Oil and Gas

Trucks drive through the energy-efficiency policy gap

Anjli Raval
Trucks loading with goods leave the port in New Jersey.
Justin Solomon | CNBC

The world's leading energy body is calling for countries to do more to regulate heavy goods vehicles and trucks, which have lagged behind cars in improving fuel efficiency and reducing carbon dioxide emissions.

In a report the International Energy Agency said there was a policy gap in legislation for so-called road freight transport — spanning lorries carrying industrial goods to supermarket trucks and vans delivering packages from online retailers.

Only four countries have energy-efficiency standards for heavy duty transport, compared with about 40 countries that have similar rules for cars and smaller passenger vehicles, the IEA said.

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"The volumes of oil consumed and carbon emissions given out by these vehicles is huge, but policy attention has been very little," said Fatih Birol, executive director of the Paris-based body."

Energy security and environmental protection for many countries is of utmost importance, so steps need to be taken to put oil demand from trucks and other large vehicles under control," he added.

The research comes amid increasing concerns, particularly from big consumer countries, about reliance on foreign oil to fuel economic growth.

There is also a mounting push to reduce air pollution that is suffocating urban populations and a worldwide drive to curb greenhouse gas emissions to stave off the worst effects of climate change.

The trucking sector, which historically has been tightly linked with economic growth, accounts for almost a fifth of global oil demand — about 17m barrels a day. This is propelled largely by the US, the EU, China and increasingly from India, the IEA said.

As big guzzlers of diesel, the dirty fuel on which these heavy vehicles run, they make up a third of all transport-related carbon emissions.

Should no action be taken, oil demand from road freight transport is forecast to grow 5m barrels a day by 2050, or about 40 per cent of the projected increase in global oil demand in that period.

This growth is expected to lead to a significant increase in carbon dioxide emissions of nearly 900m tonnes through 2050, or about the same level as from coal use in the power and industry sectors.

The global initiative to curb emissions together with a buzz around electric cars and other cleaner technologies has driven debate among international energy companies and industry analysts about when oil demand will peak.

Opec producers, including kingpin Saudi Arabia, that have been forced to contend with those warning of looming declines in oil consumption will face another challenge should global governments take on the IEA's instructions.

"While the IEA still does not see a peak in oil demand in the near future, with trucks continuing to drive consumption, this growth needs to be managed. The world needs to reckon with this reality. Trucks are the next frontier," said Mr Birol.

Linda Giesecke, a US-based analyst at consultancy Wood Mackenzie, said the US was among the four countries with government-imposed fuel efficiency standards for heavy trucks. "The global focus, meanwhile, has been on cars; only now is this changing," she said.

She said the transportation sector had already been adopting new technologies to improve fuel usage and cut emissions, but a policy push by governments would only give this shift momentum.

"Even so, it will take years to see a material impact on oil demand growth and emissions. It always takes a while for the vehicle fleet to turn over," Ms Giesecke said.

Among its recommendations, the IEA said better data gathering could create efficiencies through improved logistics and systems operations, optimised routing and fuel economy.

Improvements to the existing trucking fleet could also be made, from better aerodynamics and the use of lightweight materials to low rolling resistance tyres and technologies to cut idling.

Ultimately, a push towards alternative fuels such as natural gas, biofuels, electricity and hydrogen would be necessary to drastically cut fuel use, carbon dioxide and pollutant emissions.

David Buckby, an economist at the consultancy Transport Intelligence, said whether governments made new policy on the trucking sector would depend on cost.

"Developed countries will be early adopters of these technologies, but should costs fall sufficiently then fast-growing emerging economies, that are expected to drive oil demand in the coming years, may also adopt them," Mr Buckby said.

Rod McKenzie at the UK's Road Haulage Association, a trade body, said even in industrialised economies cost pressures were acute. Greater regulation for trucks could put many smaller companies out of business.

"For the government to say 'upgrade every vehicle in your fleet', would cost such a lot of money. Companies operate on small profit margins, so it's a massive outlay," he said.

"Given that 85 per cent of the goods in your home have been transported on a lorry, the scale of what you're asking for cannot be underestimated," he added. "Companies are trying to improve fuel efficiency, but there is only so much we can do. There are no such things as petrol lorries."

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