Heavy-duty zero-emission vehicles: Pace and opportunities for a rapid global transition��CCAC HDV Hub Meeting

Tim Dallmann

The International Council on Clean Transportation

21 July 2022

Paris Agreement aligned CO₂ pathway is possible with accelerated global ZEV transition

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• Accelerated ZEV transition reduces CO₂ emissions 73% by 2050
• HDVs account for half of CO₂ mitigation potential and cumulative CO₂ reductions of 47.5 billion tonnes from 2020-2050
• Paris Agreement’s well below 2°C compatibility achieved under the scenario
• Simply transitioning new vehicle sales to ZEVs is not sufficient to align with a 1.5° C pathway

Battery electric and fuel cell electric are the only technologies with potential for near-zero GHG emissions

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Lifecycle GHG emissions from a 12-tonne truck in 2021 (left) and 2035 (right) in the EU (preliminary results)

To align with Paris Agreement goals of well-below 2ºC, HD ZEV sales should rise to 45% by 2030 and 100% no later than 2040

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• Pace of transition varies by HDV segment
• Greater ambition needed for segments where ZEV technologies and market are more advanced

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Zero-emission HDVs will have significant global health benefits

• Exposure to air pollution from transportation tailpipe emissions was associated with 385,000 premature deaths in 2015 and costs to society of nearly 1 trillion USD per year
• Among G20 economies, actions to ensure that all new HDVs are either ultra-low or zero-emission could avoid 3 million premature deaths through 2050, equivalent to 5 trillion USD in health benefits. The magnitude of these benefits would be even greater with accelerated ZEV transitions.
• Diesel HDVs are one of the largest sources of PM_2.5 exposure disparity in urban areas

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Common characteristics of first-mover HDV segments

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Suitable duty cycle

• Predictable route and low variability

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Dedicated parking

• Guaranteed charging spots

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Return-to-base operations

• Depot charging

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A number of HDV segments are poised for early ZEV adoption and more ambitious targets

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Private sector engagement and innovative business models facilitate HD ZEV uptake

• Private-public partnerships
• Alternative business and ownership modes:
• separation of fleet operations from ownership
• leasing model
• Service provision of vehicles/infrastructure
• “Turnkey solution”

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Effective design of policies in five key areas can accelerate the transition

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1. Target-setting
2. Regulation
3. Incentives
4. Infrastructure
5. Fleet purchase requirements

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Effective target-setting designs

• Align targets with climate goals
• Make targets legally binding
• Set clear targets to avoid ambiguity.
• Set more ambitious targets in first mover segments (buses, delivery vehicles, etc.)

HDV truck phase-out targets around the world (through Dec 2021)

Effective ZEV regulation designs

Annual ZEV sales targets in California’s Advanced Clean Trucks regulation, 2024-2035

Source: Buysse, Claire, and Ben Sharpe. (2020) “California’s Advanced Clean Trucks Regulation: Sales Requirements for Zero-Emission Heavy-Duty Trucks,” 10. https://theicct.org/publications/california-hdv-ev-update-jul2020

• Design technology forcing regulations
• Allowances, flexibilities, or credits have the potential to significantly weaken a regulation’s impact and should be used judiciously
• ZEV regulations are the most straightforward way to guarantee market availability of ZEV models.
• Long-term targets provide manufacturers certainty and time to invest

Effective incentive policy designs

Purchase subsidies for HD ZEVs in California

• Scale subsidies to close the gap in cost parity
• Revenue-neutral incentive programs help accelerate cost parity as well as pay for incentive programs.
• Incentive levels should be reviewed and revised regularly to reflect changes in the cost parity gap

Effective infrastructure policy designs

• Governments should develop infrastructure roadmaps
• Set policies to drive and incentivize private sector infrastructure investment
• Public sector investment should be focused strategically where most needed

Map of the TEN-T network in Europe

Effective fleet purchase requirement designs

Preliminary HD-ZEV phase-in schedule for private and federal fleets in California’s Advanced Clean Fleets regulation

• Design demand policies to ideally create more demand than supply side policies create supply
• Rapidly transition public fleets to zero-emission vehicles.
• Put more onus on larger fleets to lead the transition

Transition status to zero-emission HDVs in emerging markets and developing economies (EMDEs)

• Many EMDEs are prioritizing bus electrification
• E-bus fleet: 30-fold growth for selected EMDEs in 2017-2020
• Market readiness: varies by region or country
• Less-ready: lack of strategy, deployment, awareness
• More-ready: sizeable uptake, strategies, active e-bus projects, e.g., some Latin American countries

Key barriers to HD ZEV transitions

• Inconsistent priorities among stakeholders: creation of common strategy
• Imports of low-cost, high-emitting used vehicles
• High import duties for e-buses
• Inadequate fiscal and financing mechanisms
• Expensive and unreliable electricity, and lack of charging infrastructure
• Disincentives for ZEV deployment, e.g., subsidies for fossil fuel
• Lack of interest among international manufacturers to invest in small markets
• Lack of technical expertise for deployment and maintenance of electric HDVs and infrastructure
• Lack of awareness for e-buses among stakeholders and the public

International support areas

• Prioritize support & adapting business models for specific HDV segments: country/city specific, e.g., BRT, midi-bus, minibus, microbus, freight/truck
• Improve ZEV cost-competitiveness: through financial support (short-term) and building supply chain capability (long run)
• Explore effective fiscal incentive programs: e.g., e-bus and electricity purchase subsidies/rebates, tax benefits for e-truck projects investment
• Form trade agreements to waive/reduce import duties: related to zero-emission HDVs and infrastructure

Regional and international collaboration

• A business ecosystem to unite all relevant stakeholders to work together
• Coalitions to inform ZEV benefits to stakeholders and public
• Share knowledge and technology and provide technical training: policy framework, local production, business model, retrofitting, financing, awareness campaigns, technical skills, pilot projects
• Information sharing on the details of successful case studies
• Regionally integrate targets and procurements: create larger market demand to attract suppliers and investors
• Help form international collaborations: establish production plants, infrastructure, R&D centers

Summary and key recommendations

• The ZEV share of HDV sales in leading markets should rise to 45% by 2030, and 100% no later than 2040 to align with Paris Agreement goals.
• First-mover segments—urban buses, urban delivery vehicles and short-haul tractor trailers—will have ample ZE products and favorable economics to support accelerated deployment
• Effective policy design can accelerate the HD ZEV transition:
• Adopt Paris-aligned HD ZEV sales targets: 45% by 2030 and 100% by 2040
• Design legally-binding regulations that mandate sales of HD ZEVs
• Provide purchase and in-use incentives to close the current gap in cost
• Lead infrastructure development and coordinate infrastructure investments
• Require fleets to purchase HD ZEVs to drive market demand

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Thanks!