Five Reasons You Need a Sustainable Fuels Strategy

October 26, 2017

Remember when fueling a vehicle was as simple as pulling up to the gas station for diesel? Now, with rapid development in alternatives, it can also mean plugging in, locking down the CNG nozzle, or even pumping hydrogen. The growth of sustainable fuels and related technologies is one of the biggest trends to hit fleet managers in decades, and staying ahead of these new developments is only going to become more critical as time goes on.

Five years ago, a handful of large corporate fleet owners and shippers, including Nike, UPS, and Walmart partnered with BSR to launch Future of Fuels. Members of this group were all committed to moving toward more sustainable energy sources, and they came to us with a critical question: Which fuels are sustainable?

What followed was a deep dive into a veritable Pandora’s Box of fuels.

While uncertainty on environmental regulation in the U.S. today is high, the direction here and around the globe is crystal clear: cleaner air, engines, and fuels.

Five years and many reports, expert convenings, and tools (not to mention several new corporate members) later, we still don’t have all the answers, but we have simplified the challenge through collaboration.

In our inaugural contribution to ACT News, we‘re sharing five reasons every fleet should develop a sustainable fuels strategy:

1. Sustainable fuels are attracting big investment

Advanced and alternative fuel technologies were once a niche, reserved for mad scientists and tinkerers. Now sustainable fuel is big business, and it’s growing. The private and public investments pouring into fuel technology development and deployment are already in the billions. California just announced $1.5 billion for alternative fuel vehicles and infrastructure, and UPS has invested more than $750 million in alternative fuel and advanced technology vehicles and fueling stations since 2009. Today, refueling networks for LNG, CNG, B5, B20, renewable diesel, and EV exist in multiple freight corridors and markets around the U.S.

2. These options are no longer just for your personal car

All of this innovation was quaint for fleet managers when it was only about Priuses. Then, when natural gas prices plummeted due to hydraulic fracturing, the market changed. The “shale gale” is just a breeze for now, but natural gas technologies have gotten better and renewable natural gas has come into play, prices have fallen, and these fuels are being more widely adopted by fleets. New announcements by Cummins and Tesla put electric trucks within sight, renewable diesel continues to grow yearly, and hydrogen is already being road tested.

3. Customers and regulators are already convinced

While uncertainty on environmental regulation in the U.S. today is high, the direction here and around the globe is crystal clear: cleaner air, engines, and fuels. The most populous states, markets, and ports, like those in California, are cracking down on air quality and signaling even more stringent requirements. Large corporate buyers, like BSR’s members, are setting fleet- and freight-specific targets. IKEA’s plan to cut carbon emissions from goods transport 30% by 2020 and HP’s goal to cut 10% more emissions from its logistics after already achieving a 20% reduction are two examples of this.

4. Efficiency has its limits

Efficiency is one side of today’s clean fleet equation, but most fleets haven’t begun to think about the other: fuels. The dramatic emissions reductions needed to meet regulator and customer goals cannot be met from efficiency alone. For example, Walmart is developing its own fuels strategy to meet its aggressive 2025 goals, even though the company already saves $1 billion annually from efficiency, because it knows that efficiency, by itself, will not be sufficient. We estimate that fleets could be required to achieve 43-56% improvements by 2030 to meet California’s requirements from efficiency alone.

5. New tools and technologies make it easier

Our sweet spot is developing solutions through business collaboration. Two years ago, an army of interns was required to compare fuels and efficiency for their climate emissions reduction potentials; now, our Fuel Sustainability Tool does it for you. Six months ago, the term “sustainable fuel” was a big, fuzzy, kumbayah phrase with no real meaning; today, we have seven Sustainable Fuel Buyers’ Principles signed by 15 companies (and growing) that clarify what this means. Teams, such as GNA and others, are doing great work on analyzing, testing, piloting, and finding great rebates for new technologies. And in the next two months, Future of Fuels will release a framework to standardize technology pilot results.

We live in exciting times for fleets, but challenges and uncertainty remain. BSR’s Future of Fuels will continue to be a forum for business and experts to understand sustainable fuel changes, as well as a platform for leaders to set the direction toward low carbon, sustainable fuels for road freight while making sure that no fleet has to be left behind.

Are you ready to set your sustainable fuel strategy?