Whether you have a fleet of 500 vehicles or five, reports, research, and the touted results from utilizing alternative-fueled vehicles has probably made its way onto a fleet manager’s radar in some form or another. Here is an overview of the current state of alternative fuels and their status in the fleet industry.
Biodiesel’s physical properties are similar to those of petroleum diesel, but is a cleaner-burning alternative. Using biodiesel in place of petroleum diesel, especially in older vehicles, can reduce emissions, according to the Alternative Fuels Data Center (AFDC).
Biodiesel blends are being used by a wide variety of industries, including fleets and general consumers, because the fuel offers an easy, low-cost option to instantly “green” their fleets, according to Jennifer Weaver, OEM outreach & education specialist for the National Biodiesel Board (NBB). The NBB is a national trade association representing America’s first advanced biofuel.
“Because biodiesel blends can be used in any diesel engine without modification, fleets don’t have to make heavy investments in new vehicles, equipment, or fueling infrastructure, like they do with some other alternative-fuel options,” Weaver said. “This provides users with an overall low total cost of ownership with a biodiesel-powered fleet.”
Biodiesel is defined by the U.S. Environmental Protection Agency (EPA) as an advanced biofuel, meaning it is a renewable fuel with lifecycle greenhouse gas emissions (GHG) that are at least 50-percent less than diesel fuel emissions, according to the NBB.
Biodiesel has traditionally enjoyed its strongest use in the medium- and heavy-duty truck market, as well as the agriculture equipment market. According to the NBB, some of the key industries and market segments using biodiesel include utility companies; government and municipal fleets; package, food, and beverage delivery fleets; construction; agriculture and farming operations; underground mining; over-the-road trucking; and fleets operating in environmentally sensitive areas.
“The industry is also seeing strong growth in the use of biodiesel blends in light-duty passenger vehicles,” Weaver noted. “With 44 new clean diesel car, truck, and SUV models available now in the U.S., and more than 58 diesel models expected in North America by 2017, consumers now have more options than ever before for using clean, renewable biodiesel blends in their diesel vehicles.”
Biodiesel blends can be used in any diesel vehicle or engine, according to manufacturer recommendations. Biodiesel blends up to B-20 (20-percent biodiesel blended with 80-percent petroleum diesel) serve as a drop-in replacement for diesel fuel and, according to the NBB, operate seamlessly compared to diesel — offering the same kind of fuel economy, power, and performance of traditional diesel fuel.
“All major OEMs selling diesel equipment in the U.S. support the use of at least B-5 biodiesel blends, provided they are made with biodiesel meeting the industry’s strict quality standards specified by the American Society of Testing Materials (ASTM) D6751,” Weaver said. “In addition, more than 78 percent of U.S. manufacturers support B-20 or higher biodiesel blends in at least some of their equipment, and nearly 90 percent of the medium- and heavy-duty truck markets support B-20.”
Currently, biodiesel and biodiesel blends are available across the U.S. from approximately 2,000 public locations, including retailers, distributors, and truck stops. A mobile app from the NBB, “Biodiesel Now,” is a station locator application.
In existence for nearly 20 years, the biodiesel industry first started to really take off in 2005 when biodiesel production reached a high of 250 million gallons, according to Weaver. In 2013, the biodiesel industry reached a new production record of 1.8 billion gallons.
“The biodiesel industry vision is to replace 5 percent (or 1.88 billion gallons) of petroleum diesel use with biodiesel by 2015, and replace 10 percent (4 billion gallons) of petroleum diesel use with biodiesel by 2022,” Weaver added.
Cleaner Diesel Options
Diesel has a high energy content, according to the Diesel Technology Forum, a national, non-profit organization dedicated to raising awareness on diesel engines, fuel, and technology.
Virtually every mode of transportation — including medium- and heavy-duty trucks, passenger vehicles, buses, even rail, ships, and airplanes — can be powered by diesel. In addition, diesel provides the power for agricultural, construction, and mining equipment.
“More than 90 percent of all medium- and heavy-duty trucks are powered by diesel engines due to its fuel efficiency, power, and reliability,” according to Allen Schaeffer, executive director of the Diesel Technology Forum. “More than 80 percent of the freight in the U.S. and 90 percent of the world’s freight is moved by diesel power.”
While diesel has been considered a mainstream fuel for commercial vehicles and off-road machines and equipment since the 1950s, only in the past few years has it been viewed as a serious and competitive alternative to gasoline for passenger cars. According to Schaeffer, this has been due to new federal requirements for carbon dioxide emissions and fuel-efficiency standards.
“Today’s 44 vehicle choices are expected to increase to more than 60 in two years, with diesel engine options available in every class of vehicle,” according to Schaeffer. According to the U.S. Department of Energy (DOE) and others, diesels are likely to account for up to 10 percent of new vehicle sales by 2020. Today’s 22 vehicle choices is expected to more than double in two years, with diesel engine options available in every class of vehicle,” according to Schaeffer.
Schaeffer continued, “Because diesel fuel pumps are available at more than half of all existing service stations, access to diesel fuel is not an issue, particularly when the superior range performance of the vehicles is taken into consideration.”
Looking at the current state of the diesel fuel industry in the U.S., slightly more than 50 percent of all gasoline stations offer diesel fuel, and the number is steadily increasing.
“ExxonMobil, the world’s largest publicly traded international oil and gas company, predicts diesel will surpass gasoline as the No. 1 global transportation fuel by 2020, with diesel demand accounting for 70 percent of the growth for all transportation fuels through 2040,” according to Schaeffer. “Natural gas will remain only a small share of the global transportation fuel mix, at 4 percent by 2040, up from today’s 1 percent.”
Looking toward the future, Schaeffer said, “Diversification of fuels and technologies is in our future. But, one thing is clear. Virtually every U.S. and international energy and transportation agency has said that diesel will remain the overwhelming transportation energy source beyond 2050.”
Electrifying an Industry
Electricity can be used to power all-electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs). Using electricity to power vehicles can have significant energy security and emissions benefits, according to the AFDC.
A variety of industries, such as delivery, utility, and public sector fleets, have embraced vehicle electrification to reduce oil consumption and costs as well as meet sustainability goals.
In addition to the variety of industries turning to electric vehicles, a wider variety of vehicle options are becoming available. From the traditional passenger vehicles, such as the Nissan LEAF and Toyota Prius Plug-in, electric vehicles are now available up to Class 7 medium-duty trucks.
“By and large, the predominant application for electrification has been the passenger car. There are currently 14 sedans and compact electric vehicle models on the market in the U.S., with more to come,” said Ben Prochazka, director of strategic initiatives for the Electrification Coalition. “Over time, we expect to see electric SUVs, such as the Tesla Model X, as battery technology improves and costs decline.”
The Electrification Coalition is a not-for-profit group of business leaders committed to promoting policies and actions to facilitate the deployment of electric vehicles on a mass scale. The Coalition has examined a few fleets that are successfully electrifying their vehicles.
One example is the City of Houston, which estimates that its 27 Nissan LEAF EVs will save approximately $110,000 per year vs. using an internal combustion engine.
Additionally, the Pacific Gas & Electric (PG&E) fleet operates more than 40 EVs, including electric work site bucket trucks.
“As bucket trucks can idle several hours per day, traditional, combustion-engine bucket trucks can consume as much or more gasoline idling than when they are actually being driven,” according to Prochazka.
By electrifying PG&E’s bucket trucks, the company saved more than $700,000 on fuel in 2011 alone. An additional benefit PG&E has found is that the battery technology in electric bucket trucks provides a quieter atmosphere that reduces noise-related disturbances and enables workers to communicate better with one another.
“There is a strong economic case for incorporating electric vehicles into public and commercial fleets,” according to Prochazka. “Over time, we expect to see more industries reaping the benefits of vehicle electrification.”
Looking at infrastructure, most EVs (80-90 percent) are still being charged at the driver’s home, according to Prochazka, who noted that one of the great values of vehicle electrification is the ease of accessing the vehicle’s fuel: electricity.
“Although public charging is used less than charging at home, there is still a considerable need to increase public charging infrastructure for EVs,” Prochazka noted.
According to the charging station locator, PlugShare, there are more than 20,000 public charging stations in the United States (as of press time). These range from low voltage 120v (Level 1) charging stations that will provide about three miles of range per hour, to 220v (Level 2) charging stations that will provide six hours of range per hour, up to DC Fast Chargers that will add 60 miles of range in the same time.
“Charging station costs are declining with increased production. Likewise, the cost to install this infrastructure is coming down as more cities become familiar with the technology. A Level 1 charging station typically entails plugging it into an average home outlet, which incurs no additional cost unless a circuit is required for the electrical panel in order to increase capacity. Level 2 charging stations range in cost from $500-$3,500 and may require extensive installation costs depending on the site. While DC Fast Chargers vary from $16,000 to $50,000 depending on the amperage and intelligence of the station. Charging station costs are expected to continue to decline over the coming years,” according to Prochazka.
The charging infrastructure industry is growing and evolving with the continued success of the electric vehicle market. In the future, the charging technology could change in both form and function. For instance, inductive (or wireless) charging may take hold as a popular method for providing electricity to vehicles. This would significantly increase charging convenience; however, the efficiency of the technology must first improve and costs must decline for greater adoption.
Looking at the cost to “fuel” an electric vehicle, Prochazka noted that, compared to gasoline-powered vehicles, EVs have the benefit of a low-cost fuel.
“Electric vehicles cost, on average, 3 cents per mile to drive, whereas gasoline-powered vehicles cost 12 cents per mile. Another benefit is that electricity prices are more predictable and less volatile than gasoline prices. Whereas gasoline prices can fluctuate with unpredictable world events, electricity prices are expected to remain relatively stable in years to come,” Prochazka said.
Electric vehicles are not new to the market, and the recent resurgence, which dates back to late 2010, has done well in the U.S.
“Electric vehicle sales have far outpaced hybrid vehicle sales with twice as many EVs sold in the first years on the market compared to hybrids,” Prochazka said. “More than 180,000 plug-in electric vehicles (PEVs) have now been sold in the U.S. And, with more models arriving every year, we expect this market to grow considerably.”
What does the future have in store for electric vehicles? Navigant Consulting forecasts that 3 percent of global vehicle sales will be PEVs in 2020, with a 32 percent compounded annual growth rate from 2012-2020. Additionally, PricewaterhouseCoopers’ Autofacts projects that PEVs will be 2.3 percent of global and 2.8 percent of U.S. auto sales by 2019.
Growth of Renewable Fuels
Ethanol is a renewable fuel made from corn and other plant materials, collectively known as “biomass.” The use of ethanol is widespread — almost all gasoline in the U.S. contains ethanol in a low-level blend. Ethanol is also available as E-85 — a high-level ethanol blend — for use in flexible fuel vehicles, according to the AFDC.
Ethanol, as a vehicle fuel, is not a new concept. Henry Ford and other early automakers suspected it would be the world’s primary fuel before gasoline became so readily available, according to the AFDC. Today, researchers agree ethanol could substantially offset traditional petroleum use. Some studies have estimated that ethanol and other biofuels could replace 30 percent or more of U.S. gasoline demand by 2030.
“The fuel E-85 is unique in comparison to other alternative fuels, in that it is only found in light-duty applications, and is found at traditional gasoline stations across the country” according to Robert White, director of market development for the Renewable Fuels Association (RFA). “It is not restricted by fleets, or centralized fueling points. Additionally, E-85 is also different in one major fashion: flex-fuel vehicles (FFVs) can use E-85, regular gasoline, or any combination of the two. These are not dedicated vehicles and those using them should never run out of fuel.”
The RFA has been the “voice” of the U.S. ethanol industry since 1981, and are committed to helping our country become cleaner, safer, and more energy independent.
Currently, E-85 is available in 47 states, both publicly and privately, continuing to open at a relatively quick pace, with one station opening on average, each day.
According to White, the three largest factors driving growth are:
• Economics: Ethanol is less expensive than gasoline and makes the price of E-85 very attractive.
• The Renewable Fuel Standard (RFS) is pushing more gallons of renewable fuels into the marketplace. Retailers know that more is coming, and many are leading the effort to be the first in their area.
• Vehicle Production: Each year more than 2 million FFVs are introduced into the marketplace. This means each retailer has more potential customers, many who might not stop at their station today.
Additionally, according to White, using E-85 is as easy as using regular unleaded and requires no additional training. “It helps reduce harmful emissions, extends our fuel supply, and is a domestic fuel made from renewable resources,” he said.
Looking to Natural Gas
Natural gas is a domestically produced gaseous fuel, readily available through the utility infrastructure, according to the AFDC. This clean-burning alternative fuel can be used in vehicles as either compressed natural gas (CNG) or liquefied natural gas (LNG).
Currently, the main users of natural gas include long-haul freight transport, public fleets (in particular state and local fleets because it helps the communities bottom line), city buses, and refuse haulers.
“In the long-term, we believe natural gas will play a role in every sector of transportation, including light-, medium-, and heavy-duty vehicles, private and public sector fleets, as well as residential and consumer. We see a role for natural gas in delivering cost-effective, reliable fuel for transportation services and we already see the market growing in that direction,” said Kathryn Clay, VP of Policy Strategy for the American Gas Association (AGA).
Looking at infrastructure, Clay noted that there has been a 60-percent increase in CNG stations since 2009.
“We have a long way to go, but we must remember that we are building out a national infrastructure. And, we need to think creatively about ways we can leverage, for example, investments made by fleets and make those same refueling stations also available to the public where appropriate, so that way you can build a station on the business merits for that fleet, but you can also provide a service of another fuel choice to the local community,” Clay stated.
There are currently a little more than 1,200 CNG stations nationally and more than half of those are open to the public.
“Building a national infrastructure that is a long-term enterprise. We have more than 160,000 gasoline stations across the country, but it took literally decades for that to happen,” Clay noted.
In looking where natural gas as a transportation fuel is set to go in the future, Clay explained we must first take a look back.
“When I am speaking about natural gas vehicles (NGVs), people will often raise the fact that, in the 1990s, we made a concerted public policy push toward natural gas transportation, which really plateaued, literally fading away in many areas. There are many people in these companies making decisions about fleets that were in their jobs back in the 1990s and they want to know what’s different now?” she said.
According to Clay, in the past five or six years U.S. consumers have become more aware that the national energy landscape has completely changed.
“The shale gas revolution means that we have such an abundance of this natural gas resource that projections for natural gas prices for decades are low and stable, particularly relative to petroleum, which is forecasted to be higher in cost and much more volatile,” she explained. “In the 1990s, we went through a period of volatility in natural gas prices that really stifled the market for NGV investment. Our new circumstance with this abundance of natural gas means that we are much more likely to have market stability and the cost savings of petroleum are already very significant and will continue to grow over time.”
If the future of the natural gas market is driven right now by one thing, it’s the dependability on price that fleet managers can put in their total cost of ownership calculations, cost savings that business owners can put back into their own businesses. Clay emphasized not to rule any segment out of natural gas.
Measuring Propane Autogas
Propane autogas has always focused on commercial fleets, those that are centrally fueled, mainly with return-to-base operations whose vehicles typically travel within a 200-mile radius of the home base, ac-cording to Tucker Perkins, chief business development officer for the Propane Education & Research Council (PERC).
“Currently, we have dominated the light-duty segment, as well as school buses, local pickup and delivery, people moving (such as Super Shuttle and mobility companies), and just about everyone with access to a van, pickup truck, or taxi cab,” Perkins said. “These fleets see the value of propane autogas because maintenance is easy and cost-effective and fuel prices with propane are about half that of gasoline or diesel. Most fleets we talk to see ROI within the first year of operation.”
Moving forward, Perkins believes in growth, witnessed by recent robust sales in the school bus fleet industry, working with both Blue Bird and Thomas Built. Additionally, propane autogas has expanded into the medium-duty market, including the Freightliner Custom Chassis Corp. walk-in van based on the MT-45 chassis and the Ford F-650, with dates announced for the Ford F-750.
“What excites us with the medium-duty vehicle class is that local pickup and delivery companies, such as movers, paper companies, crane trucks, etc., are now offered propane autogas options,” Perkins said. “When you really do the math, the total cost of operation with propane autogas — including fuel costs, maintenance, and garaging — is one of the lowest of any fuel.”
One example of a fleet adopting propane autogas is UPS, which tested 20 vehicles and made an announcement that it was purchasing 1,000 units at the 2014 Work Truck Show.
“If people are driving 20,000-25,0000 miles per year or more, and keeping their vehicles in service for five years or more, the economics are very favorable for using propane autogas,” Perkins noted.
In regards to infrastructure, it tends to be a non-factor for propane autogas, according to Perkins.
“We are proud of where our infrastructure is today, with more than 3,000 publicly accessible sites in the U.S.; however, we feel that price and ease of propane infrastructure is not a factor and not a barrier to adoption.”
Most fleets utilizing propane autogas feature return-to-base operations, and installation costs for a fueling site is less than $50,000 and is easy to install, maintain, and operate. The propane industry is now focused on installing more public sites and refueling dispensers on-site for business locations.
“Additionally, propane autogas fueling sites are easy to expand or even change locations, should the business grow or move,” Perkins said, noting that power and maintenance of a propane autogas fueling station only adds approximately 1 cent per gasoline gallon equivalent (GGE).
Propane autogas prices are stable and product is readily available. Unfortunately, the unusually harsh 2013-2014 winter did cause a supply shortage in parts of the upper Midwest, causing some price volatility and fluctuation.
“We still produce far more propane in the U.S. than we consume. It was not a supply problem, but a logistics problem,” Perkins noted. “The rare supply and logistics problems that were experienced are being addressed over the next six months to ensure it doesn’t happen again.”
Looking toward the future, the shale gas revolution in areas of the U.S. will produce unprecedented amounts of propane, which is a by-product of natural gas development.
“It’s more than we have ever had, and coming from natural gas it’s lighter than crude oil,” Perkins said. “We still have to grow the base business, including more propane-autogas-powered forklifts, lawn mowers, etc.”
Currently, Perkins noted the propane autogas industry is thrilled.
“We have supply in excess of demand. We have a relatively stable price and a base of bigger users. We are excited about a migration to direct-injection engines, moving up into larger horsepower and torque to move us more into the traditional diesel space,” he said.