Go Green with Your Fleet Overnight How Sustainable Diesel Alternatives Are Impacting the Way Fleets Operate

Go Green with Your Fleet Overnight How sustainable diesel alternatives are impacting the way fleets operate

Climate change is an ongoing topic that attracts heated discussions, headlines news stories and challenges government policies. The public’s growing understanding and demands for more efficient solutions are fueling a shift in corporate attitudes, especially about ways to reduce greenhouse gases (GHG)—a major source of our planet’s increasing warmth.1

In response, nearly half of Fortune 500 companies have at least one climate- or clean- energy-related target.2 Some of these companies, with Google, Wal-Mart and Bank of America leading the way, intend to operate with 100 percent renewable energy.3

In the United States, transportation is the primary source of GHG emissions from burning fuel for cars, trucks, ships, trains and planes.4 More than 90 percent of the fuel used for transportation is petroleum based, including conventional diesel.5

Neste MY | Go Green with Your Fleet Overnight: How sustainable diesel alternatives are impacting the way fleets operate 1 Transportation Emits Most Greenhouse Gases

Because transportation plays a major role in GHG emissions, it has prompted the U.S. Environmental Protection Agency to develop a three-phase GHG and fuel-efficiency mandate scheduled for full implementation by 2027. Fleet operators in the public and private sectors will have to comply, so it’s clear why many are intensifying their search for alternative fuels. But what are their options?

4% 2% 5% Transportation

8% Industrial

Electricity Generation (In State)

8% 39% Electricity Generation (Imports)

Agriculture

11% Commercial and Residential

High-Global-Warming Potential Gases

Recycling and Waste 23%

Source: California Air Resources Board

Battery-powered electric vehicles grab much of the media’s attention, but heavy-trucks are much more expensive than those with conventional internal combustion powertrains, and a network of recharging stations along highways remains to be built. Cleaner-burning compressed fuel, like natural gas and propane, require modifications to trucks and investment in specialized storage and refueling equipment. And though cleaner burning, they are still fossil fuels and contribute to increasing levels of carbon dioxide in the atmosphere.

Alternative fuels are becoming easier to adopt and more affordable. To make their trucks greener, fleet operators will need to embrace these new technologies while increasing the efficiency of their current resources.

Neste MY | Go Green with Your Fleet Overnight: How sustainable diesel alternatives are impacting the way fleets operate 2 Carbon Intensities Per Mile6

Calculating the Full Cost of Fuel

The most accurate way to evaluate the cost and environmental impact of a fuel is to

calculate its carbon intensity (CI). This is a measure of the amount of GHG (CO2e) generated for every unit of energy produced. Measuring every fuel in the same units provides a consistent baseline for comparison.

Alternative Transportation Fuel Carbon Intensities Per Mile6

Calculated using industry-standard vehicle efficiency coefficients to represent real-world applications.

2000.0 1907.6 1848.9 1850.2 1802.7 1805.3 1800.0 1763.9 1770.0

1645.6 1600.0 1587.6 1587.6 1588.0 1581.9 1582.4 1582.9

1400.0 1280.7 1200.0 1121.8

1000.0 941.0 877.9 893.5 833.2 778.5 787.3 799.8 800.0 744.8 729.8 715.2 692.4

617.5 636.2 600.0 WTW g Mile COe 444.4 400.4 410.4 400.0 318.1

200.0

0.0

Soy B5 Fish Fat Soy B20 Midwest Texas Mix US AverageEast CoastGulf Coast Florida Mix Alaska Mix Central Mix NA Tallow CARB Diesel Midwest Mix NortheastCalifornia MixNorthwest MixSouthwest Mix Mix Southeast Mix Used Cooking Oil Global Animal Fat US Avg Natural Gas US Avg Natural Gas Technical Corn Oil Rocky MountainsHawaiian Mix Islands Mix NA Shale Natural Gas NA Shale Natural Gas West Coast (inc. HI, AK) H2 from NA Natural Gas NA Conventional Natural Gas Great Lakes, Mid-Atlantic Mix NA Conventional Natural Gas Petroleum diesel Electricity Hydrogen CNG LNG Renewable for transportation diesel

Electricity generation sources are region-dependent. Some areas with a high concentration of renewable sources can have an energy production CI that is lower than diesel, but producing equivalent power in other areas can be more than twice as polluting.

Other alternatives, like compressed natural gas (CNG) and liquefied natural gas (LNG), can have a lower CI value, which means less pollution is made while producing these options. However, for a fleet owner, there are other considerations.

Each of these non-diesel alternatives has a price tag for which fleet operators must budget. These costs can include purchasing new vehicles, installing charging stations, building CNG/LNG fueling stations, converting existing vehicles, or retraining and certifying maintenance personnel.

Neste MY | Go Green with Your Fleet Overnight: How sustainable diesel alternatives are impacting the way fleets operate 3 At the Pump: Expect Higher Prices

Diesel prices hover close to $3.35 a gallon—nearly 54 cents a gallon higher than this time last year.7 These rising prices, combined with the growing pressure to invest in environmentally friendly alternative fuels and technologies, mean that fleet managers will need to find new ways to better manage, if not reduce, fuel spend while still operating efficiently.

How Much Diesel Prices Might Increase

$8.00

$6.00

$4.00

$2.00 Price per Gallon Price

$0.00 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Diesel, Mid-Demand Case Diesel, Low Price (Low Demand) Case

Diesel, High Price (High Demand) Case

Source: California Energy Commission Source: California Energy Commission

Neste MY | Go Green with Your Fleet Overnight: How sustainable diesel alternatives are impacting the way fleets operate 4 Fleets in Service Today— and for Years to Come

Trucks have a long life cycle, so diesel-powered vehicles in current fleets should still be on the road in 2030 and beyond.8 These trucks can be converted to run on alternative fuels. Making the switch, however, means fleet owners will need to invest millions of dollars to modify or replace trucks that have internal combustion engines.

Even if fleets make that commitment, billions more dollars are needed to build the infrastructure to recharge or refuel vehicles running on batteries or alternatives fuels—which could take decades.

Gradual Fleet Turnover

Projected life span of diesel-powered trucks on the road today:

Class 8 Class 7 (long-haul tractor-trailers moving (service vehicles moving several 80,000 to 200,000 miles a year) times a day within a city)

5 to 7 years 20 or more years

Source: Revised Transportation Energy Demand Forecast 2018, California Air Resources Board

Neste MY | Go Green with Your Fleet Overnight: How sustainable diesel alternatives are impacting the way fleets operate 5 Handling the Truth About Fuel Cost

In California, the primary U.S. market for alternative fuels for Class 8 trucks and other heavy-duty vehicles, fuel prices are already higher than that of other states due to taxes and regulations.9 And prices are predicted to reach or exceed $4 per gallon in 2019.10 What’s more, diesel prices in California could reach between $6 and $7 per gallon during the next decade.11

In addition, the state committed to “remove as much carbon dioxide from the atmosphere as it emits” by 2045.12 How fleets respond is critical to California achieving its carbon neutrality goal, because the transportation sector is the single biggest contributor of GHG, nitrogen oxide (NOx) and diesel particulate matter (DPM) emissions into the atmosphere.

All of these environmental and monetary concerns are what’s driving fleet operators in their search for fuel options, especially choices that can green up a fleet immediately. The most popular are noted below:

1. Rightsizing to replace older vehicles with more fuel-efficient trucks 2. Converting to alternative fuels such as biodiesel, CNG, LPG and electricity

Both approaches can help fleet operators quickly achieve business goals, but some alternative fuels require significant new investment to modify existing trucks or purchase

Neste MY | Go Green with Your Fleet Overnight: How sustainable diesel alternatives are impacting the way fleets operate 6 new vehicles. Invest in Renewable Diesel for the Long Haul

Most Class 8 and heavy-duty trucks burn conventional CARB (ULSD) petroleum diesel. While it’s a hydrocarbon fuel that meets the ASTM-D975 standard, petroleum diesel contains aromatics that do not combust easily. In turn, engine oil is contaminated, injectors become fouled and DPM filters clog.

One alternative fuel available right now is renewable diesel, which is proven to burn cleanly and to reduce maintenance costs and requires no change to a fleet’s existing vehicles or infrastructure.

Renewable diesel is a non-petroleum hydrocarbon fuel made from 100 percent renewable raw materials, including animal and plant waste. Unlike conventional refining of petroleum diesel, the bio-based feedstocks and a specialized refining process ensure that renewable diesel has none of the aromatics and impurities that can damage engine parts.

For fleets seeking a fast route to clean and efficient operations, renewable diesel can provide a carbon intensity up to 80 percent lower than fossil diesel usage. The impact on emissions is immediate.

Switch one average Class 8 truck (65,000 annual miles, 5 mpg) to renewable diesel for one year and produce:

86 fewer metric tons of GHG over that period The same GHG reduction as taking 21 passenger cars off the road

Burns cleanly Carb Renewable Reduces maintenance costs Requires no change to a fleet’s existing Diesel BioDiesel Diesel vehicles or infrastructure

Neste MY | Go Green with Your Fleet Overnight: How sustainable diesel alternatives are impacting the way fleets operate 7

CARB (ULSD) Renewable Diesel VS Diesel Diesel Trucks: The Least-Expensive Class 8 Option

Projected tractor-trailer prices for California make diesel power a financially attractive choice now and into the future, compared to alternative fuel technologies:

$225,000

$200,000

$175,000

$150,000

$125,000

$100,000 2015 2020 2025 2030

Diesel Catenary Electric Hydrogen Compressed Natural Gas Liqueﬁed Natural Gas

Source: California EnergySource: Commission California Energy Commission

Neste MY | Go Green with Your Fleet Overnight: How sustainable diesel alternatives are impacting the way fleets operate 8 Carb Renewable Diesel BioDiesel Diesel

CARB Diesel and Renewable Diesel: What’s the Difference?

When it comes to choosing a fuel to power their vehicles, fleet managers have plenty of options; however, not all fuels are created equal. See how the two fuel types stack up:

CARB (ULSD) Renewable Diesel VS Diesel What is it? Conventional, petroleum-based Premium-quality, non-petroleum hydrocarbon fuel approved for use hydrocarbon fuel made from 100 in California by the California Air percent renewable raw materials. Resources Board (CARB). Every molecule in renewable diesel Meets ASTM-D975 standard for is found in CARB diesel; can be diesel fuel oils. swapped into vehicles with no change in infrastructure.

Meets ASTM-D975 standard for diesel fuel oils.

System Maintenance Contains aromatics, which do not Contains no aromatics or impurities, combust as easily as paraffins. allowing fuel to combust with maximum efficiency while decreasing Incomplete combustion products the frequency of injector maintenance contaminate oil, foul injectors and and DPF regenerations. clog diesel particulate filters (DPF).

Shelf Life Can be stored for about 12 months at Can be stored for long periods of time an ambient temperature of 68°F. in proper conditions with no change in quality.

Environmental Impact Generates nitrogen oxide (NOx),* Generates lower total hydrocarbons, which can increase the risk of lower methane and lower respiratory conditions non-methane hydrocarbons, as well as lower NOx in pre-2010 engines.*

*Engine-out emissions

Neste MY | Go Green with Your Fleet Overnight: How sustainable diesel alternatives are impacting the way fleets operate 9 Why Fleet Managers Trust Renewable Diesel

Performance matters. With a cetane number ranging from 75 to 85, renewable diesel combusts more readily than petroleum diesel, which has a cetane number from 42 to 52. The result: better throttle response, quicker cold-starts, quieter operation and less soot production. No new investment. Renewable diesel can be poured straight into an existing fuel tank or mixed in the tank with petroleum diesel already available at a fleet’s home base or refueling centers along the route. Nearly zero impurities that can contaminate oil, foul fuel injectors and plug DPF. This quality lowers maintenance costs and roadside delays for DPF regenerations.

Renewable Diesel Adds Up to Reduced Costs

There are many choices when it comes to going green with a fleet, but in terms of simplicity, operational impact, and cost to switch, there is only one that wins hands down.

Renewable diesel is the proven alternative to fossil diesel. For example, Neste sold its one billionth gallon of Neste MY Renewable Diesel™ in California in 2018. Increasingly, fleets rely on the performance of cleaner renewable diesel to power Class 8 trucks on day trips and on longer runs across the state with the largest population in the nation. Throughout California, fleets also deliver critical municipal services with renewable diesel in fire trucks, garbage trucks, buses and other locally driven vehicles.

The quickest impact fleets can make now and the biggest change to cleaner and efficient operations over the long haul is to switch from petroleum diesel to renewable diesel.

Neste MY | Go Green with Your Fleet Overnight: How sustainable diesel alternatives are impacting the way fleets operate 10

“ Renewable diesel boasts the same engine performance as CARB diesel and biodiesel but requires less system maintenance, offers a longer shelf life and produces less environmental impact. With Neste MY Renewable Diesel, fleet managers no longer need to choose between performance and sustainability; they can optimize performance while lowering their maintenance costs and doing their part to clear the air.”

MATT LEUCK, RENEWABLE DIESEL FUEL TECHNICAL MANAGER NESTE U.S., INC.

About Neste

Neste creates sustainable solutions for transport, business and consumer needs. Our wide range of renewable products enable our customers to reduce climate emissions. We are the world’s largest producer of renewable diesel refined from waste and residues, introducing renewable solutions also to the aviation and plastics industries. We are also a technologically advanced refiner of high-quality oil products. We want to be a reliable partner with widely valued expertise, research and sustainable operations.

Sources

1 U.S. Environmental Protection Agency, “Sources of Greenhouse Gas Emissions,” https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions (accessed November 30, 2018). 2 Hiroko Tabuchi, “With Government in Retreat, Companies Step Up on Emissions,” The New York Times, https://www.nytimes.com/2017/04/25/climate/with-government-in-retreat-companies-step-up-on-emissions.html (accessed December 3, 2018). 3 Ibid. 4 U.S. Environmental Protection Agency, “Sources of Greenhouse Gas Emissions,” https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions (accessed November 30, 2018). 5 Ibid. 6 BSR, “Future of Fuels: Fuel Tool v1.2.1,” August 2018, https://www.bsr.org/en/collaboration/groups/future-of-fuels (accessed April 9, 2019). 7 U.S. Energy Information Administration Independent Statistics and Analysis, “Petroleum & Other Liquids,” October 29, 2018, https://www.eia.gov/petroleum/gasdiesel (accessed October 30, 2018). 8 California Energy Commission, “Transportation Energy Demand Forecast 2018-2030,” Revised April 19, 2018, https://efiling.energy.ca.gov/getdocument.aspx?tn=223241 (accessed October 30, 2018). 9 Ibid. 10 Ibid. 11 Ibid. 12 Brittany Shoot, “The World’s Fifth-Largest Economy, California, Just Committed to 100% Carbon-Free Power by 2045,” Fortune, September 10, 2018, http://fortune.com/2018/09/10/california-governor-carbon-free-power-energy (accessed December 4, 2018).

Neste MY | Go Green with Your Fleet Overnight: How sustainable diesel alternatives are impacting the way fleets operate 11