While the current technology landscape supports the decarbonization of light-commercial vehicles and medium-duty trucks, significant investment in other solutions, such as the hydrogen economy, will be necessary to put heavy-duty trucks and long-haul fleets on the path towards net-zero. In this installment of our Pathways to decarbonization series, we explore abatement strategies industry players can take both now and into the future to meet emission reduction targets.
The state of play
The transport sector emits 7.7 gigatons CO2 per year, of which heavy duty trucks alone account for 1.8 gigatons—or 4% of global CO2 emissions.1 This places a heavy responsibility on the sector to decarbonize. Yet this hard-to-abate sector faces a range of challenges on its pathway to decarbonization. The size and scale of the industry, along with supply chain limitations in filling orders, constrain its ability to change. Limited financing and insufficient regulatory incentives make it difficult for original equipment manufacturers to continue extracting value from traditional business models while simultaneously developing alternative technologies. Additionally, the renewable electricity capacity required for these alternative technologies may take significant time and investment to develop, and the charging and fueling infrastructure for a switch to battery and hydrogen technologies lacks the standardization needed to cover entire road networks.
Beyond these challenges, complex value chains make it extremely difficult to determine CO2 emissions on a comparable basis. Legal and consumer pressures to track and report may force action in the future, but current frameworks are not sufficient. Additionally, inertia may heighten resistance in moving to newer technology, particularly in developing countries.
The way forward
To overcome these obstacles, the heavy road transport industry should consider a phased approach to decarbonization. In the near to medium term, optimizing routes and transport networks, along with electrifying short haul fleets, are likely to be the highest-impact solutions in markets that have supportive policies and incentives. While hydrogen-powered fuel cell electric vehicles (FCEV) may be critical to support decarbonization for longer distances, the technology cycle has not yet reached the point of mass production. As a result, in certain developing geographies, transition fuels, such as biodiesel and synthetics, are expected to play an important role. Success in first-mover regions may also strengthen the business case for low-emission technologies. This may act as a catalyst for the market expansion of vehicle component technologies and enable the flow of innovations across geographies.
In conjunction with technological advancement in vehicle development, charging infrastructure and availability of renewable energy should be scaled up significantly. Cross-functional collaboration between key ecosystem players may drive the pace of transition to help create a win-win situation while mitigating investment risks.
Read the full report to learn more about Deloitte’s recommendations.
About Pathways to decarbonization
The Pathways to decarbonization series is a collection of insights on the challenges, opportunities, and viable decarbonization pathways for high-emitting and hard-to-abate sectors. Each of the sector perspectives offers a foundational starting point for leaders who would like to better understand the landscape across these critical sectors.
Explore “Recommendations” below for more in-depth transport and climate-related reports.