Alternative Fuels: Reducing Emissions in the Transport Sector - Integretrans
May 31st, 2024

Alternative Fuels: Reducing Emissions in the Transport Sector

Climate change is one of the biggest challenges facing the world today. Scientists confirm that it is real and primarily driven by human activity. A warming climate brings numerous environmental and social challenges, including biodiversity loss, more frequent natural disasters, health issues related to rising temperatures, dwindling food and water resources, intensified human migration, and many other problems.

Various measures are being taken to mitigate climate change at both the global and EU levels. These range from the Paris Agreement, which aims to limit temperature increases to 1.5°C above pre-industrial levels, to the recently adopted Corporate Sustainability Reporting Directive (CSRD). These initiatives encourage states and businesses with significant environmental and social impacts to view sustainability as a strategic priority and to implement measures that address the most critical sustainability issues and reduce negative impacts.

The nature of the transport sector’s activities makes climate change and reducing greenhouse gas (GHG) emissions the most significant sustainability issue. The transport sector is currently estimated to be the world’s second-largest source of GHG emissions (Climate Watch, 2023).

Reducing Emissions: Strategic Value for Business

While each step in reducing GHG emissions significantly contributes to societal and environmental well-being by mitigating climate change and its consequences, a strategic perspective on GHG emission reduction, viewed through the lens of risks and opportunities, enables transport companies to assess its importance for business survival and competitive advantage, both now and in the future.

Implementing a decarbonization strategy can provide several benefits:

  • Reduce operating costs by enhancing operational efficiency, implementing innovations, and optimizing routes.
  • Create a competitive advantage by offering customers less polluting freight transportation solutions.
  • Increase stakeholder satisfaction by meeting the expectations of investors, customers, employees, the public, and others.
  • Improve the brand’s reputation and employer image, enhancing the company’s market value.

Conversely, failing to reduce GHG emissions can turn these potential advantages into disadvantages, presenting challenges in attracting customers, investors, and employees, and maintaining a reliable business reputation in the market.

Decarbonization Levers in the Logistics Sector

Reducing GHG emissions in the transport sector offers a diverse range of available solutions. The primary decarbonization levers cover a spectrum of strategies and technologies, including electric cars and hybrid vehicles, alternative fuels, logistics optimization, route planning (including intermodal solutions), smart technologies, telematics systems, autonomous vehicles, promotion of economical driving and driver education, financing of relevant technologies and tools, incentive systems, and comprehensive accounting and reporting measures.

Selecting specific decarbonization levers to reduce GHG emissions depends on several factors: the required and feasible investments, potential operating costs, legal requirements and financial incentive mechanisms, customer demands, infrastructure availability, company activities, existing sustainability strategies and obligations, and various other determinants that influence how each business prioritizes decarbonization efforts.

Alternative Fuels

Looking through our perspective and the potential we already see in the market, we want to focus more on the choice of alternative fuels and the challenges that come along with this choice.

Alternative fuels also referred to as unconventional and advanced fuels, encompass fuel types derived from sources other than petroleum. These include a diverse range of energy types and sources suitable for the transport sector, such as electric energy, hydrogen gas, compressed and liquefied natural gas, synthetic fuel, and paraffin fuel. The primary objective of alternative fuels is to reduce the use of fossil fuels and help minimize the amount of carbon dioxide and other GHG emissions from the transportation sector.

While it’s impossible to entirely eliminate lower or higher indirect emissions (in the well-to-tank category) regardless of the alternative fuel chosen, opting for electricity and/or hydrogen as clean fuels enables the reduction of direct emissions (in the tank-to-wheel category) to zero.

Furthermore, various other types of alternative fuels, depending on their composition, combustion efficiency, and other properties, can significantly decrease GHG emissions. Among these, biodiesel stands out as a popular option, derived from vegetable oils or animal fats, and can serve as a substitute for traditional diesel fuel. Another promising substitute is HVO (hydrogenated vegetable oil) fuel, known for its higher energy efficiency and lower emissions. Additionally, BioLNG (bio-derived liquefied natural gas) presents a viable transition option, derived from organic waste and boasting lower emissions compared to conventional natural gas.

Challenges in Integrating Alternative Fuels

Loreta Dainytė-Bužinskė, head of the sustainability and quality department, discusses the challenges faced when assessing options for adopting and integrating alternative fuels. “Integrating alternative fuel solutions demands meticulous groundwork, beginning with selecting the most suitable fuel type—a decision influenced by various interdependent factors. Among these factors, financial costs are the most important. Comparing fuel prices across various types, gas stations, and even countries or regions presents a significant challenge itself, but this is only the tip of the iceberg. It’s imperative to thoroughly evaluate all components contributing to the final cost of transitioning to cleaner fuels. This includes assessing the fuel type’s efficiency, the necessity for additional equipment or even new vehicles, potential increases in vehicle servicing and maintenance expenses, alterations to the vehicle’s lifespan, insurance-related adjustments, and potential tax benefits.”

Loreta emphasizes that in addition to the mentioned direct sources that determine the price, infrastructure issues are no less important. This includes whether the supply network for a certain type of fuel is geographically conveniently located and covers the needs, and also whether these fuel supply sources guarantee that their alternative fuel is safe, has approved technologies, and provides the required quantities at the filling station. Even climatic conditions can influence the choice; for example, at low temperatures (~-30°C), the density of biodiesel can change and damage the tractor engine. In addition to all this, it is important to be well acquainted with the current legal environment (e.g., the Fit for 55 package) governing existing and potential restrictions on diesel-powered vehicles, as well as current and anticipated subsidies and incentives for using alternative fuel solutions.

The third, equally crucial aspect relates to the value proposition for customers. Currently, cleaner fuel sources are a more expensive alternative to diesel-powered vehicles in many regions, so the provision of less polluting transportation services is possible only based on a mutual agreement between the customer and the carrier. Once this decision is made, ensuring that specific transports for particular customers are conducted using the chosen alternative fuel type becomes imperative, with the accurate systematization of information and provision of evidence.

As Loreta concludes, “The adoption of alternative fuels inevitably demands updates and adjustments across nearly all key operational processes of the organization. Therefore, embracing this path of decarbonization undoubtedly represents a strategic decision for the organization, reshaping fundamental principles of the business model and sending a clear signal to the market.”

Prospects in the Transport Sector

While emission-reducing solutions to optimize operations and enhance efficiency can yield positive results, their potential is limited. Furthermore, infrastructure-related challenges hinder the swift electrification of fleets. In light of these limitations, the adoption of alternative fuels such as biodiesel, HVO fuel, and BioLNG emerges as a key strategy to mitigate GHG emissions—a direction both stakeholders and ourselves are focused on.

Pressure from customers, international regulations, and the urgency of addressing climate change demand immediate action. With this perspective in mind, we anticipate the transport sector market, along with its associated infrastructure, to respond to these needs. The future promises to be dynamic, marked by rapid changes and expansions in supply to meet the ever-increasing demand. We are thrilled to be part of this journey and to contribute to creating a more sustainable future.

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