Four Alternative Fuels For Transportation Companies

Both shippers and carriers have a lot to consider as they aim to diversify their mix of transportation energy. It’s a balancing act weighing many factors like capital investment, energy costs, energy consumption, available infrastructure, and individual sustainability goals, and a host of alternative fuels for transportation.

Diesel still makes up 93 percent of the transportation market share, and although it will likely remain the standard fuel for heavy-duty transportation for the near future, alternative energies are becoming more viable. In the right application, alternatives can be operationalized for fleets today and each one offers potential benefits while also presenting obstacles to overcome.

From electric vehicles to natural gas, advancements in more sustainable transportation technology are on the horizon, and the industry is incredibly optimistic about this diversification as we branch into fuel alternatives for the future.

4 Types of Alternative Transportation Energy

Taking a closer look at four main types of alternative energies for heavy-duty transportation will help shippers make the best decisions for their organization’s strategy.

• Biodiesel and Renewable Diesel
• Natural Gas
• Battery Electric
• Hydrogen Fuel Cell

Biodiesel, Renewable Diesel

Biodiesel and renewable diesel are two of the most widely proliferated alternative energies used in commercial transportation. Examples of common biodiesel and biofuel mixes seen at most fueling stations include E10, B5, and B2. Additionally, B20 is a biodiesel mix that is required in Minnesota during the summer months. The process of hydrotreating, which is commonly used in oil refineries, creates a product that is nearly identical to conventional diesel fuel.

Opportunities and Challenges of Biodiesel and Renewable Diesel:

The most limiting aspect of biodiesel (and other advanced biofuels) is that they are only used for blending. Pure biodiesel cannot be used in colder temperatures because it can crystallize and gel, potentially damaging a truck’s engine. For this reason, most major engine manufacturers void warranties if a blend above 20 percent is used in a diesel engine.

Renewable diesel’s biggest benefit is that it can directly replace traditional diesel in common diesel engines. The cost of production, however, is high which precludes more widespread use throughout the industry.

Sustainability Benefits of Biodiesel and Renewable Diesel: 

Both biodiesel and renewable diesel are non-fossil fuels made from organic waste such as vegetable oil and animal fats.

Biodiesel and biofuels currently dominate diesel alternatives on a national scale due to state-level blending requirements. Additionally, the federal government encourages the adoption of alternative fuels, specifically in transportation, through the Renewable Fuel Standard (RFS) program. With the intention of decreasing greenhouse gas emissions in a way that is achievable and scalable, this program requires the incremental blending of fossil fuel supplies with alternative fuels. Biodiesel and renewable diesel are the most common. 

As the government raises minimum blending requirements each year, existing market share will diffuse among a wider mix of fuel types. RFS is also the reason ethanol is found in the gasoline that fuels your car or personal vehicle. 

Most renewable energy, including diesel, is sold in California where the state’s additional Low Carbon Fuel Standard (LCFS) legislation makes it competitive with traditional diesel prices. Pure renewable diesel emits 60 percent fewer lifecycle emissions than traditional diesel making it an attractive option from an emissions standpoint. The cost of production, however, makes it a challenge to singularly adopt across fleets.

Natural Gas

Natural gas can be found in several forms – compressed and liquefied – and the source matter will determine its sustainability impact, largely referring to renewable natural gas. 

Compressed natural gas (CNG) has been used in consumer vehicles for decades but is gaining market share in the heavy-duty transportation space. The fuel itself offers a low, stable price point, and reduced emissions compared to diesel. 

Liquefied natural gas (LNG) is less popular than the condensed form of natural gas because it must be brought down to very cold temperatures. This makes it costlier to produce, store, and transport. It also emits higher levels of greenhouse gases through this cooling process making its environmental benefits more muted. It is more prevalent throughout Europe because Europe lacks pipeline infrastructure, compared to the U.S.’s expansive natural gas pipeline network.

Renewable natural gas (RNG) is chemically the same as conventional natural gas, but it is made from renewable source material, like animal waste, landfill gases, and decaying organic matter. This is important to note because of its carbon intensity. In some cases, particularly dairy waste, it actually eliminates carbon emissions in its lifecycle of production and consumption. 

CNG and RNG share the same pipeline network and end-uses. Once it is refined to its final form the two are indistinguishable, so understanding the lifecycle of this energy source becomes imperative to understand overall carbon intensity. 

Opportunities and Challenges of CNG in Transportation:

One of the benefits of CNG is that it experiences far less price volatility than diesel. Typically, when a shipper reimburses a carrier for CNG, the reimbursement is based on a price set at the beginning of each month.  Natural gas is very abundant in the U.S. because of the shale boom, which resulted in increased domestic oil and gas production. The supply of natural gas currently produced is so significant, some oil producers must burn excess supply off due to lack of capacity in pipelines.

One of the biggest challenges facing the adoption of CNG as an alternative fuel in transportation is that it gets compared directly to diesel. When diesel prices are low it becomes more cost-effective over CNG. Additionally, alternative fuel vehicles running on natural gas require different engines and fueling stations than diesel trucks, which means the upfront investment is significant. 

CNG provided cost savings of around $1 per gallon over diesel before the crude oil market plummeted at the end of 2014. This was when the price of oil was above $100 a barrel.

The recent low diesel fuel price environment, however, makes fueling trucks with diesel more economically advantageous. If the price of oil spikes again, CNG is positioned to be one of the most practical alternative fuels if all other factors align.

As we’ve pointed out in our article The Viability of CNG in the Supply Chain, infrastructure for natural gas is still expanding, albeit slowly. Regardless, ongoing price stability will continue to make it an attractive option when implemented in the right use cases.

Sustainability Benefits of CNG: 

CNG burns much cleaner by emitting fewer greenhouse gas (GHG) emissions than gasoline or diesel at the point of combustion. Yet, it is still a fossil fuel, and most of it comes from large-scale drilling operations, which leaves a large carbon footprint. RNG is a renewable energy option for natural gas consumption because it is made from organic material including waste from landfills and livestock. 

Lifecycle emissions become more important because RNG’s production process repurposes methane gases which would otherwise be released into the atmosphere. This ultimately makes the overall impact of RNG a net-zero, and sometimes net negative, in terms of emissions. 

Programs that take advantage of federal and state incentives can improve their financial viability. California is leading the charge in the utilization of RNG for transportation fuel with regulations and incentives to make it more cost-competitive with diesel fuel.

Battery Electric

Battery-powered electric vehicles (BEVs) will surpass CNG in viability if the technology continues to advance. 

As of this writing, BEVs haven’t yet gained mainstream traction in heavy-duty applications. Major pre-orders are signaling the beginning of a shift in the shipping industry. These purchases include UPS ordering 950 Workhouse electric delivery trucks. It also includes reservations from major consumer packaged goods (CPG) shippers, retailers, and carriers for heavy-duty, Class 8, battery-electric trucks, like the Tesla semi.

Market disruptors like Tesla and Nikola are being met by industry mainstays like Daimler and Volvo to develop the BEVs of tomorrow’s freight market. Some of these companies have announced that these battery-electric trucks are expected to be available and incorporated into transportation supply chains between 2020 and 2022.

Opportunities and Challenges of Electric Vehicles in Commercial Transportation:

The future of BEVs looks bright, once these technologies are adopted into the mainstream supply chain. 

The main benefits of BEVs include increased energy efficiencies and long-term cost benefits due to lower energy costs compared to diesel. Power and performance will be able to compete directly with diesel drivetrains—a characteristic not yet shared by any other energy types. 

Tailpipe emissions will fall to zero, making them highly attractive for congested urban areas. Additionally, lifecycle emissions will continue to improve as the U.S. energy grid moves away from fossil fuels.

Despite significant electric DC fast-charging stations, the biggest hurdle for BEVs is the lack of heavy-duty infrastructure. For that reason, the shippers most likely to take advantage of electric trucks are those with private fleets running specific lanes. 

These shippers could invest in charging infrastructure on-site or along dedicated routes. Electric vehicles can also operate within city limits on repetitive routes like city-transit, leaving diesel trucks on longer lengths of hauls across the country.

Limitations on the range of battery charge further exacerbate this challenge. Batteries are extremely heavy. Trucks have weight-restricted carrying capacity, so it is unappealing to forego a full truck for an electrified powertrain. 

Additionally, battery technology is limited by time and range. Once it is fully charged ranges sit around 200 miles. Most long-haul shipments are 1,000 miles or more. For every minute a truck isn’t moving it makes $0, so that downtime and frequent stopping is unappealing in most supply chains. 

We could see utility companies, multinational energy companies, and electric vehicle manufacturers, like BYD, Tesla, and Daimler, building stations to support their specific network of trucks.

Sustainability Benefits of Electric Trucks:

California’s GHG emissions regulations and incentives are paving the way for this alternative energy as well. In early 2020, Anheuser-Busch purchased BYD’s 100th fully battery-electric class 8 truck on the U.S. This joins its already 20+ electric vehicle network to reduce carbon emissions in their transportation supply chain.  

Electricity shows a lot of promise for shippers seeking sustainable options. Yet, measuring the true sustainability benefits of electric trucks gets complicated. The full lifecycle emissions, and more specifically the power source to create the electricity, must be considered.

For example, Electricity generated from coal plants still emits significant amounts of GHG emissions into the atmosphere, compared to electricity derived from a wind turbine. This will become increasingly relevant as the technology proliferates throughout the industry, and reporting and elimination of carbon emissions become more regulated.

Hydrogen Fuel Cell

Hydrogen fuel cell electric vehicles (FCEVs) are similar to electric trucks because they both are battery-powered vehicles, but energy source differentiates the two. These heavy-duty vehicles use a fuel cell to combine pure hydrogen and oxygen to produce electricity to power a truck’s battery. The most well-known manufacturers of this type of transportation are Nikola and Toyota.

Read an interview Breakthrough had with Nikola about the future of hydrogen fuel cell technology, here. 

Opportunities and Challenges of Hydrogen Fuel Cell Technology:

The price point is the biggest challenge facing the adoption of hydrogen fuel cells as an alternative energy source. The energy to power the truck is expensive and may not make financial sense for most shippers and carriers today. Hydrogen is expensive and difficult to process, and it can be even more expensive to transport. As new battery technology emerges, however, it’s possible the price will drop and this will become a more attractive option.

The greatest advantage that hydrogen fuel cell trucks have over other electric options is range. Electric vehicles are expected to have a maximum range of 100 to 300 miles on a single charge, although Tesla claims its electric semis have a 600-mile range. On the other hand, Nikola says its hydrogen fuel cell trucks can travel over 1,000 miles at a time. This becomes an attractive, energy-efficient option for long hauls.

Hydrogen fuel cell vehicles face an even steeper uphill battle than electric in terms of infrastructure. While hydrogen trucks will need fewer recharges due to their extended range, they still need specific hydrogen fueling stations. In 2019, there were only 40 public hydrogen fueling stations in the U.S. and most of them are in California.

Sustainability Benefits of Hydrogen: 

Converting hydrogen gas into electricity is relatively clean when considering tailpipe emissions. Hydrogen gas produces only heat and water byproducts. Despite this clean emission, producing hydrogen raises sustainability concerns.  

Some hydrogen production relies on fossil fuels and a thermochemical process known as steam-methane reforming. These processes emit greenhouse gases, which is why considering the lifecycle emissions of alternative fuel sources has become increasingly important to ensure truly sustainable supply chain practices.

The alternative is to use renewable hydrogen, through the electrolysis of water molecules and hydrogen-producing microbes. But this technology is still in limited use and the processes are expensive.

What's Your Alternative Fuel Strategy?

Deciding which types of alternative fuel are the right options for your transportation strategy may come down to your organization’s core values. If you emphasize sustainability and want to be an eco-friendly, forward-thinking brand, be an early adopter. If you are committed to reducing GHG emissions, you may experience higher energy prices until the technology and methods become more commonplace. You are also more likely to be on the leading edge of a rapidly changing corner of the industry.

The biggest challenges for all shippers and carriers are the costs and complications of switching from diesel to alternative fuels – but it is possible. Diversifying energy portfolios gives shippers flexibility, supporting an agile supply chain. Setting up strategic partnerships with carriers and energy providers can increase the financial viability and long-term program success. As governments, organizations, and consumers continue to shift their sights on a clean energy future with more stringent emissions targets, shippers should expect and set themselves up for a future of alternative fuels.