Freight Transport needs a Finkel clean energy target

As another Australian energy policy neglects Transport, our highest energy using sector, we now await the outcomes of the climate change policies review to arrest the sector’s rising emissions intensity and declining fuel security.

Under our Paris Agreement commitments we need to halve per capita emissions and a two-thirds reduction in emissions intensity of all economic activity, so for the freight and passenger transport sectors to contribute their shares, ambitious, effective and integrated government policies at many levels will be critical. To reach the required emissions reduction trajectory, one estimate is that one billion tonnes CO2-e needs to be reduced from the Australian economy by 2030. With Transport contributing about 18% of Australia’s current annual emissions (93 of 527 Mtco2e), its share would be 180 million TCO2e reduced by 2030, roughly 12 million tonnes pa.

Current Policies Inadequate

Under the Emissions Reduction Fund transport methods, only three projects have been contracted to deliver a total of 1.2 million tonnes CO2-e contracted over 7 years, averaging 170,000 TCO2-e p.a., about 1.5 per cent of the average required annual mitigation for the transport sector. Greater mitigative action from the sector is needed, and quickly, because the long lives of transport vehicles such as trucks, buses, trains and ships, and their enabling infrastructure, means that decisions made over the next few short years may lock-in emissions-intensive transport equipment for decades.

Use of low carbon transport fuels such as biodiesel, natural gas and ethanol has declined significantly in recent years, due to a variety of factors including low oil price, technology performance and a lack of refuelling infrastructure and supply chain development, and the continued closure of local refining capacity means imported fossil-based fuels are relied upon for freight transport more than ever. An assessment of transport energy productivity growth, like those undertaken for other critical networks in the electricity, water and gas sectors, would better inform climate change policy development for transport generally, showing productivity growth or deterioration trends in network efficiency and its impact on national productivity and emissions.

New Policies & Infrastructure

Enhanced incentives and support are needed to dramatically improve emissions reduction activities in a sector that will grow 25% in the next decade. Freight transport needs policy leadership and strategic vision with clear objectives for energy use and emissions reduction with a single source of overall responsibility to integrate programs at all levels.

Significant freight infrastructure capacity building projects that dramatically improve the business case for shifting freight to less emissions-intensive modes should be of the highest priority to change business-as-usual growth in road freight and its consequences for greenhouse gas emissions, congestion, air pollution and road safety. Initiatives could include increasing rail payload capacities and more dedicated rail lines between ports and hinterland intermodal terminals, while re-building capacity for domestic shipping will need strategic investment in dedicated coastal shipping terminals for intermodal and roll-on/roll-off cargoes and regulatory change that currently limits is use.

Key policies required to effectively and sufficiently encourage emissions reduction in freight transport include:

1. Establish an explicit carbon pricing mechanism
2. Make the ERF more financially attractive for transport projects
3. Encourage mode shift with full cost-reflective road pricing, specific mode shift incentive schemes and including key opportunities under the ERF land and sea transport method
4. Fuel-efficiency standards for light commercial and heavy vehicles
5. Incentives for accelerated retirement of older rail and heavy road vehicles
6. Measure productivity and productivity growth in the transport energy network
7. Freight transport efficiency remains one of the largest opportunities for additional initiatives under the National Energy Productivity Plan, and the 2XEP Freight Roadmap details a list of 70 initiatives that could also be included in the NEPP or other existing policies for government and industry to action together. A key for these will be piloting the use of the Australian Standard for Transport Energy Audits, a world-best practice standard developed by an Australian government-industry partnership that will underpin many emissions reduction measures.

Taking a Finkel-like approach by establishing clean energy targets and a single point of responsibility for their achievement are critical first principles for freight transport to help Australia reach its emission reduction goals for 2030 and beyond.

How to lift energy productivity in Freight Transport

A Roadmap to double energy productivity in Freight Transport by 2030” is now released for comment, and yours will be most welcome.

Urgent action is needed to generate more economic value from the energy used to move freight in Australia, as congested cities increasingly constrain productivity across the economy. Decisions made today can lock-in energy-intensive freight transport activities for decades.

Published by the Australian Alliance for Energy Productivity using extensive consultation with leading transport businesses, industry associations and government stakeholders, the roadmap aims to agree actions and priorities for both industry and government under the National Energy Productivity Plan (NEPP).

Transport is now Australia’s largest energy user, and with the freight task to grow 25% over the next decade, it will have ever-greater influence on congestion, climate change, air pollution and economic productivity across all sectors. The transport sector has some of the most cost-effective opportunities for energy and emissions savings, yet as the NEPP 2016 annual report notes, raising energy productivity in freight and commercial transport relies largely on voluntary action, and little progress is being made.

The Roadmap considers trends that will shape future energy use in the sector, including increasing urbanisation, a shift to renewable energy, vehicle electrification, connectivity and intelligent transport systems, automation and business model transformation. It gauges the extent of improvements possible via known technologies; it highlights the uncertainty expected from various levels of disruption that is coming; and it identifies measures to help the transition to a much more energy-productive freight sector.

Key suggestions will be incorporated into its final version, so please check it out and contribute your ideas.

 

Extra money to buy new trucks

Announcing a new service that unlocks government funding to buy new efficient trucks.

We can now help mid-to-large trucking companies access government incentives to invest in more efficient transport vehicles by reducing finance costs and paying cash from carbon credits.

Unique Opportunity

With no up-front costs, we can qualify fleet renewals for:

–             a 0.7% finance rate discount monthly

–             cash payments from carbon credits annually

Funded by the Clean Energy Finance Corporation, the finance discount lowers lease payments for the life of the lease and comes off your market interest rate.

The more fuel efficient your new vehicles are compared to those they replace, the greater the carbon credit cash bonus becomes, paid from an established Emissions Reduction Fund project annually for up to seven years.

Easy, Low Risk & No Fees

It’s an easy, low risk process with no up-front or ongoing charges that gives truck buyers extra cash on top of the fuel savings and other benefits that new trucks provide.

And it shows customers you are achieving real, measurable, government-backed environmental improvements as an innovator in your industry.

Why leave money on the table?

Don’t miss out! Contact me today to see how much funding is available for your new truck purchases in 2017 and beyond.

David Coleman

davidcoleman@westnet.com.au

0455 777 551

Clean Transport News

Keep up-to-speed with the latest developments in clean transport action:

1.       Nikola One Truck Revealed

One of the largest US trucking companies believes the Nikola One truck could be a game-changer for the trucking industry. Going all-electric with a hydrogen-powered fuel cell will help change the cycle of rate volatility driven by diesel prices. Including one million miles worth of fuel in the vehicle’s purchase price will help too.

The Nikola One is like to a “rolling iPhone” with everything a truck driver needs to do business at their fingertips, including a 21-inch display screen driver console pre-loaded with its own freight matching service: Nikola Shipments. Available from 2020, and with nearly $4 billion worth of pre-orders already, the queue starts here.

2.       Vehicle emissions tests reveal real-world performance

Credibility of the Green Vehicle Guide is in doubt after Australia’s first on-road vehicle emissions test program shows the laboratory-test results on which it is based don’t translate into real-world Australian conditions. Noxious gas emissions were found to be four times the regulatory limits, while greenhouse gas emissions and fuel consumption were up to 35 per cent higher than figures shown on Government-mandated Fuel Consumption Labels. 

Fuel efficiency is the top consideration for about a quarter of Australians when buying a car. Following the Volkswagen scandal, Europe is moving away from laboratory testing to improve its emissions regulatory model and Australia should do the same.

3.       India unveils the world’s largest solar power plant

No, this isn’t off-topic given the inevitable move to electric truck fleets. The Adani Group is leading India to a solar-powered future. Does their name ring a bell? Yes, Adani is also developing a huge coal mine in Queensland, the subject of a storm of protests from well-funded international environmental groups.

Adani shows the reality that a clean energy future won’t be a binary model. A mix of energy sources is needed for prosperity while reducing climate risk. Sure, coal needs to get cleaner, but wanting the resource kept in the ground based on ideology heightens divisiveness in local communities between winners and losers and provides no solutions that play to Australia’s strengths.

 

#cleantransport

Helping freight transport companies, their customers and governments move towards zero carbon transport by finding profitable ways to move more freight using less fuel.

Save money on fuel and grow with green demand – that’s what Clean Transport Action is all about.

If you’d like a roadmap to set your direction or help to get moving, let’s talk.

David Coleman

 Clean Transport Action

davidcoleman@westnet.com.au

+61 455 777 551

 

 

Are you ready for Intelligent Transport Systems?

Melbourne’s ITS World Congress 2016 was a mind-blowing experience for someone getting up-to-speed with the latest in a fast-changing field.

With 12,000 delegates from 73 countries, this annual event tracks the rapid progression in Intelligent Transport Systems (ITS), where leading players show how new transport technologies are disrupting business models across the globe.

No longer science fiction or 5-10 years away, ITS is already here, and not just in big cities like London, Singapore and San Francisco. Smaller places like Milwaukee, Ohio and Estonia are showing that Intelligent Transport Systems can be applied anywhere for those willing to collaborate and share value in new ways.

Visions of Transport’s Future:

ITS offers a vision of seamless transport of people and goods by connecting all elements of multimodal transport – passengers, freight, vehicles, information and communications technologies and infrastructures – in a digitally integrated system.

The National Transport Commission believes five disruptive technologies will change transport systems over the next 25 years:

  • Automation
  • Connectivity
  • Big Data analytics
  • The sharing economy
  • Zero emission vehicles

They see fleets of driverless vehicles providing on-demand shared passenger and freight transport services with a dramatic reduction in private vehicle ownership and the number of vehicles on our roads. Government reliance on fossil-fuel-based revenues to fund transport infrastructure is in jeopardy from relentless fuel-efficiency gains even before electrified vehicles (EVs) emerge, inevitably needing ‘user pays’ road pricing based on when, where and how people use roads.

Then there’s Gartner’s three key emerging digital technology trends for the next 5-10 years:

  • Transparently immersive experiences, such as brain-computer interfaces, augmented and virtual reality;
  • Perceptual smart machines, where radical computational power enables machine learning, artificial intelligence, autonomous vehicles/drones and smart robots;
  • The platform revolution, allowing organisations to connect with new business eco-systems that exploit internal and external algorithms to generate value, including quantum computing, Blockchain and Internet of Things (IoT) platforms.

Add to this picture a series of global Megatrends: urbanisation; online retail with free, fast shipping globally; decarbonisation and green finance; mobile connectedness; and social media, to name a few, and you get an explosion of new business models enabled by technology and collaboration that change the very nature of how people and freight move today.

What will this mean for Freight?

How will freight movement be transformed, and how will transport operators need to change their traditional thinking? Some opportunities include:

Smart GIS:           Geographic Information System (GIS) mapping provides content and context about everything, where everything that moves or changes is measured and reported real-time to networks in geospatial frameworks. Advanced space/time analytics enable Big Data visualisation for supply chain design using simulations, enabling new types of collaboration across networks of individuals and organisations using shared-information services. Daimler, BMW and Audi now jointly own the HERE map technology business whose map data is used by four out of every five cars in world today.  Daimler has made it an open platform to encourage innovation to optimise use of infrastructure, with interesting possibilities for its truck brands.

Automated & connected vehicles:            Supervised autonomous driver assistance systems; truck platooning; restricted-access route choice systems using infrastructure sensors to manage and monitor compliance; Truck drivers become Operators that are advised what to do, where to go and how fast to drive by voice-guided navigation and live sight augmented reality, which may help attract drivers to the industry. That’s if the vehicle isn’t driverless, as many road, rail, water, air, port, terminal and warehouse vehicles and equipment will be, always in the most fuel-efficient driving mode. Uber Freight’s self-driving truck acquisition, Otto, recently partnered with Volvo to complete its first shipment of Budweiser beer.

Freight matching:             Uber has released its freight platform that matches trucks with the right load wherever they are, aiming ultimately for a self-driving freight system. Both uShip and Australia’s yojee run online freight marketplaces, while Convoy has contracted 10,000+ regular scheduled shipments per year for Unilever in addition to on-demand deliveries.

Urban freight:    Better use of infrastructure capacity will take serious private-public collaboration. Technology helps negate barriers: EVs are quiet and safe to help extend off-peak deliveries; vehicle routing systems provide real-time congestion and cargo updates to combine with loading dock/zone scheduling to optimise flows; consolidating loads via matchmaker systems maximises equipment utilisation for fewer empty or under-utilised trips; and what about last-mile deliveries with e-trikes or robots?

Container optimisation platforms:            Melbourne start-up Opturion routes containers between wharf, container yards and transport yards using multi-source data sets to maximise efficiency within vehicle, cargo, site and route constraints.

Clean energy:  Rapid advancements in light and heavy electric truck technology combined with battery energy storage and renewable power present a ‘chicken & egg’ dilemma for developing charging infrastructure networks. Nikola isn’t waiting for public investment in refuelling networks for its zero-emissions heavy duty hydrogen electric truck, planning instead to build a network of hydrogen refuelling stations fed by its own solar farms that produce hydrogen from water using electrolysis.

Insurance:           Revolutionised to reduce costs, both through significantly safer vehicle operation and Telematics providing location, time and driver behaviour data to enable precise estimation of underwriting risk for lower insurance costs;

Then there’s some that don’t fit simple categories: Hyperloop One/DP World high-speed electric container transit system (possibly underwater); Blockchain crypto-technology to track financial payments, cross-border trade and freight flows; and the physical internet intended to replace current logistics models entirely with an open system routing freight using the principles of the Digital Internet.

Together, these technology-enabled business model advances offer greater asset utilisation, cheaper freight movement and happier, better-served customers.

Technologies need Collaboration

The key lesson for me is these technologies rely on collaboration to design, develop and apply into the community. Sharing knowledge and proprietary data via open access platforms is fundamental to a term used widely at the ITS World Congress – Collaborative-ITS.

Freight transport is a fragmented, diverse sector, with four modes of road, rail, sea and air transport connecting networks of transport yards, sea ports, airports, intermodal terminals, warehouses and customer distribution systems. Austroads found generating interest from industry for its urban freight improvement project very challenging, because individual freight operators believe there’s little they can do to make a difference, while for their customers freight is only a small business cost.

Yet there’s plenty of examples around the world that may inspire action here.

  • Singapore is leading the way with Big Data networks. To optimise every mile of road on their small heavily populated island, the Land Transport Authority has smart sensors installed everywhere to collect transactional real-time movement information which is shared at a rate of 400 million downloads per month. They aim to enable mobility on demand services via driverless vehicles, sharing and electrification services while doubling its rail network to reduce reliance on privately-owned vehicles. What impact on collaborative freight management will this open source information sharing platform have?
  • With no room to expand, Hamburg Port optimises its infrastructure by connecting IoT sensors to collect and share data with all port stakeholders via mobile devices. Real-time delay updates prevent more widespread disruption within and outside the port. Smart sensors communicate truck parking availability; connect multimodal interfaces between ship, road, rail and movable bridges; and connect truck drivers to traffic lights to prioritise cargo movements.
  • The US state of Iowa’s Department of Transport conducted a supply chain design model for all products moving in the State at a zip code level using bill of lading data in a massive public and private sector data gathering and analysis exercise. Finding a clear need to better consolidate freight, with a private partner it’s developing the Cedar Rapids Logistics Park with intermodal cross-dock rail/river/highway access which will return a benefit of US$26.53 for every dollar invested.

Disruptors are coming from outside the transport industry, blindsiding traditional players. Partnerships with and between outsiders such as Google, UBER and Tesla abound, moving smart/shared concepts forward using technology. Amazon is building its own logistics business, buying branded truck trailers, leasing freight aircraft and building warehouses (opening 23 globally in Q3 2016 alone) to “control its own destiny” as well as serve other retailers and consumers. Even within the traditional players, disruption is underway. Deutsche Post DHL now makes its own electric vehicles enabled by open automotive standards, bypassing auto-makers to deal directly with their suppliers to build new tailor-made delivery EVs that they may even sell to other logistics providers.

Freight’s intelligent future

Future freight transport is automated, connected, shared, safe and clean. It’s all about data. Epic advances in volume and speed to generate, process and store data will fundamentally change goods movement.

Data overload and digital fatigue already hold back many from embracing new analytical capabilities that can create value for customers. Yet it’s riskier to do nothing or use Digital simply to protect existing business models.

We can continue to work around inefficiencies we see in the freight transport system every day, or join with progressive people to embrace an ITS future. To solve systemic challenges, we can do more together than we can alone.

 

#cleantransport

Shipping’s Growing Carbon Gap

sinking_container_ship

On the face of it, Shipping is the most efficient of freight transport modes. Intermodal shipping containers kick-started rapid growth in trade globalisation 60 years ago, and container ships, tankers and bulk carriers have been getting bigger ever since. Carrying more freight with less fuel on a tonne-mile basis, shipping has the highest energy productivity of all transport modes.

Yet looks can be deceiving. While international shipping contributes 2.4% of global greenhouse gas emissions, business-as-usual could see this explode to a whopping 18% by 2050. As trade growth increases demand, today’s fleet burns the dirtiest transport fuels, and a new report shows the market doesn’t reward ship owners who invest in the latest fuel- and carbon-efficient technologies.

When you consider the scale of the sector’s emission reductions that need to start now to contribute to the COP 21 Paris Agreement target of 1.5°C to 2°C global warming, there’s clearly an enormous decarbonisation gap that threatens to strand shipping assets in a nightmare of devaluations if potential regulatory policies come into play. Current freight flow stoppages due to Hanjin Shipping’s bankruptcy show the disruption shipping company failures can cause.

Markets don’t reward efficiency

The UCL Energy Institute report paints a sad 10-year picture of free-market myopia that finds the latest fuel efficient ships have no better market performance in terms of revenue or usage than vessels with decades-old technologies.

So why wouldn’t cheaper-to-run ships be used more than old ones? Well, today’s record-high shipping capacity drives a low freight rate market, so owners of highly efficient ships must match reduced market rates while passing on fuel savings to charterers, who get the win-win all to themselves.

OK, with fuel prices low the past few years I can understand fuel efficiency has less profile now, but back when capacity was less, charter rates higher and fuel through the roof the report shows it still didn’t seem to get much consideration from charterers. And operating speeds were found to be slower for the more efficient ships, when I would’ve thought the opposite. If fuel cost is barely being considered, maybe its significance in vessel operating cost structures isn’t as big as you’d think, especially in the charterers’ or cargo-owners’ total end-to-end cargo delivery costs.

Market inaction breeds future risks

Shipping customers doom themselves to higher costs over the long term by not incentivising efficient newbuilds and retrofits now.

Current regulation such as the Energy Efficiency Design Index will take forever to have much effect, so if the International Maritime Organisation can’t show improvement in the industry then a UN/State/regional-level carbon price may be forced upon it.

The RightShip GHG Emissions Rating system aims to fix information barriers but the information’s importance needs to influence charterers so they demand GHG ratings or validated fuel efficiency numbers from owners before contracting. Charterers and brokers need to understand the value/net benefit in whole-of-contract-life cost terms, and clearly now only Cargill, BHP Billiton, Rio Tinto and others who use the RightShip ratings system do.

But do these customers actually pay a premium for the good GHG Rating ships they’re using? Their market power allows them to screw rates down as well as anybody. Given GHG Rating users handle 20% of world trade, the report shows no benefit is flowing through to ship owners in better rates or utilisation, leaving little incentive for new fuel efficiency investments or substandard vessels to leave the market.

Who will lead change?

Community expectations to close the decarbonisation gap will come to bear on shipping from governments, investors and from within.

While further regulation may be justified, a mandatory efficiency standard will be difficult to apply to old vessels. Ultimately it might take a carbon price passed directly to charterers supported by voluntary Energy Efficiency Operational Indicator and Existing Vessel Design Index measures with in-service validation and benchmarking to force and help charterers change their decision-making.

Investors increasingly vote with their wallets to make boards respond to green preferences that are rationally based on financial sustainability and managing risks in a zero carbon future.

Owners of efficient ships must better promote their value proposition that reduces costs, positions for green demand and lowers regulatory risk for customers and the industry. Cargo owners, charterers, brokers, ports, banks, industry associations, suppliers and employees can all influence fuel efficiency improvements in the shipping fleet.

The oversupply of ships that helped take down industry giant Hanjin Shipping can only be fixed by scrapping old inefficient vessels, and the shipping market must take the lead now for its long term benefit.

Clean road transport game plan

Enjoyed reading Prime Mover magazine’s recent sustainability report series. Signing the COP21 Paris accord certainly does accelerate the need for a commercial road transport industry game plan to lead Australian business and government policy responses or we’ll be left wondering what happened post-2020. The language has changed: “low carbon” ambitions of last century are obsolete; specific, measurable “zero carbon” goals are in.

With an old truck fleet averaging 14+ years of age, half our technology is last century too. Fuel is such a critical and volatile cost; why the lack of fleet renewal in Australia? Especially when new fuel-efficient trucks promise substantial operating cost savings and liquid capital markets offer the cheapest interest rates in memory. Perhaps it’s the difficulty accessing capital when thin profit margins produce long paybacks on capital intensive equipment?

To help operators buy new trucks, government funds are available from the Clean Energy Finance Corporation and the Emissions Reduction Fund, but there’s been little take-up. If these programs don’t suit the industry, we need to understand what policies will work and advocate accordingly. Without effective government assistance we’ll continue falling further behind the rest of the world. Reducing fuel tax credits for trucks over 13 years old and using the money saved to help operators buy new trucks is a great idea.  

The US SuperTruck program shows the critical role government can play, not only in R&D but also supporting market adoption of new technologies at scale. The USA has many policies that may work here: fuel efficiency standards; standards for renewable and low carbon fuels; vouchers to help buy efficient trucks; co-investment in alternative fuel infrastructure and vehicle technology; and a Smartway partnership between government and industry that tests, benchmarks and informs operators on green transport technologies, so successful there’s now similar programs in Europe, Asia and Brazil. Meanwhile the enormous carbon reductions possible through biodiesel use in Australia have previously been constrained by perverse government policies. While Scania and Volvo show biofuel blends all the way up to B100 are technically viable, fuel tax credits only apply up to a B20 blend limit.

The commercial road transport industry needs targets. Aviation is the first transport sector to set a global goal, aiming for carbon-neutral growth after 2020. Key to this is a target of 1.5% fuel efficiency improvement each year, currently being over-achieved at 2.9% p.a. While emerging technologies featured in Prime Mover’s report may help a clean energy transition in the future, fuel efficiency remains the best action we can take now using current technologies. Key to this will be using the growing daily flood of data coming from each modern truck.

Transport is Australia’s largest energy user, so action in the road freight sector will be critical to achieving the Paris COP21 zero carbon goals. Doubling energy productivity, using clean fuels and offsetting residual emissions is the way forward. Carbon neutral engine oil is a brilliant start; zero carbon transport is the new goal. Making it happen, to use Prime Mover’s June editorial theme, is now the challenge. Creating a game plan with the industry’s green and clean solutions for input to the 2017 Australian climate policy review, rather than taking the policies we’re given, will take collaboration and leadership, and the time to start is now.