Comparison Tool Helps Freight Industry On Road To Decarbonisation

Ara Ake has launched a free tool to help long-distance heavy freight companies and the public sector better understand the options for decarbonising their road fleet.

The tool, which is available on the Ara Ake website, takes a ‘total cost of ownership’ (TCO) approach to calculating the cost of road freight movements.

"This means rather than just looking at the upfront cost of buying different types of vehicles, it estimates the relative costs of using different vehicles powered by different fuels for a given freight trip, taking into account other costs such as labour, carbon dioxide emissions and Road User Charge costs" explains Ara Ake Chief Executive, Dr. Cristiano Marantes.

New Zealand’s heavy truck fleet contributes 27% of all transport emissions but accounts for only 7% of total annual travel. This concentration of emissions into a relatively small amount of total travel highlights the critical need to find ways to decarbonise heavy freight movements.

"The TCO comparison tool looks at trips carried out by vehicles powered by green and blue hydrogen, battery electric vehicles, drop-in and conventional biodiesels, and standard diesel internal combustion engine vehicles."

This week’s Climate Change Commission advice also highlights the need for significant decarbonisation of heavy transport and estimates that nearly three-quarters of all heavy trucks imported into New Zealand by 2035 would be electric (either battery or fuel cell electric vehicles).

The Commission recommends that work to enable switching away from fossil fuels to reduce emissions from heavy vehicles is begun in the first emissions period, alongside a national low-emissions freight strategy. Ara Ake is publishing the TCO comparison tool to contribute to this much-needed work.

The tool was developed for Ara Ake, New Zealand’s new energy centre, by NERA Economic Consulting, and peer reviewed by the New Zealand Institute of Economic Research. Ten stakeholders provided input and feedback into its practicality and relevance.

"The tool comes with a set of inbuilt assumptions about various factors, such as the cost of electricity, vehicle capital costs, the cost of various fuels, and road user charges," Dr Marantes said.

"It also incorporates typical data on average daily heavy freight trips provided by EROAD, including information on average daily kilometres travelled, average number and length of stops, and average speed."

In addition, it allows users to run their own scenarios and input their own data, enabling it to incorporate commercially sensitive data not yet in the public domain.

"We hope this will be a useful resource for public and private sector decision-makers when they are making strategic decisions about transport investments. By making their scenarios fully customisable, users can also make decisions based on what they know and expect to be true, such as price paths for carbon over time," Dr Marantes said.

Shaun Morrow, Business Development at Mainfreight, said the comparison tool was a useful conceptual tool to test different assumptions around long-distance heavy freight decarbonisation.

"I see applications for its use in supporting longer-term planning and fleet composition in the years ahead," he said.

Energy Efficiency and Conservation Authority (EECA) Group Manager of Strategy, Insights and Regulations, Marcos Pelenur, agreed.

"By analysing the cost of moving heavy road freight across different technologies and fuels, the tool provides a valuable tool for decision-making. We are also pleased to see that users can run and save their own scenarios and input their own data. Transport is one of New Zealand’s biggest sources of emissions and by making tools such as these publicly available, it should help to inform better decarbonisation sources in this sector."

Dave Hadley, Principal Advisor Strategic Policy and Innovation at the Ministry of Transport, said that the tool gave freight sector operators the ability to compare all of their vehicle options, in line with their own specific business needs.

"The impact of transport decisions made in the present will influence New Zealand’s emissions profile for decades to come. Comparison tools like this one provide a fuller picture of current and future costs to decision-makers to help them make more-informed decisions for the life-time of their fleets."

The tool can be found at www.araake.co.nz/ldhf-tco. Under a Creative Commons license it is available for anyone to download and use free of charge and is accompanied by a user guide.

Selected insights

Battery electric vehicles

- At present, most battery electric vehicles (BEVs) are recharged. However, an alternative option is battery swapping. Depending on the costs of associated infrastructure, battery swapping could materially alter the economics of BEVs. This is for two main reasons. First, it avoids the need to incur additional labour costs to recharge during a trip (ie, time spent waiting for the battery to recharge). Second, battery swapping provides a means of accessing off-peak grid and energy costs by breaking the link between when batteries are charged and when BEVs need to stop and refuel.

- Without battery swapping, the economics of BEVs are both very sensitive to payload penalty (ie, due to the weight of the batteries they must carry to complete long trips) and to trip length. The latter is due to the need to carry larger batteries (and thus less freight) or stop more often to fast-charge (which incurs higher labour and energy/infrastructure costs by nature of fast charging during the day).

- In practice, BEVs are not driven on their full rated battery capacity. Instead, they are operated with a floor (after which vehicles enter a power-saving mode) to ensure vehicles don’t discharge completely and strand the driver. This floor results in extra battery weight at the expense of payload capacity. The economics of using a BEV are greatly impacted by the level of this floor.

Green hydrogen

- At present, using green hydrogen is more expensive than some other carbon-reducing options shown in the comparison tool. A large driver of this is the cost of the trucks themselves which are currently more expensive than all other options. However, as the cost of fuel cell electric vehicles (FCEVs) comes down, the economics of using green hydrogen improve substantially.

- For longer trips, green hydrogen may be the most efficient option, depending (in particular) on the evolution of FCEV and green hydrogen production costs and the payload penalty associated with using BEVs.

Biofuels

- Because the carbon cost component of using diesel or a biodiesel is small in comparison to the fuel cost component, to achieve a total cost of ownership (TCO) which makes using biodiesels more attractive than using diesel, the cost of biodiesels will have to decrease substantially.

Freight trips

- Most freight trips are under 400 kilometres (km). Less than four percent of all road freight trips (defined as the total kilometres driven in a day by a single truck) in 2020 were over 400kms, and less than one percent of trips were over 600kms.

- The heaviest trucks on New Zealand’s roads (30 tonnes and above) generally appear to have a very heterogenous driving profile. More than half of all days any given truck drives in a year, on average, are spent driving distances of less than 200kms, while the average percent of days spent driving distances of 500kms or more is roughly 7 percent of annual days driving.

General

- Road user charges (RUC) charges make up a significant proportion of TCO in most cases. This means that allowing a RUC exclusion for any carbon-reducing vehicle/fuel combination will significantly impact its economics. However, not only is allowing exemptions a transfer of road costs onto non-exempt vehicles, it would also lead to a major step-increase in cost for an operator when these run out.

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