Building Prosperity into the Future of Trucking
Submitted by Transition Accelerator
A World In Transition
World economies are positioning themselves for success in the emerging low-carbon future. The value chains that will power our future economy are being set up today, and global leaders—including in Canada—are looking to seize the opportunities created by this change.
All sectors are transitioning, and the trucking sector is no exception. It is one of the foundations of our economy, moving 78% of all goods in this country. So, to position our economy for success, the sector needs to be cost competitive and zero emissions—and the trucking industry shouldn’t be expected to do this on their own.
More Certainty Than Uncertainty
The good news is we know far more about zero-emission truck technologies than we did even a few years ago. While battery electric trucks hold promise for the light-duty, medium-duty, and short-haul heavy freight sectors, there is an emerging consensus that hydrogen trucks will be the zero-emission solution for long-haul, heavy-duty freight.
Hydrogen trucks are well suited to the realities of Canada’s trucking sector, offering greater range, larger payloads, better cold-weather performance, and shorter refueling times.
A Peterbilt truck retro-fit to run hydrogen-diesel dual fuel. Photo Credit: Mark Lea-Wilson
Past and ongoing pilot projects like the AZETEC project have increased our collective understanding of hydrogen truck technologies and their best use cases. The challenge now is getting the economics to work by scaling up the hydrogen value chain.
A Pathway to the Future
A strong hydrogen value chain is necessary to make hydrogen truck adoption economically viable, and this has two components: risk management and profitability. Every link in the value chain needs low enough risk and high enough profit because a single weak link can break the chain and leave trucks unable to operate.
The Hydrogen Value Chain
To succeed, the hydrogen value chain must address the needs of all stakeholders—those producing and delivering hydrogen, fueling stations, truck manufacturers, service providers and ultimately the end user: trucking companies. Today, the hydrogen value chain is not economically viable.
The problem is that everything in the hydrogen value chain is new, expensive, and not widely available: the trucks, the fueling stations, the production equipment, and so on.
We know that producing and using hydrogen at scale will bring costs down, but currently, the market is not investing in scaling up the hydrogen value chain.
We won’t achieve economic viability without a plan.
The Minimum Viable Corridor as a Solution
We can’t scale up the whole hydrogen value chain across Canada in one go. Instead, we should aim for the smallest scale that can approach economic viability in a carefully selected corridor where the ingredients for success exist. Then look for ways to bridge gaps to meet the needs of each link in the hydrogen value chain, making the corridor viable.
This can be done with a Minimum Viable Corridor that consists of a few fueling stations and a few hundred trucks operating in full commercial service along a single freight corridor, enabled by supporting services such as service bays, technicians, and spare parts. The Minimum Viable Corridor is held together by contracts that lock down key components like price and availability of hydrogen, amount of hydrogen consumed, leasing costs for trucks, availability of maintenance and spare parts, truck performance, and so on.
The Transition Accelerator has developed a Minimum Viable Corridor framework through extensive analysis and deep engagement with stakeholders in the trucking and hydrogen supply sectors. Preliminary findings indicate a successful Minimum Viable Corridor would meet these requirements:
Risk Management
Trucking Company needs
· Guaranteed availability of hydrogen at a price that is competitive with diesel
· Four or five-year leasing of trucks that meet the performance needs (150,000+ km/yr, heavy loads, rapid refueling, long ranges, etc)
· Guaranteed annual costs that are competitive with diesel trucks (maintenance, insurance, etc)
· Recognized branding to differentiate those operating hydrogen trucks
Truck Manufacturer needs
· Access to leasing arrangements for hundreds of vehicles over a 10-year period
· A value chain poised for success with cost-effective hydrogen, a supportive regulatory regime, and supports for maintenance, insurance, drivers, etc
· Engagement with customers to continue to understand their preferences
· Access to a market with growth potential
Hydrogen Fuel Supply Company needs
· Guaranteed 10-year fuel demand to justify investments and access financing
· Access to incentives for low carbon hydrogen production, delivery, and dispensing equipment
· Certainty of and access to GHG credits for low carbon hydrogen supply
· Access to a market with growth potential
Scale Needed for an Economically Viable Corridor
· Number of trucks increases annually so at least 200 are in commercial operation by year five
· Each truck travels150,000–200,000 km/yr on 300–400 km long corridor
· Truck fleet consumes 3,000–4,000 t H2 per year
· Three hydrogen fueling stations each deliver 4 to 6 t H2/day
· Hydrogen is dispensed at a competitive price to diesel (about $8/kg)
These are just preliminary findings which, by their nature, we expect to change. But they can serve as a starting point for deeper conversations with those serious about transitioning.
Demonstrating a heavy-duty fuel cell electric truck during an event organized by AMTA. Photo Credit: Mark Lea-Wilson
Building a Minimum Viable Corridor
Fortunately, the steps to building a minimum viable corridor aren’t that complicated. First, we need to continue advancing discussions with trucking companies to better articulate their needs and co-develop a shared vision of a minimum viable corridor: identifying candidate corridors, potential fueling locations, potential truck suppliers, and so on. Then, with support from transparent, independent analysis, build out a robust, credible plan to seek out corridor partners, funders, and policy support.
The corridor can’t be built overnight. The first year would see the one or two fueling stations built and a few dozen trucks ordered. In the following years, more trucks would be added each year, and another fueling station or two.
Premier Smith at a hydrogen fueling station announcement near Edmonton. Photo Credit: Mark Lea-Wilson
Public and private funding are both needed, but a Minimum Viable Corridor optimizes investments and maximizes chances of economic success. And the burden isn’t that great.
Modelling has shown that the magnitude of public investment to transition the heavy-duty trucking sector is less than the amount of carbon tax that is currently being paid by the sector. If public funding is used strategically, the investment from trucking companies would be no more than what they are already investing in trucks, fuel, and operations.
A successful Minimum Viable Corridor can set the sector up for future successes. It will build confidence in zero-emission truck technologies and unlock more corridors, further improving Canada’s competitive position in a low-carbon future.
We know what we need to do. Let’s get this transition into gear.