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 CO2e 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 Copyright ©2018 Neste. Use for Neste and Neste designated recipients only. No redistribution. 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 (2015) 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