Zero-emission trucks (ZETs) have had quite a July. In the middle of the month, 15 states and the nation’s capital signed a memorandum of understanding (MOU) to target the goal of about one in three commercial vehicles sold to be emission-free by 2030 and every single one by 2050. Around the same time, 30 OEMs and suppliers pledged their support to the Zero Emission Truck Coalition, which seeks to secure the passage of legislation to provide $2 billion worth of incentives at the point of sale to help fleets become first adopters. Meanwhile, Nikola will break ground on its hydrogen fuel cell truck plant in Arizona on July 23. It’s just one of many planning to disrupt the trucking industry with powertrain solutions free of fossil fuel.
And at the center of many of these developments is CALSTART, the nonprofit organization that facilitates the deployment of cleaner, more efficient transportation in America and around the world. To help understand the latest developments, FleetOwner spoke with Bill Van Amburg, executive vice president of CALSTART.
[Edited for clarity]
FleetOwner: What is significant about this MOU?
Van Amburg: What we saw with California adopting its Advanced Clean Truck rule was a really clear signal from a state that's always been on the leading edge, which aligns with some of the things going on in Europe and China. What this does say, however, is that this isn't just a California thing. This is 40% of the population of the U.S., represented by these states, saying, “We're aligned in the same direction.” This is saying basically 30% of sales of trucks and buses in 2030 need to be zero emission and 100% by 2050.
Most of the global OEMs, as well as our domestic, innovative OEMs and others, are all investing in ZETs and have early product development. And in some cases, they’ve launched first versions of zero-emission trucks. This gives them pretty clear guidance that this investment is important and they can continue to make it. I think the truck makers and others would be interested to see why supporting policies, incentives and investments get put in place, because that's going to be equally important to the direction.
We do believe 30% is achievable. The carbon rules are aggressive, but eminently achievable, particularly if you put the right policies and support structures in place.
FO: How was CALSTART involved?
VA: We have been very involved with California just providing strategic guidance and support staff with the California Air Resources Board. With them, we have developed this strategic model for change called the Beachhead model. We want to phase in zero-emission technology that works best first for fleets and manufacturers and duty cycles, and then grow those rapidly. We have shared this framework with our global commercial vehicle Drive to Zero program.
FO: Why do you think that's feasible?
VA: It’s because the applications are the most suitable for electrification in this near-term.
Those immediate opportunities are the return-to-base, fixed route, and often urban applications. If you look around the U.S., 40% of the use of trucks today, including really big Class 8 tractors, are often not the ones driving long distance every day. But a portion of them are driving around urban regions moving food, beverages, and goods within larger urban regions and centers. And when you really look at the part of the truck market that can be electrified, it's easily 40%.
It started with transit buses, but it's really moving rapidly into urban delivery, including last-mile delivery, with e-commerce and medium-duty goods delivery. Right behind that you're getting into heavy applications like refuse and heavy urban haul—Class 8 tractor-trailers in drayage, food and beverage, and delivery applications.
We try to be very agnostic when we talk about zero emission. It's battery electric, fuel cell electric, and I would include in that range extended hybrids, which can operate a big chunk of their time in zero emissions, but can shift into a hybrid operation for longer haul.
We think that 300- to 500-mile corridors are very doable sometime, beginning around 2024 or 2025. It won't be the bulk of the market, but we're going to be seeing the first inroads into longer distance goods movement, either with fuel cell electric, or fast-charge battery electric along fast-charge corridors, or potentially a range-extended hybrid.
FO: The MOU isn’t binding. Should people read into that?
VA: It's a little more than voluntary, but there aren't any teeth to it yet. I think that's the main point. What they've agreed is, these are the right directions we need to go. We want to work together across these multiple states to set collaborative policies and strategies and get investments and regulations. We are committed to working over the next six to 12 months to actually come up with an action plan to put teeth against the 30% and 100% goals. The direction really aligns with global directions we’re already seeing and syncs up well with work going on around the world. It’s a commitment to set in place the tools that lock this plan in stone.
FO: After the MOU was released, the Diesel Technology Forum sent a rebuttal citing how much emissions have dropped due to engine treatment innovations. Do you feel diesel is being included enough in these conversations?
VA: I don't think any of us can forget what diesel has done and is doing. It's still the predominant technology on the road. We’re not going to get to removing diesel trucks for a long time, if ever. What we're starting to see is the beginnings of the transition to use the right technology, both for climate change and air quality, in the right application. And that may not be diesel. In fact, over the next 10 years, we're saying about 30%. That still means 70% of the trucks are going to be diesel.
Diesel Technology Forum and the industry have done great work in reaching higher efficiencies and lower emissions. When you look at continued growth, transportation is still the fastest-growing segment for fuel use and climate. And the biggest segment there is heavy-duty goods movement. With e-commerce, greater shipping, and all that goes on that, we're having more vehicle miles traveled. So as clean as the individual diesel is getting, we're putting more diesel miles out on the road and more trucks. What we really still need to do is reduce the emissions from diesel engines. They have to make sure that they are as clean as they can be in the test standards and when they're in the real world. And they are not right now when you get into low load and low temperature conditions.
FO: How are developments like this helping fleets on the fence about investing in clean trucks make a decision?
VA: From a manufacturer’s perspective, the thing the industry hates the most is lack of clarity and certainty of outcome. Zero emissions is not a pie in the sky. It gives us a strong level of comfort that the investments we've made so far are not wasted; they're actually going somewhere.
What it means for fleets is that they can start thinking about where it could work; are they the fleets that can best use this? Can they start blowing out their plans and talking to their utility about what it will take to get infrastructure and understand what products are available? It's starting to give some lead time for them to think.
If done right and put into the right duty cycles, ZETs can be more cost effective than the vehicles they would replace. While they are more expensive vehicles upfront today than diesel, in correlation, they should lead to a much lower cost of ownership. This can be really exciting for fleet competitiveness.
This is also huge for America because it has invented a lot of these technologies. I have been concerned for awhile that we're not encouraging the use of the technologies we invent, where we can drive our own markets for them and exercise leadership. I have been concerned that China and Europe are going to get ahead of the U.S., so I think this is a really strong move on the part of the states to actually encourage competitive leadership and in these technologies.
FO: A 20% maintenance savings is a stat thrown around. Is that a fair number?
VA: It will vary by duty cycle. You get into a refuse truck and brakes repair or replacement could be 30 or 40% because of the regenerative braking. We’re seeing on a fuel cost basis, it can be significantly lower on the order of 50% or more. The maintenance costs can vary between 10 and 20% reductions. What we’re seeing is operational cost reduction can be a real benefit. Structured well, the TCO [total cost of ownership] can be a real positive outcome compared to diesel. We’re not 100% there yet, so I don’t want to overstate that.
With support incentives on the front end while the vehicles are still at low volume, you can help de-risk that first investment and get some comfort with the technology as it starts to come down in price and up in volume.
FO: CALSTART helped organize the ZET Coalition, which would help get $2 billion to remove that upfront cost barrier. What else needs to happen in America to spur this zero-emission revolution in transportation?
VA: I think national leadership is important here. I think what it does is it can really help our domestic production is ramp up faster. It will be more spotty if we don't have federal leadership. Having a national overlay would be really powerful.
Also, utilities get regulated at the state level. There are varying approaches out there right now, it's kind of a patchwork quilt. If we could have some kind of stable investment in infrastructure at the federal level to make sure that no matter where you are, if you wanted to put in some of these vehicles, you can get some support to put in the infrastructure in if your utility didn't have its own funding to do it. That would ensure that we spread these benefits across America and not just in pockets of the country.
FO: What’s your take on the Joe Biden's proposed $2 trillion clean energy plan?
VA: We are nonpartisan, so we don't take any active stance in political relations. Having said that, what we did see from the Biden campaign is interesting to us because it's this scale of investment that we're seeing in other regions of the world starting to lead in these technologies. So, at least from a vision standpoint of what we need to be investing in as a country, there's a lot of value in that in terms of the incentive. We're actively engaged in Congress on the infrastructure bills that are going through.
FO: Has the current administration approached CALSTART and tried to see how they can involve you in some sort of infrastructure bill?
VA: No, we've not been approached by the administration.
FO: Does CALSTART have any opinions on the battery versus fuel cells debate?
VA: Pragmatically, they're both electric drivetrain that happened to get their electrons from a slightly different source — either storing in the battery or generating it out of a fuel cell. Everything else in that vehicle is an electric powertrain. From our standpoint, these are definitely complementary technologies, they are not competing technologies.
In the short term, battery electric has been a little ahead in the race. It's a more robust technology and the price came down a little faster. It definitely looks like the solution that you see for return-to-base fleets in urban settings.
We're seeing transit properties are interested in fuel cells because they offer benefits in terms of longer range and faster fueling. For heavy- or extreme-duty cycle applications and long-distance applications, there is a lot of interest in what fuel cells can offer. That's not something that battery electric is doing yet, and fuel cells may offer a real opportunity.
I don’t think there's an absolute in any of that. There's going to be a shakeout in what works best in different cycles, different business cases and the like. Where we’re going to have to be a little more thoughtful is in the refueling and recharging infrastructure for what we’re going to be doing.
One of the smartest things Nikola has been asking is, “How do we think about putting in these larger feeling centers that actually refuel lots of vehicles?" Not just for trucks coming through, but for cars. We've been looking at port applications where trucks, rail and marine sector equipment would be able to use hydrogen at a centralized point.
FO: How is that $2 billion in proposed incentives from the ZET Coalition going to help the various players, from fleets to utilities, grow zero-emission technology into a mature solution?
VA: We're just at the beginning phases of building this out. We're learning a lot of our crucial lessons right now. We know the technology works. What we need to do now is refine the use cases and how we scale up the infrastructure. That's what we need to be doing over the next five years. That will help the utilities get really streamlined and speed up their installation timing and capacity improvement planning.
Fleets need to be comfortable with how to set up their depots to charge 50 trucks, do smart charging, and get the cheapest electricity at certain times of day. I think we're just at the beginning of a pretty exciting time to get into a much higher efficiency delivery system that's really competitive.
