Lowering carbon emissions has become more than just an industry trend. For several years, carriers, shippers and brokers across all modes have become increasingly focused on reducing carbon emissions. It’s just good business practice in a competitive landscape where customers are looking to reduce their scope 3 emissions and to be in compliance with requirements.
In the private sector, 58% of Fortune 500® companies (a significant increase in recent years) have established targets to reach net zero by 2050, and of those businesses, roughly half of them already have plans in place to reduce scope 3 emissions in their supply chain1. The public sector is trending similarly, with at least 29 states releasing climate action plans2 and the Biden administration committing to reducing U.S. GHG emissions by 50% by 2030 and reaching net zero by 20503.
With the transportation sector being the largest source of GHG emissions in the U.S.4, logistics companies will need to prepare to demonstrate their carbon reduction efforts, whether due to a requirement or simply to be competitive and responsive in a landscape where customers are looking to reduce their scope 3 emissions.
To find out just how prepared the transportation industry is, FreightWaves partnered with Chevron Renewable Energy Group to survey a large group of carriers, shippers and brokers about their progress and approach to lower carbon emissions. The survey asked supply chain leaders about their current lower carbon targets, preferred strategies and implementation hurdles.
To ensure that research results were representative of the industry as a whole, FreightWaves surveyed a fairly even distribution of leaders from the three types of groups presented. About 39% of respondents were carriers (all modes), while 36% classified themselves as brokers and 26% identified as shippers.
Survey respondents also represented a large geographic area, with a significant concentration of respondents from the East North Central region of the United States, which is often highly represented in
this kind of research due to the large number of logistics companies headquartered in this area.
The results from this survey make it clear that efforts to lower carbon emissions are gaining momentum, although there are still a number of industry holdouts. At the same time, the most common answers from total respondents highlighted misconceptions regarding performance concerns and implementation difficulties with some of the lower carbon fuel solutions being evaluated.
Supply Chain Takes Heed of Lower Carbon Needs
With mounting pressure coming from many angles, it makes sense that the majority of surveyed organizations have either already adopted lower carbon targets or are in the process of doing so. The awareness of most companies about environmental challenges, evolving consumer demands and emerging legislative trends is constantly improving. These organizations — including carriers, shippers and brokers — will be better poised to navigate shifting expectations in the future due to their ongoing efforts.
An increasing percentage of companies fall into the category of having established lower carbon strategies. In fact, more than 40% of survey respondents said their organizations have already adopted lower carbon targets, and an additional 22% said they are actively working on adopting targets.
A minority (38%) of respondents, however, said their organizations have not yet set any lower carbon targets and have no plans to do so in the immediate future.
The number of publicly traded companies with net zero targets has increased by 68% from 2020 to 20225. The growing activity around carbon reduction would suggest that those companies who are already taking steps to reduce carbon emissions may have a competitive advantage against those who are not.
Brighter Spotlight Expected on Reducing Carbon Intensity
While many organizations are working internally to reduce carbon emissions, shippers and brokers are now paying attention to stated lower carbon targets and strategies when choosing carrier partners.
Shippers are taking the lead on the reducing carbon intensity (“CI”), with about 32% of respondents noting lower carbon targets are an important factor in their carrier selection criteria. Brokers lagged behind shippers, with 14% holding that sentiment.
While brokers may be as focused on lowering carbon intensity now, it is important to acknowledge that brokers work for shippers. As reducing carbon emissions becomes more important for shippers, they will inherently make their way into widespread brokerage requirements. The two groups’ perceptions of the future illustrate this point well.
A near-majority of both parties — around 46% of shippers and about 48% of brokers — said that while they don’t currently factor lower carbon targets into selection criteria, they think it will become a more important criteria in the near future.
These numbers, especially the forward-looking data points, should provide an additional push for carriers that have been slow to consider their CI impacts and work toward reducing carbon emissions.
Carriers: Understand Importance, Concerned with Implementation
Almost 66% of surveyed carriers reported feeling at least some pressure from shippers and brokers to demonstrate their lower carbon strategies with more than 10% of those carriers reporting that they have been asked about their efforts frequently by multiple customers. Previously explored shipper and broker attitudes made it clear that carriers will likely experience mounting pressure in the near future as their industry partners and the customers of those partners continue to increase their focus on lower carbon initiatives.
While carriers are largely aware of the growing importance of embracing lower carbon initiatives, a significant portion are struggling with perceived hurdles when it comes to implementing changes. The most commonly perceived hurdle — identified by almost half of survey respondents — that stands between carriers and their efforts to meet their carbon reduction targets, is a lack of viable solutions. For small and midsized fleets, alternatives such as electric, hydrogen fuel cells and natural gas (CNG, LNG and RNG) may be barriers.
However, accessible and impactful solutions, such as renewable biofuels, are available to all fleets today. Increasing awareness about these solutions may propel more carriers toward implementing lower carbon targets for their organizations.
Echoing the above results, 50% of carrier respondents said they are not currently implementing any strategies for reducing carbon intensity within their fleets. For the fleets that have started to implement lower carbon efforts, it appears that biodiesel and renewable diesel were the standout lower carbon fuel solutions.
Biodiesel is a drop-in solution that works in petroleum diesel equipment with typically no modifications needed. Plus, bio-based diesel can make use of the existing liquid fuel distribution infrastructure, making it easier and more affordable for customers to access product.
Biodiesel is Effective and Accessible
Surveyed carriers believe biodiesel is about three times more feasible to adopt than electric and twice as achievable as compressed natural gas (“CNG”) or liquefied natural gas (“LNG”). Carriers also believe biodiesel is more effective than electric and CNG/LNG at reducing carbon emissions., Research has shown that biodiesel may be 56% more effective at reducing carbon emissions than electric vehicles when taking the grid into consideration6.
Carriers are more familiar with biodiesel than renewable diesel, with 42% actively using the former and 27% using the latter. Despite this, more carriers have plans to increase their use of renewable diesel. Just under 40% said they were increasing their use or had plans to start using it, while about half of carriers said they had no plans to use biodiesel or renewable diesel in their fleets.
For a lower carbon fuel solution to be considered viable, it must be accessible and deliver adequate performance. A significant portion of surveyed carriers were concerned about biodiesel’s ability to deliver on both, which could be a factor limiting implementation.
The most common misconception to adopting biodiesel and renewable diesel is a concern with engine performance (54%).
- Performance: Biodiesel offers improved lubricity and combustion, and reduced DPF clogging and regenerations versus petroleum diesel. Renewable diesel is considered a direct replacement to petroleum diesel, meaning its engine performance and use would be the same as petroleum diesel.
- Availability: B20 and above biodiesel blends are widely available at more than 800 public fuel stations throughout the country, whereas R20 and above renewable diesel blends are available at roughly 574 stations, primarily located in California7. Lower blend levels of biodiesel and renewable diesel are even more widely available.
- Fuel quality: Like all types of fuels, there can be a difference in quality from different producers. Chevron Renewable Energy Group is an industry leader for biodiesel quality by not just meeting the industry-standard for biodiesel quality known as ASTM D6751, but going above and beyond by participating in the BQ-9000® program, which includes additional quality assurance steps. Biodiesel also exceeds some petroleum diesel specs, including Cetane content and lubricity.
- Price: B20 biodiesel blends and renewable diesel have both been relatively consistent with the price of petroleum diesel over the last five years8. Their use generally requires no additional equipment investment.
- Cold weather use: Contrary to some misconceptions, with proper blending, handling, storage and use of additives, biodiesel may be used effectively in extreme cold. With renewable diesel acting as a direct replacement to petroleum diesel, it performs the same in cold weather as diesel.
- Infrastructure development/storage: Both biodiesel and renewable diesel can be used with existing infrastructure – including engines and storage tanks, generally requiring no additional investment.
- Effectiveness of carbon reduction: Compared to petroleum diesel, biodiesel and renewable diesel may reduce carbon emissions by up to 100% for fossil carbon9. Biodiesel can also reduce total hydrocarbon by 70% and renewable diesel can do so by up to 40%10. The carbon intensity (CI) score of both biodiesel and renewable diesel have also been consistently lower than LNG and hydrogen11. Compared to electric, biodiesel may be about 56% more effective at reducing carbon emissions when taking the power grid into consideration.
The push for a lower carbon supply chain is not going away. Carriers, shippers and brokers are feeling pressure to implement lower carbon strategies, and many of them need assistance and guidance regarding where to start.
Some of the most talked about solutions — such as alternative vehicles — will not likely be viable industry-wide solutions in the near term and may require significant infrastructure investment. Biodiesel and renewable diesel, however, have proven themselves to be both accessible and effective. Many of the perceived barriers to adoption of biodiesel and renewable diesel are also misunderstandings.
Sources & Footnotes
- https://www.whitehouse.gov/briefing-room/statements-releases/2022/06/30/fact-sheet-health-sector-leaders-join- biden-administrations-pledge-to-reduce-greenhouse-gas-emissions-50-by-2030
- Carbon intensity for EVs based on eGRID 2020 figures and EV EER of 3.8 for transit buses per National Renewable Energy Laboratory
- Product is produced from renewable oils and fats. Methanol used to make biodiesel and hydrogen used to make renewable diesel and SAF are typically made from conventional natural gas but can be produced from renewable resources.
- CARB Assessment of the Emissions from the Use of Biodiesel as a Motor Vehicle Fuel in California “Biodiesel Characterization and NOx Mitigation Study.” Durbin (2011)
- CarbonintensityforEVsbasedoneGRID2020figuresandEVEERof3.8fortransitbusesperNationalRenewableEnergy Laboratory
Originally shared by FreightWaves and Chevron Renewable Energy Group. The full report with graphics is available for download here.