Alternative fuels in road haulage

In 2022, 1.64 billion tonnes of goods were moved by GB-registered HGVs in the UK, covering a total of 12 billion miles[1]. As the nation strives for a more sustainable future, it’s clear that the transition to alternative fuels (AF) for road haulage – and all road transit – is essential for achieving this aim. Though there are obstacles to the wider adoption of AF within the haulage sector, these are not insurmountable.

While more comprehensive infrastructure and tech advances are required, there is specialist finance available to help organisations make the leap into a greener future.

Image: pixabay[2] The current situation In total, road traffic contributed 101 MtCO2e in 2022[3], accounting for more than 90% of domestic transportation emissions and 26% of the UK’s total emissions.

While the transition to AF in the car and light commercial vehicle space has gained momentum, moving to alternative power sources for HGVs is a more complex challenge. Yet it is clear that AF are the future of road haulage, not just from an emissions point of view but from a legal one too. In November 2021, the UK Government announced it will become the first in the world to commit to phasing out new, non-zero emission heavy goods vehicles by 2035[4].

All new HGVs sold in the UK will need to be zero emission by 2040. It also announced the Zero Emission Road Freight Demonstrator Programme[5] to help decarbonise the UK’s freight industry. A House of Commons Committee report, Fuelling the future: motive power and connectivity[6], announced that the UK Government “Recognises the importance of a widespread, reliable refuelling and recharging network to provide confidence in the commercial viability of zero emission HGVs,” and the role of the “public and private sectors to achieve this.[v]” The new government is unlikely to change this direction of travel.

So, what are the most credible alternatives to emission-heavy fuels? The battle is currently between several main contenders: electric, biofuels and hydrogen. But there are challenges presented by all three.

The challenges to broader use of alternative fuels Battery electric vehicles (BEV) appear to be the favoured option. But the range of BEV HGVs is a major stumbling block.

On average, this currently stands at just under 140 miles, or 220 km, for a standard electric HGV vehicle[7]. Logistics UK states we are “still a long way away from having a reliable, market-ready zero emission HGV that can transport goods across the entire UK[8] “. There are also concerns about the readiness of the charging infrastructure should the volume of electric HGVs increase significantly.

So, what about biofuel and hydrogen options? Biofuel operates more like a traditional engine, and hydrogen fuel cells burn the hydrogen to charge up the battery for an electric transmission. Refuelling (at a fraction of the time taken to recharge a battery) could happen using the network of current stations and without the need for investment in charging infrastructure.

However, there are still only just over a dozen hydrogen refuelling stations in the UK, prohibiting wider adoption. In addition, the current landscape of competing alternative fuels is creating confusion. Haulage firms are reluctant to make big investments in one type over another, for fear of buying into the ‘Betamax’ version of AF.

Many are waiting for a clearer picture to emerge before committing. However, there are solutions on the horizon. How to beat the traffic

There are clear pathways for improving existing refuelling and recharging infrastructure. One is to create a depot network for charging, with HGV-exclusive centres dotted around the country on established haulage routes – although there would need to be some clarification on who might own the depots. It could result in a situation where large hauliers dominate, leaving SME hauliers frozen out.

It might be that a state initiative is needed, especially when considering the Government’s position on phasing out non-zero emission HGVs. Another interesting potential solution is emerging in China. Batteries-as-a-service initiatives allow drivers to swap batteries at dedicated charging stops, meaning no loss of transit time waiting to recharge.

This begs the question: is battery standardisation a logical solution and how would we achieve this? It looks likely that ongoing investment in electrification and infrastructural development will end up serving a large part of our transport requirements. However, travel outside of mainstream needs – such as tricky terrain and long-haul freight – may come to rely on different AF, most likely hydrogen fuel cells.

These vehicles produce no waste product other than water and have a larger range (typically 200 to 250 miles)[9]. The next stop The current state of AF is undoubtedly confusing and the rate of adoption shows there may be a reluctance or inability to take the next step.

It is clear that capital investment will be needed but must be focused in the right places. Given the economic challenges facing the UK Government, there are some likely difficulties in financing a wholescale switch to AF. For example, the Government has pledged GBP90 million for the Hydrogen Supply Programme[10], in part to try and increase the number of H-filling stations in the UK[ix].

But this represents a drop in the ocean of what is required to create a hydrogen-based network. Private sector finance is essential to help transform the industry. Specialist financiers (like Siemens Financial Services) have an appetite for the sector and a deep understanding of the potential capabilities of the technology.

This will allow arrangements that are financially as well as environmentally sustainable. Like any venture, the ‘green project’ will only work successfully if the numbers add up. This could include measures like flex financing periods, low-start arrangements that allow projects to grow without being overburdened, or “as-a-Service” financial models.

With zero upfront costs, ‘as-a-Service’ models offer predictable OPEX (Operating Expenditure) monthly payments, allowing faster scalability with minimal balance sheet impact. The most suitable finance options will come from organisations with expertise in the field and involvement in the technology and infrastructure. A strong supply chain and ability to provide added value are also essential.  It is clear where we are now and where the destination needs to be, and it is specialist finance that will be driving the change.

You can find out more about what Siemens Financial Services is doing to drive the revolution in AF haulage here[11].

Authors: John Bolton[12], Sales Manager – Industry Finance & James Hardie[13], Transportation Finance – Business Development Manager Siemens Financial Services

References

1. ^ 12 billion miles (www.gov.uk)
2. ^ pixabay (pixabay.com)
3. ^ 101 MtCO2e in 2022 (www.statista.com)
4. ^ phasing out new, non-zero emission heavy goods vehicles by 2035 (www.gov.uk)
5. ^ Zero Emission Road Freight Demonstrator Programme (www.gov.uk)
6. ^ Fuelling the future: motive power and connectivity (publications.parliament.uk)
7. ^ standard electric HGV vehicle (electriccarguide.co.uk)
8. ^ market-ready zero emission HGV that can transport goods across the entire UK (publications.parliament.uk)
9. ^ hese vehicles produce no waste product other than water and have a larger range (typically 200 to 250 miles) (www.innovationnewsnetwork.com)
10. ^ Hydrogen Supply Programme (www.gov.uk)
11. ^ here (www.siemens.com)
12. ^ John Bolton (www.fleetpoint.org)
13. ^ James Hardie (www.fleetpoint.org)