Decarbonization of transportation has made great strides in many parts of the world, thanks to zero-emission cars, buses, light commercial vehicles, and various forms of micromobility. However, progress has been slower for medium and heavy duty trucks (MDTs and HDTs). Road freight now accounts for 53% of global trade-related transport CO2 emissions, and this share is expected to rise to 56% by 2050 if current trends continue.
While many recent technological advances have put the future of low-carbon trucks within reach, success will require greater collaboration along the entire value chain. The World Economic Forum’s Road Freight Zero (RFZ) initiative, established in September 2020, is designed to help industry leaders jointly develop solutions. The target audience includes stakeholders on both the demand and supply sides, including manufacturers; Consumer goods giants; Logistics specializations. fleet operators; energy, technology and infrastructure companies; Creative people. funding companies; academic institutions; and civil society groups.
Our report, “Zero Road Freight: Pathways to Faster Adoption of Zero-Emission Trucks,” is a joint publication from the World Economic Forum and McKinsey describing how the Free Zone Initiative can help countries achieve their emissions targets. This report draws on a wealth of prototyping, research, and direct engagement with RFZ partners, including multiple workshops with over 40 companies, a dedicated questionnaire to assess barriers and solution paths, and numerous in-depth interviews with RFZ partners to analyze specific prototypes. ZE Truck Certification, Quantitative Use Case Modeling.
After providing an overview of the road freight market, this report discusses barriers that may prevent progress toward ZE emissions, as well as potential solutions to overcome the barriers. Although this report focuses on the European trucking sector, many solutions can be applied globally.
The increasing number of road freight emissions
Road shipping currently generates 15 percent of Europe’s carbon dioxide emissions. About 70% of those emissions come from MDTs and HDTs, the sectors that are the most difficult to mitigate. But this may not remain the case for much longer since the shift to ZE technologies has already begun. Recent research by the McKinsey Center for Future Mobility indicates that by 2025, 4 percent of total MDT and HDT sales in Europe will be ZE vehicles. This share could grow to 37% by 2030, representing about 150,000 vehicles, provided that the rollout is supported by 140,000 public and destination charging points and 1,500 compatible hydrogen fueling stations.
ZE Trucks’ current growth trajectory, while promising, will not be enough to limit global warming to no more than 1.5°C above pre-industrial levels – the amount agreed in the 2015 Paris Agreement. To reach this goal, More investment will be needed in both ZE trucks and infrastructure than currently anticipated. For example, additional investments of €25 billion to €30 billion are needed by 2030 for a faster rollout of ZE trucks with higher capital expenditure. Supporting a much larger ZE fleet in a 1.5°C temperature trajectory may also require between €50 billion and €60 billion in additional infrastructure investments (higher than current projections) by 2030. This equates to approximately 1,000 to 1,500 additional supply stations. Fueling with hydrogen and 150,000 to 200,000 additional hydrogen fueling stations. Additional charging points for trucks.
Basic techniques
Two major technologies are currently competing for acceptance: battery electric vehicles (BEVs) and hydrogen fuel cell electric vehicles (FCEVs) (Figure 1). They both feature electric motors with batteries and electric motors, but they use different energy storage systems. While a wide range of battery-electric trucks will become available before 2025, most OEMs are also investing in FCEV technology, with plans to enter the market on a large scale after 2025. Therefore, the future market is likely to include a mix of power generation technologies. Powering battery electric vehicles and battery electric vehicles (FCEV). Proponents of both BEV and FCEV technologies assume that future tipping points, including regulatory policy changes, will close the gap in total cost of ownership (TCO) between these technologies and alternatives (diesel vehicles or other ZE truck solutions).
The importance of partners along the value chain and alternative fuels
Although our report focuses on road freight with zero road emissions, complete decarbonisation depends on the entire value chain. For example, battery-powered trucks run on electricity from the grid, but the carbon intensity of national electric grids varies by country. In the European Union, about 60% of electricity comes from carbon-free sources, so renewable energy supplies need to expand in tandem with demand for battery-powered trucks. Currently, a combination of blue (low carbon) and early experimental green (renewable) hydrogen is commercially available. To achieve the full decarbonization effect of FCEV trucks, hydrogen must only come from green sources.
In addition to battery electric vehicles and fuel cell electric vehicles (FCEV), the industry can help reduce net carbon emissions by using alternative fuels. While options such as liquid natural gas (LNG) or compressed natural gas (CNG) allow for moderate carbon savings, newer synthetic fuels and biofuels, such as bio-LNG, bio-CNG, and biodiesel processed with vegetable oil ( HVO), become viable low-carbon options. Since these alternative engines use internal combustion engines, they can play a suitable role as bridging solutions, although they all generate tailpipe emissions and are therefore less attractive to regulators.
Barriers to zero-emission trucking and the path forward
Through a formal survey and detailed interviews with Road Freight Zero partners, we uncovered several potential challenges facing the adoption of ZE trucks from 2021 through 2030. These are the two most important barriers:
Lack of charging/refueling infrastructure. ZE trucks will require new charging stations or hydrogen refueling stations. For some use cases, charging and refueling operations can be performed in depots using infrastructure designed specifically for the user. But to increase path flexibility and to serve the full range of use cases, stakeholders need to build public infrastructure on the fly, which typically requires high investments, strong business cases, and effective implementation. The need for new financing models for trucks and infrastructure. Finance companies must adapt the depreciation and operating cost curve models of conventional trucks to match ZE truck technology. For example, a vehicle’s depreciation relative to the total cost of ownership depends on the purchase price, residual value, and length of ownership. High capital expenditures and uncertain residuals result in higher depreciation and higher trucking costs for ZE vehicles, and financing models must take this into account.
Based on our survey of World Economic Forum partners, discussions with industry partners, and a review of the latest published reports, the RFZ Initiative has identified three sets of solutions to overcome barriers and accelerate the decarbonization of road freight. First, new policies can improve the total cost of ownership for ZE truck owners while simultaneously reducing risks faced by infrastructure providers. These policies may include the following:
Purchase subsidies for ZE trucks Carbon taxes or credits on vehicle emissions Road toll exemptions for ZE trucks or penalties for diesel trucks Tax increases or driving bans and fines in city centers (assuming suitable alternatives to ZE trucks are available) Grants covering up to 75 percent of purchase costs Infrastructure and installation, tax breaks on electricity rates for companies providing commercial charging services for electric vehicles
The industry will also benefit from innovative financing, especially at the beginning and end of the ownership period. Potential solutions could include dynamic pay-per-mile leasing plans, which reduce the risks fleet operators face by basing payment in part on usage, or battery-as-a-service offerings, which end-customers can purchase on a monthly subscription basis.
Finally, the road to ZE trucking will be smoother if industry associations collaborate on a coordinated launch of market-ready ZE vehicles and their corresponding infrastructure. Some trials are already being implemented in Europe and can serve as models for larger deployment as total cost of ownership improves.
In addition to overcoming barriers, the trucking industry may accelerate the adoption of ZE trucks by focusing on the right use cases. Based on a detailed database and TCO tool, the RFZ team estimates that two use cases will be the most important in the near to medium term and will also have the largest decarbonization impact in Europe. The first is based on the distribution of warehouses via MDTs and includes 11 short-haul routes around regional centres. Trucks will return to the same depots every day with high route predictability, reducing demand uncertainty for both infrastructure and trucks. Figure 2 provides more information about the activity patterns and processes of these pathways. With this use case, the initial capital expenditure investment for the trucks themselves will be less than that for long-range trucks because their lower payload and range requirements allow for the use of smaller batteries. The second important use case focuses on long-distance routes along nine high-traffic corridors in Europe using HDTs.
For more information, download the full report on which this article is based, Road Freight Zero: Pathways to Faster Adoption of Zero-Emission Trucks (PDF–10.9 MB).
