissions, the electrical grid is somehow risking to become increasingly carbon-reliant thus increasing emissions. In this rhythm, there may well come a point where the grid emissions intensity makes it worse to use electricity than natural gas or diesel.
Panama Canal Congestion and Crisis Profits
Unlike the Suez Canal obstruction that made headlines across the globe, the media coverage on the Panama Canal congestion has been an oddly sparse. The Panama Canal has been affected by draught and low waters that limits the number of ships allowed to transit. In August 2023, the number of ships waiting rose to over 150, and this figure has remained somewhat constant both in September (128) and in October. The congestion primarily formed because the Canal saw an average of 36-38 vessels travelling per day. The number of transits has been reduced to 32 and will be further reduced to 31 from the 1st of November. Close to 40% of U.S. naval traffic crosses the the Panama Canal yearly, so this is quite a big problem for American logistics chains
Some ships wait upwards of 10 days to sail through the Canal. It’s particularly costly to wait: “A handy size vessel owner is still looking at a US$160,000 lump sum for a 10-day wait at the canal. A vessel of around 55,000 dwt would be looking at an additional US$ 220,000 lump sum payment”. Waiting also has an emissions footprint that is rather significant given that even relatively small vessels can burn upwards of 5 tonne of bunker fuel per day simply waiting.
In times of crisis, opportunities for profits arise. There is a facility to ‘skip the queue’ for a fee. Companies can apparently bid to skip the queue, and some have paid up to US 2.4 million for the privilege. Crisis capitalism in full swing!