The landscape of fleet sustainability is undergoing rapid transformation, driven by stringent new emissions regulations and the increasing complexity of clean technology adoption. As highlighted in the latest State of Sustainable Fleets report, the past two years have brought significant changes, creating both confusion and opportunity for fleet operators. Nate Springer, Vice President of Market Development at TRC Companies, aptly notes, “It is exciting to see the numerous new partnerships, investments, and innovations that industry and government are forging to put sustainable solutions into the hands of fleets today while laying the groundwork for tomorrow’s ever greater adoption of clean technologies.” This sentiment underscores the dynamic nature of the industry and the collaborative efforts pushing it forward.
The preceding year witnessed an unprecedented influx of $32 billion in state and federal funding aimed at assisting fleets in their sustainability transitions. Simultaneously, the availability of renewable diesel and renewable natural gas reached record levels, providing viable near-term solutions. Furthermore, innovative partnerships between utilities and fleets, novel depot and leasing models, and technologies leveraging existing natural gas infrastructure emerged, signaling a wave of innovations designed to tackle the challenges of charging infrastructure and fuel availability.
Drew Cullen, Senior Vice President of Fuels and Facility Services at Penske Transportation Solutions, emphasizes the multifaceted challenges facing fleets today: “Fleets today are faced with a myriad of challenges in their continual pursuit of reducing the environmental impact of their operations. The complexity of options, investment requirements, and the promise of continued technology improvements only adds to fleet planning uncertainty. The 2024 State of Sustainable Fleets report is a tremendous resource for fleets to evaluate the range of options available and under development as they advance their strategy to meet and exceed sustainability goals.” Penske Transportation Solutions recognizes the critical need for clarity and informed decision-making in this evolving sector, and resources like the State of Sustainable Fleets report become invaluable tools for navigating the complexities.
Key Findings from the 2024 State of Sustainable Fleets Report
The 2024 brief provides essential clarity on market developments concerning renewable fuels and electricity, coupled with diesel, near-zero, and zero-emission vehicles. Here are some pivotal findings that fleets need to consider:
Efficiency Technology and Diminishing Returns
A significant portion of fleets, specifically 63% in the annual survey, who have already invested in efficiency technologies and practices, anticipate reduced returns on further investments in this area. This suggests that while efficiency measures remain important, fleets are increasingly looking towards more transformative solutions like alternative fuels and zero-emission vehicles to achieve substantial sustainability gains.
Renewable Diesel Surges in Popularity
Renewable diesel (RD) experienced a remarkable 68% increase in consumption in 2023 compared to the previous year. This surge is largely attributed to favorable carbon credit markets that have enabled RD to reach price parity with conventional diesel in many regions. This makes renewable diesel an attractive and readily available option for fleets seeking immediate reductions in their carbon footprint without significant infrastructure changes.
Biodiesel Price Reduction
The price of B20, the highest blend of biodiesel commonly used, saw a 9% decrease, falling to $3.25 per diesel gallon equivalent (DGE). This price reduction enhances the economic appeal of biodiesel blends as a sustainable fuel alternative, further diversifying the options for fleets aiming to reduce emissions.
Compressed Natural Gas Offers Economic Advantages
The retail price of compressed natural gas (CNG) averaged 50% less than diesel in 2023, settling at $3.04/DGE. This substantial price difference positions CNG as a highly cost-effective fuel, particularly when coupled with the increasing availability of renewable natural gas.
Renewable Natural Gas Adoption on the Rise
Fleets utilizing CNG are increasingly incorporating renewable natural gas (RNG) into their fuel mix. On average, fleets using CNG met 70% of their fueling needs with RNG, as reported in the State of Sustainable Fleets survey. This signifies a strong commitment to reducing greenhouse gas emissions, as RNG offers significantly lower carbon intensity compared to fossil natural gas.
RNG Infrastructure Expansion
The RNG sector witnessed substantial growth in infrastructure, with over 150 new production facilities opening in 2023. Furthermore, a robust pipeline of at least 300 additional RNG projects is underway, indicating continued expansion and increasing availability of this renewable fuel source.
Improved Carbon Intensity of RNG
The carbon intensity of RNG in California’s Low Carbon Fuel Standard market improved by 21% between 2022 and the first three quarters of 2023. This improvement further strengthens the environmental benefits of RNG, making it an even more compelling option for fleets operating in regions with carbon reduction mandates.
Advancements in Natural Gas Engine Technology
2024 marks the beginning of production for a lighter and more powerful 15-liter natural gas engine. This technological advancement is expected to broaden the applicability of natural gas vehicles across various fleet segments and drive significant growth in natural gas vehicle sales. Penske Transportation Solutions, with its expertise in vehicle maintenance and fleet operations, will likely play a key role in supporting the adoption of these advanced natural gas vehicles.
Innovative Charging Solutions with Natural Gas
Natural gas-fueled linear generators have begun operations to provide charging solutions for battery-electric Class 8 trucks. This innovative approach addresses the charging infrastructure challenges associated with electric vehicles, particularly for heavy-duty applications, by leveraging the existing natural gas infrastructure.
Battery Electric Vehicle Adoption Doubles
The adoption of battery electric vehicles (BEVs) experienced a surge, with over 26,000 electric buses, trucks, and vans delivered in 2023. This represents a doubling of BEV deliveries compared to 2022, demonstrating the accelerating momentum towards vehicle electrification.
Commercial Vans and Pickups Lead BEV Adoption
Commercial cargo vans and pickup trucks constituted the majority, 90%, of all BEV deliveries in 2023. Notably, two manufacturers, Ford and Rivian, dominated 95% of this segment, highlighting the current market concentration in light-duty electric commercial vehicles.
BEV Penetration Still Low Among Early Adopters
Despite the growth in BEV deliveries, electric vehicles still represent a small fraction, only 1-2%, of the total vehicle count in early adopter fleets surveyed. However, a strong majority, 90%, of these early adopters anticipate increasing their BEV usage in the future, signaling a positive long-term trend for electric vehicle adoption.
Expansion of Charging Infrastructure and Leasing Models
Significant progress was made in expanding charging infrastructure dedicated to fleets. Multiple fleet-dedicated charging depots opened or were under construction in 2023. Concurrently, numerous providers announced leasing and “as a service” models for vehicles and charging solutions, reducing upfront investment barriers for fleets considering electrification. Penske Transportation Solutions is at the forefront of offering comprehensive fleet solutions, which include guidance on charging infrastructure and the integration of electric vehicles into fleet operations.
Hydrogen Hub Investments
The U.S. Department of Energy’s (DOE) historic allocation of $7 billion will fund seven proposed hydrogen fuel production and distribution hubs across 16 states. This substantial investment underscores the long-term potential of hydrogen as a clean fuel and the commitment to building out the necessary infrastructure.
Hydrogen Price Volatility
The average retail price of hydrogen in 2023 nearly doubled from mid-2022 levels, reaching as high as $36/kg in California. This price volatility and relatively high cost remain a barrier to widespread hydrogen adoption, highlighting the need for further cost reductions and infrastructure development.
Propane Autogas Remains Economical
Propane autogas averaged $1.71 per GGE for private retail fueling, the most common approach for fleets. This is significantly lower than the average price of gasoline at public stations, which was $3.58 per gallon. Propane autogas continues to offer a cost-effective alternative fuel option for fleets, particularly in applications where infrastructure compatibility and range are important considerations.
Conclusion: Navigating the Sustainable Fleet Transition with Penske Transportation Solutions
The 2024 State of Sustainable Fleets Market Brief serves as an indispensable resource for fleets navigating the complexities of sustainable transportation. As Drew Cullen from Penske Transportation Solutions points out, understanding the available options and anticipating future developments is crucial for effective fleet planning. The report underscores that while challenges persist, particularly in areas like charging infrastructure and the upfront costs of zero-emission technologies, significant progress is being made across various sustainable fuel and vehicle technologies.
For fleets seeking to develop and implement robust sustainability strategies, partnering with experienced providers like Penske Transportation Solutions can be a strategic advantage. Penske’s expertise in fleet management, vehicle maintenance, and emerging technologies positions them as a valuable partner in navigating this evolving landscape. By leveraging insights from reports like the State of Sustainable Fleets and collaborating with industry leaders like Penske Transportation Solutions, fleets can confidently advance their sustainability goals and contribute to a cleaner transportation future.
