What’s driving road freight decarbonisation? Planning, collaboration and a whole fleet of innovative solutions.

By Carlos Maurer, Shell’s Executive Vice President, Sectors & Decarbonisation

When I graduated from Rice University in the late 90s, I remember a lot of my friends tried to get me to follow them into what they saw as the ‘glamorous’ world of banking and finance. But then came Shell’s request for an interview. In Shell, I saw a company that wanted to make real change in the Energy world and in the sectors it operated, and 24 years later, I’m still here, working to make those changes a reality.

In the coming years, the biggest change we will face as a society, is the transition towards low-carbon forms of energy. This is change on a global scale. It is change that will take years to be fully realised. But it is also change that can be initiated first on a smaller, sector level, such as in the commercial road freight sector.

Commercial road freight plays a critical role in the global supply chain, shown by its $3.5 trillion market worth[1] and the 3 million companies that operate some 217 million trucks and buses globally.[2] And it will play a critical role too in the coming energy transition.

But with such huge scale comes an equally huge challenge: approximately 9% of global CO2 emissions are attributed to commercial road freight.[3] And with road freight volume expected to more than double by 2050, this already complex challenge will only become more intricate and collaboration even more important.[4] But this collaboration must be strategic; led by tangible, shared goals; driven by data; and measured in well-defined outcomes.

Decarbonising Road Freight: Getting into Gear

This need for carefully considered, strategic collaboration – which takes into account economic, technical, regulatory and organisational factors – is what has led Shell to partner with Deloitte, to produce what is now the second of a series of reports focused on the decarbonisation of harder-to-abate sectors.

The joint “Decarbonising Road Freight: Getting into Gear” report aims to understand both the current barriers to decarbonisation that the road freight sector is facing and the available solutions that are already making a difference, by providing a roadmap for accelerating progress. Only a comprehensive assessment of these barriers and a significant exploration of the solutions will help to move the sector forward.

But why now? Because we are facing an industry tipping point. Increasing demands, accelerated regulations and maturing technologies have created a groundswell of progress, which will be necessary to keep pace with societal change. Change that must be embraced if we are to ensure the industry continues to thrive.

And solutions are key here. Only a solutions-oriented approach to this challenge will be effective in the long run. Which is why the report focuses on four key phases of action, covering immediate responses to longer-term solutions that can be developed and scaled over time. In terms of what can be done immediately however, to make an impact now, the report explores three key areas:

  • The transition of viable duty-cycles: How the industry can immediately replace small and medium-sized vehicles in short-range and urban duty cycles with available battery-electric and fuel cell electric vehicles.
  • Targeted development of transition technologies: How to commercialise areas of progress, like biofuels, around existing points of supply, and natural gas supply, where it’s not disruptive to zero emissions pathways.
  • Operational and design efficiencies: How to reduce emissions of existing fleets by: improving vehicle design through low-cost add-ons; optimising fleet management solutions; and implementing operational improvements through the use of high-quality fuels and lubricants.

These are areas that can and should be implemented today. And the majority of road freight leaders that we speak to are beginning to make decarbonisation a top priority, evidenced by actions such as DHL’s electrification of its UK fleet or the pledge by some of Europe’s largest truck makers to phase out traditional combustion engines by 2040.

Shell’s role in this journey: commitment and collaboration

Yet, as the world moves further through the energy transition, it will be important for companies to evaluate their position and role in a decarbonised future. At Shell, we favour an end-to-end approach that helps us reduce the CO2e intensity of our own products and operations, and helps our customers manage their sustainability needs.

For us, that means becoming a net-zero emissions energy business by 2050 or sooner. A significant ambition, but one that is in step with society and our customers. And to make it a reality, we will:

  • Aim to be net-zero emissions from making our products
  • Seek to reduce the carbon intensity of the products we sell; this will mean selling more hydrogen, more biofuels, and more renewable electricity
  • Work with sectors that use energy, like aviation, heavy freight and shipping, to help them find their own path to net-zero emissions

And when it comes to decarbonising road freight specifically, we have committed to supporting the following solutions:

  • Deploying fuels and infrastructure: From our involvement in the BioLNG Euronet Consortium that is scaling up LNG infrastructure across Europe, to accelerating our global biofuels production, with more than 10 billion litres produced in Brazil during 2019.
  • Solutions for reducing and offsetting emissions: From our fully synthetic heavy-duty diesel engine oils that provide up to 2% better fuel economy; to fleet management tools like Connected Freight in Asia, Instafreight in Europe, and a global training partnership with Smart Freight Centre; to carbon offsetting initiatives through our Shell Card or Shell Environmental Products offerings.
  • Advancing policy and collaboration: By investing significant efforts to help accelerate decarbonisation, such as our joint Coalition Statement with 62 signatories in Europe, which commits to the ambitious targets of 100,000 hydrogen fuel cell electric heavy-duty trucks and up to 1,500 hydrogen refuelling stations, by 2030. As well as our intention to join the World Economic Forum’s Road Freight Zero coalition.

For me, this kind of collaboration will be the most defining aspect of our ongoing efforts, and it’s what keeps me upbeat about the future of the sector. My optimism is further strengthened by the conversations I have with others across the industry, such as Jari Kauppila from the International Transport Forum, whom I spoke to recently. As Head of the Secretary-General’s Office, Jari and his team are doing some outstanding work regarding their government counsel and we’re excited to explore how Shell can help aid this progress.

Working alongside our customers

But while collaboration is king, it must always revolve around the needs of our customers. We are supporting the industry as it converges on a technology pathway to decarbonise road freight, and it is our customers and their businesses that will benefit most from progress in areas such as:

  • Hydrogen: Hydrogen is the fuel that will likely provide the more practical, cost-effective and less disruptive pathway to net-zero emissions for heavy-duty freight, which is why we are taking an industry-leading position in this space. Globally, we have around 50 hydrogen fuelling stations, while through the Project Portal consortium in the US and H2Accelerate in Europe, we are helping to create the conditions for a mass-market roll-out of hydrogen trucks.
  • Electric mobility: For light duty and short-route medium duty, the industry is prioritising electrification. Having acquired NewMotion – one of Europe’s largest electric vehicle charging providers – in 2017, we have demonstrated our intent to build a world-leading position in charging solutions for out-of-home and fleet depots. And in America, we acquired Greenlots and have partnered with the Volvo Lights Project to push the needle on heavy-duty battery electric trucks and equipment.

The importance of public policy

However, without the right backing and buy-in, progress will stall. Because ultimately, the decarbonisation of road freight will require close coordination and integration between policies that impact vehicles, fuels, infrastructure and consumer choice. To encourage this, Shell has identified six policy levers that can help incentivise and accelerate investment in low and zero emissions solutions:

  • Set clear CO2 emission performance standards and time-bound zero emission targets
  • Ensure fuels regulations continue to support a mosaic of low and zero emission fuel options
  • Invest in a low and zero emission fuel production and distribution infrastructure
  • Incentivise fleets and owner-drivers to buy low and zero emission vehicles until they can compete on basis of TCO
  • Allow appropriate use of high-quality carbon offsets and trading
  • Align the taxation of energy products and electricity with zero emission targets

While it might appear a broad set of targets, this wide-reaching scope is necessary, since no one single policy will be sufficient to create momentum enough for change throughout the sectoral value-chain. Which is why a sectoral policy framework can help deliver a set of complementary measures to accelerate demand and supply of lower carbon energies, provide the necessary infrastructure, and incentivise the right consumer behaviours. All of which will work to encourage effective investment and help push ambitions even further in the right direction.

Preparing for the next step

To close, let me return to one of the figures that introduced this piece: road freight volume is expected to more than double by 2050. We have all no doubt been told throughout our careers that growth is a positive outcome of business. And while that remains true, it has never been clearer that growth must now be sustainable above all else. But to make this a reality, we need collaboration, we need solutions, and we need change. So, to the road freight industry – and all its amazing people – I ask you to get into gear and join us on this journey to decarbonisation as we go full speed ahead to make real change happen.

If you’d like to read the full “Decarbonising Road Freight: Getting into Gear” report, you can download it here: www.shell.com/DecarbonisingRoadFreight

[1] Cision. “Global Road Freight Transportation Market Report 2020-2027.” PR Newswire. November 16, 2020 (accessed December 17, 2020).
[2] Shell. “Decarbonising Road Freight: Getting into Gear.” 2021.
[3] Shell. “Decarbonising Road Freight: Getting into Gear.” 2021.
[4] Shell. “Decarbonising Road Freight: Getting into Gear.” 2021.

Disclaimer

This presentation contains data and analysis from Shell’s Sky scenario. Unlike Shell’s previously published Mountains and Oceans exploratory scenarios, the Sky scenario is based on the assumption that society reaches the Paris Agreement’s goal of holding the rise in global average temperatures this century to well below two degrees Celsius (2°C) above pre-industrial levels. Unlike Shell’s Mountains and Oceans scenarios, which unfolded in an open-ended way based upon plausible assumptions and quantifications, the Sky scenario was specifically designed to reach the Paris Agreement’s goal in a technically possible manner. These scenarios are a part of an ongoing process used in Shell for over 40 years to challenge executives’ perspectives on the future business environment. They are designed to stretch management to consider even events that may only be remotely possible. Scenarios, therefore, are not intended to be predictions of likely future events or outcomes.

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