A roadmap for decarbonising the global road freight industry

03 February 2021 Consultancy.eu 5 min. read

The global road freight sector will need to cut its CO2 emissions by 60% by 2050 in order to meet Paris Climate Agreement targets. In a new report, Shell and Deloitte have laid out a roadmap to cut the industry's footprint.

The report was prepared by researchers from Shell and Deloitte in the Netherlands and the UK. Data from the International Energy Agency (IEA) was used for a current status report on the global road freight sector, while a survey of more than 150 industry executives and experts from 22 countries helped chart the way forward.

The backdrop is an urgent climate crisis, and an international call to keep global warming within 2-degree limit by 2050 – per the Paris Climate Agreement of 2015. The accord also targets net zero carbon emissions from life and business by the same deadline.

A roadmap for decarbonising the global road freight industry

A backbone of the global economy: road freight transports necessities and key products around the world, particularly to remote areas. Unfortunately, the industry also falls into what Monitor Deloitte and Shell label “harder-to-abate” sectors, where emissions are historically high and a challenge to reduce.

“These sectors share common characteristics, such as long asset lifespans, high energy dependency and complexity of electrification. As a result, decarbonisation of these industries will be slower, more investment-intensive and more technically demanding than other sectors,” explained Rajeev Chopra, Global Leader for Energy, Resources & Industrials at Deloitte.

As it stands, road freight contributes 9% of global CO2 emissions – higher than any other harder-to-abate sector including cement, iron & steel, chemicals, shipping and aviation. What’s worrying is that these numbers are on the rise. In fact, the research shows that road freight emissions could jump a staggering 60% by 2050 – if the current trajectory persists.

Global road freight volume and emissions

Multilateral global pressure aside, the road freight industry also faces outcry from consumers, employees and increasingly regulators – as climate change climbs rapidly up the corporate agenda. The only way forward is to decarbonise the industry.

For Paris Climate Agreement targets to be satisfied, Deloitte and Shell peg the required emission cut for road freight at 60% by 2050 – starting with a 30% cut by the end of this decade. A more reflective metric: a heavy 80% plus cut is required to emission intensity – the volume of carbon emissions weighed against a sector’s GDP contribution. 

The question remains of how to make such a substantial cut in a sector where emissions are so hard to abate. Indeed, the current figures are actually the product of years of decarbonisation, driven by strategic regulatory interventions on engine design such as the step-by-step upgrade from Euro I engines in 2000 to Euro V or VI models that now power 60% of all trucks in Europe.

That being said, these initiatives appear to have run their course. In response to the survey among industry executives and experts, around 80% stated that regulatory incentives to curb road freight emissions are fragmented and ineffective as a result. Electrifying the fleet is the ideal option for the future, although many report that the technology here remains immature and lacking in scale and reliability.

Another challenge is a lack of clear decision-making roles about the future of road freight – home to myriad stakeholders with differing expectations and levels of pressure. Underlying all these challenges is the fundamental change required to assets and infrastructure in the sector to build and sustain low emission transport in the future.

Decarbonising road freight 

Per the report, this complex set of challenges will have to be tackled over a ten-year horizon. To kick off, more than a dozen initiatives must unfold in the short term – leading up to 2023. Some of these will lay the foundation for change: more policy structure for energy providers and equipment manufacturers, regulatory roadmaps, outlines for collaboration and consumer awareness.

Solutions Roadmap

Others are aimed at sparking a ‘snowball effect’ – exemplified by joint purchasing commitments, tech partnerships and other competitive ventures. Lastly, the immediate term needs some quick fixes for instant impact – such as building design efficiencies and deploying transition technologies, etc.

In the medium term – 2023 to 2028 – road freight will need more foundational changes such as cross-sector innovation, standards for charging electric vehicles, information access and further policy refinements. In the backdrop, ballooning green finance and new revenue models will create the desired snowball effect.

By 2030 at the latest, researchers expect many government emission targets to come into full effect and intensify. By this point, the focus should shift to sustaining low-emission transport in the long term – via new logistical models, better maintenance and scaled production. Following these tracks should produce a much more promising outlook for 2050 than currently prevails.

According to partner at Deloitte Netherlands Tarek Helmi, shifts away from the internal combustion engine will be key. “Despite the decarbonization barriers road freight leaders believe that a zero-emission technology pathway is emerging that includes both hydrogen and battery electric vehicles, with both starting to enter the global fleet at scale in the coming decade.”

The full 104-page report can be downloaded from the website of Shell. The joint research team was led by Alvaro Loyola from Shell and Tarek Helmi from Deloitte.