Australia has its first carbon neutral trucking company! Congratulations to Transforce Bulk Haulage in Dubbo who achieved this feat by saving fuel to reduce their carbon footprint then buying carbon credits to offset the remaining emissions.
So what’s stopping other transport firms from going carbon neutral?
Market Incentives & Barriers
Any emissions reductions need to be profitable to motivate action. According to Carbon War Room, heavy trucking can achieve huge emissions reductions using simple technologies with proven savings that are available today. Yet there are three formidable market barriers to get over:
- access to capital for high upfront costs;
- good information operators can trust;
- principal-agent split incentive problem, where in a fragmented industry often those with incentive to save fuel don’t have the cash or the control. This can occur where prime movers and trailers have different owners, where fleets are leased, where freight companies hire sub-contractors, and where customers contract dedicated trucking services with operators paying for fuel.
Shipping also has cost-effective measures to reduce emissions available now. A DNV report points to 16 technical and 8 operational measures, as well as adopting alternative fuels such as biodiesel and LNG. Similar market barriers apply for Shipping as for Trucking. For both transport modes, shippers appear to be at the heart of environmental improvements, for freight owners are more likely to have the power as well as the appetite to pursue environmental improvements above basic regulatory compliance.
There is no single solution to finding a cheap clean diesel alternative. Emissions regulations and oil price volatility will encourage the switch from diesel to a mix of cleaner fuels that need increasingly costly and complex equipment.
For the maritime industry the viability of LNG and biofuels has a longer time horizon than for Trucking, which has its challenges to overcome. As it is, Shipping will struggle with the low sulphur fuel mandate in 2015 due to insufficient refining capacity to make the cleaner grade. Biofuel refining capacity is far below what the shipping industry would need to make the switch.
Sharing better information on fuel- and carbon-efficiency opportunities will help break down barriers, especially when this improves transparency at an organisational or even a vehicle level. Here are some current initiatives:
- The Green Freight Europe program addresses the information barrier in Trucking through collaborative learning, reporting and comparative benchmarking
- Carbon War Room has a shipping efficiency website which rates 60,000 existing ships on their specific fuel efficiency performance, enabling benchmarking against like vessels.
- Three major shippers are choosing only to charter the most fuel efficient ships available in a demonstration to ship owners that the market will reward investments in sustainable fleets. Such environmental leadership is supported by a vessel fuel efficiency ratings system that uses reliable data from a respected technical specialist.
Measuring emissions to improve the bottom line, reduce risk and discover competitive advantage is a developing science. The ‘art’ of good information sharing may lie in real-time data by company – or by vessel, vehicle or aircraft – so that full supply chain awareness of Carbon Efficiency and Carbon Productivity become the mantra throughout all transport modes.
Accessing Funds to Invest
Trusting good information is important but the key to widespread adoption of fuel efficient technologies and clean fuels is funding the up-front costs.
How can we better link those with cash and the desire to save environmental resources, with those who want to save money but have little capital to invest in improvements? Carbon pricing on Transport helps the business case to finance fuel efficiency improvements, and incorporating carbon offsets helps even more, as Transforce Bulk Haulage has shown.
One maritime proposal wants a new bunker levy to contribute to an international fund so that ship emissions above set reduction targets can be offset by purchasing carbon credits. But who wants another fuel levy that may only be passed along the supply chain anyway?
New developments in California may point the way for Road Transport. Clean Mobility Centres embrace alternative fuels and enable drivers to offset the carbon emissions from their fuel purchases at the pump. Offset dollars go to the Carbon Fund Foundation to directly fund clean air projects.
What if we could offset Transport’s greenhouse gas emissions at the point of sale for all goods and services? Just like booking an airline seat where you choose to pay a little extra to offset your share of the flight’s emissions, imagine if you could offset the transport emissions of any delivery or purchase?
Imagine creating a clear transactional link between the consumer or organisation at the end of a supply chain and the transport operator needing funds to invest in fuel saving measures with economic as well as environmental benefits. It might work like this:
- consumer chooses to offset the transport component of the emission profile of any goods purchase by paying a bit extra
- that offset spend goes to a Transport-specific carbon finance fund
- the fund is accessed by transport operators to finance precisely measured emission reduction projects with real financial paybacks
- a strong transparent measurement methodology where integrity of data is key underpins emission reduction valuations for the consumer (investor) and transport operator
- web, mobile and social media technologies enable ‘one click carbon offsetting’ as well as ‘real-time climate friendliness’ tracking of personal emissions savings to inform consumers
Yes – It’s Possible
Transport operators need better access to capital so they can make fuel- and carbon-saving investments, and operators, their customers and ultimately consumers must be able to have faith in the integrity of the emissions savings. Challenging, yes, but the unleashing of such incredible capital liquidity through ‘one click carbon offsetting at point of sale’ may generate huge Transport footprint reductions.
Look at what Transforce has achieved with its fleet of 11 trucks in regional NSW through fuel savings measures that save them money, supplemented with carbon offsets to neutralise their footprint. Yet it’s a question of immense scale to ask:
How can this approach be expanded throughout the mosaic of Australian supply chains?