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Truckmakers must speed into action to meet zero emissions rules

Carbon Tracker says most HDV manufacturers used less than 1% of vehicle production capacity to produce zero-emissions trucks and buses in 2023 © AP Photo/dapd/Nigel Treblin
Carbon Tracker says most HDV manufacturers used less than 1% of vehicle production capacity to produce zero-emissions trucks and buses in 2023 © AP Photo/dapd/Nigel Treblin

Legislators are demanding emissions cuts, but only 2% of new heavy-duty vehicles manufactured in 2023 globally were zero emissions

Manufacturers of heavy-duty vehicles, including trucks and buses, are “unaligned” with zero-emissions targets due to a failure to embrace electrification, a report by UK-based think-tank Carbon Tracker says. 

To keep pace with the International Energy Agency’s net zero emissions by 2050 scenario, Carbon Tracker estimates 13mn zero-emissions HDVs need to be deployed globally between 2024 and 2035. Yet, in 2023, only around 2 per cent of new HDVs produced globally were zero emissions, equating to fewer than 100,000 vehicles, Carbon Tracker adds.

A single diesel truck driving in Europe burns 450,000 litres of fuel during its lifetime, the same as 30 cars, says Brussels-based think-tank Transport and Environment. It adds that 97.2 per cent of HDV sales are currently diesel.

Carbon Tracker finds that despite only making up around 3 per cent of vehicles on the road, HDVs contribute to around 30 per cent of emissions from road transport. 

In 2023, most HDV manufacturers used less than 1 per cent of vehicle production capacity to produce zero-emissions trucks and buses, says Carbon Tracker’s report. Researchers analysed production by eight HDV manufacturers, which cover around half of global HDV production and sales.

Chinese electric vehicle manufacturer BYD leads in zero-emissions HDV manufacturing, with EVs accounting for 100 per cent of its global production in 2023. For all other companies in Carbon Tracker’s analysis, zero-emissions vehicles, which are generally considered to be battery electric, plug-in hybrid electric, or powered by hydrogen fuel cells, made up a fraction of HDV manufacturing in 2023.

Zero-emissions HDVs accounted for a mere 1 per cent of Swedish company Volvo and American company Paccar’s global manufacturing in 2023.

Germany-headquartered Traton manufactured 0.8 per cent of its total HDVs as zero emissions in 2023, and both Daimler Truck (German) and Iveco (Italian) manufactured 0.5 per cent.

Indian company Tata manufactured 0.4 per cent as a proportion of overall production, while Japanese firm Hino lagged behind with none of its manufacturing being zero-emissions HDVs in 2023.

Short and long-term plans

While some of the companies assessed have net zero targets in place for 2040 and 2050, HDV manufacturers are also failing to establish interim emissions targets, which is “not conducive to a credible and joined up emissions reduction strategy”, Carbon Tracker says.

None of the eight manufacturers assessed by the non-profit had short-term emissions reduction targets in place, including BYD.

For long-term targets leading up to 2050, Carbon Tracker rates three of the manufacturers’ targets as “poor” (Paccar, Tata and Hino) and one of the manufacturers as “average” (BYD), with only four manufacturers having “good” targets.

HDV manufacturers risk missing out on a significant “opportunity for revenue growth” by failing to embrace electrification, Carbon Tracker says. They also risk internal-combustion engine trucks becoming “stranded assets” as legislators force HDV manufacturers to increase their climate ambition, adds the think-tank.

Tighter emissions rules

The EU has introduced legislation that will require HDVs to reduce their emissions. The CO₂ emission performance standards for new HDVs, agreed by the European parliament at the end of January 2024, subjects HDVs to increasing emissions reduction targets.

If the proposed standards are formally adopted by the parliament and European Council, new HDVs sold in the EU will need to reduce their carbon dioxide emissions by 15 per cent by 2025, 45 per cent by 2030, 65 per cent by 2035 and 90 per cent by 2040, respectively, compared with 2019 levels. Manufacturers will face fines for failing to fulfil these requirements.

“There’s no alternative to meeting these targets,” T&E freight team manager Fedor Unterlohner tells Sustainable Views.

An April report from T&E also outlines how HDV manufacturers will be subject to the Corporate Sustainability Reporting Directive, which requires annual disclosure of a variety of sustainability factors including Scope 1, 2 and 3 emissions. Large EU companies with more than 500 employees began data collection this year and will be required to publish their first CSRD-aligned reports, including their Scope 3 emissions, in 2025.

T&E calculates that 99.8 per cent of truckmakers’ total emissions come from Scope 3 emissions, generated after the point of sale.

Further, in March, the US Environmental Protection Agency introduced stronger standards to reduce emissions from HDVs, starting with model year 2027. The standards require vehicle manufacturers to increase the percentage of vehicles they produce that are zero emissions, with the share varying according to the vehicle type. The standards can be met through increasing combustion engine efficiencies, producing plug-in hybrid electric or battery EVs.

The EPA estimates that the final rule will result in net greenhouse gas emissions reductions of 1bn tonnes between 2027 and 2055.

On April 24, the White House also announced $72mn for investment in a “supertruck: charged” scheme, which it says will expand “vehicle-to-grid charging” infrastructure for electric trucks.

The UK government has a target for all new heavy goods vehicles sold in the country to be zero emissions at the tailpipe by 2040, covering electric and hydrogen vehicles.

Lack of supporting infrastructure

Volvo says it is aiming for zero-emissions vehicles (electric and hydrogen-powered trucks) to make up 50 per cent of new vehicle sales by 2030 and 100 per cent by 2040. But “the purchasing of zero-emissions vehicles is increasing too slowly”, a spokesperson tells Sustainable Views.

“To speed up the number of zero-emissions vehicles on the roads, governments and private companies must put the necessary enabling conditions in place. This includes charging and biofuel infrastructure and CO₂ differentiated road taxes,” they add.

The other companies featured in Carbon Tracker’s analysis did not respond to Sustainable Views’ request for comment.

European Automobile Manufacturers Association director-general Sigrid de Vries said in a January statement, following the EU’s announcement of its vehicle emissions standards, that the infrastructure for the industry’s transition is lacking. Along with charging infrastructure de Vries recommended “comprehensive carbon pricing schemes, and meaningful support measures for transport operators to invest quickly”. Zero-emissions vehicles alone will not guarantee the switch, she said.

Sarah Lane, managing director of investor Denham Capital’s sustainable infrastructure team, agrees “a lack of supporting infrastructure” remains a significant barrier to a fully electrified road transport system. Private capital can play a role in supporting this infrastructure, but until now investors have primarily focused on domestic EVs where there is “a clear use case and demand”, she tells Sustainable Views

“Electrification for trucks and buses is at an earlier stage of the development curve, and challenges such as range and weight concerns for electrified HGVs must be overcome to strengthen the investment case at this part of the value chain,” adds Lane. 

Jamie Hamilton, partner with consultancy Deloitte’s automotive team, tells Sustainable Views that a key way of accelerating charging infrastructure would be for governments to establish a “convening power to bring together energy companies, infrastructure providers” and incentivise investment.

Shift is ‘already happening’

Unterlohner remains optimistic that legislation is driving truckmakers to make the switch to zero-emissions vehicles. “We are just at the beginning of a quite dynamic and probably quite dramatic S curve,” he says. 

“If you look at what truckmakers have officially announced that they’re planning to do, it is pretty mind blowing,” he says. “European truckmakers have essentially said that over 60 per cent of their truck sales in 2030 will be zero emissions — predominantly electric, a little bit of hydrogen as well”.

Improvements in battery technologies to reduce their weight is driving this progress, along with electric refuelling, which makes the total cost of ownership of electric trucks much cheaper than diesel alternatives, he adds.

Lane suggests that incentivisation schemes from governments could drive investment towards electrifying HDVs.

Unterlohner suggests policymakers could introduce a number of measures to incentivise the uptake of zero-emissions trucks in the short term, including reduced tolling costs, purchase subsidies and increasing the price of diesel vehicles. But, “in the long term, this needs to work without subsidies . . . and it should if we get the transition right”, he says.

A service from the Financial Times