November 1, 2007
technology review | Alternative Fuels in Logistics

The search is on for alternative fuels

the search is on for alternative fuels

Imported oil and its attendant risks. Greenhouse gases and global warming. An economy dependent on a vibrant freight transportation system. Add those up and the result is a growing imperative to find alternatives to traditional fuels.

By Peter Bradley

In 1925, a pair of German scientists applied for a patent for a process they had developed to turn carbon monoxide and hydrogen derived from coal into a liquid fuel. Franz Fischer and Hans Tropsch may not have thought of the process they developed as an alternative fuel in the way we think about that term today. But diesel fuel created through the Fischer-Tropsch process is one of a number of technologies that could transform the way freight carriers fuel their vehicles.

In some ways, the future is already here, with trucks of all sorts running on propane, compressed natural gas (CNG), and liquefied natural gas (LNG). Carriers like UPS and FedEx as well as many utility companies have been using alternative fuels in their fleet vehicles for several years.

What's driving these initiatives is a combination of worrisome issues. To start with, American politicians and the public want to reduce the nation's dependence on imported petroleum—though opinions vary on how to reach that goal. There's also a growing movement to reduce greenhouse gases as more scientists come to a consensus that the earth is warming and carbon emissions are part of the reason. And at $90 a barrel, oil has become an expensive commodity.

That all adds up to growing pressure on carriers and their equipment suppliers to find ways to run clean and lean operations.

"We want to lessen dependence on crude oil," says Robert Hall, director of vehicle engineering for UPS. "The world is using up its crude oil. To sustain our fleet and our business, we need to be prepared long term for the use of multiple fuels. Emissions reduction and quality are another issue." UPS says it has the largest fleet of vehicles operating on alternative fuels in the transportation industry, including 600 vehicles running on propane and 800 running on CNG.

Ready to come clean?

The imperative seems clear enough. But are American trucking fleets ready to make wholesale changes to their operations? In an internal document provided by one large contract fleet company that operates thousands of vehicles, company fleet managers candidly assessed the variety of technologies available to them. (The document was made available to DC VELOCITY with the understanding that its source would not be disclosed.)

Though it acknowledged the potential benefits of shifting to alternative fuels—reduced exhaust emissions, reduced dependence on imported petroleum, cost savings, and burnishing the corporate image—the analysis also carried some caveats. For example, reduction of some types of pollutants can occasionally lead to an increase in other types. It also warned that potential savings in fuel costs have to be balanced against potential higher costs in vehicle operations, including vehicle costs, payload capacity, vehicle range, power and torque, and fuel availability.

But alternative fuels and associated technologies aimed at more efficient operations are almost certainly in the offing for most fleets. The U.S. Department of Energy (DOE) has established a number of programs in partnership with industry aimed at research into and development of alternative fuels and a variety of technologies aimed at cleaner, more efficient freight operations.

Not surprisingly, much of the impetus for improvement comes from the West Coast, particularly California, where air quality has become a key public health concern. In June, for instance, California's South Coast Air Quality Management District, an air pollution control agency, approved a $2.9 million expenditure for 20 LNG heavy duty vehicles from Westport Innovations Inc., a Vancouver, B.C.-based developer of alternative fuel technology. The trucks will be operated by Total Transportation Services at the ports of Los Angeles and Long Beach.

Also active on the West Coast is WestStart-CALSTART, a not-for-profit consortium of some 145 companies focused on reducing transportation-related air pollution. "Our goal … is to see the development of clean transportation technologies," says John Boesel, the group's president and CEO.

Unlike some industry-sponsored organizations, the group does not promote a particular solution; it remains neutral on both fuel and technology. "We try to act as a strategic partner and facilitator to help all the companies succeed," Boesel says. Its efforts include programs focused on commercial traffic. In September, for example, WestStart-CALSTART sponsored the sixth annual National Hybrid Truck Users Forum in Washington state (for a list of upcoming events, visit www.

Big Brown goes green
In fact, hybrid vehicles have been much in the news recently. Last year, for example, UPS conducted a highly publicized hybrid vehicle test with the U.S. Environmental Protection Agency (EPA). For several months, UPS used a fleet of hydraulic hybrid delivery vehicles in the Detroit area, using a technology it developed in a partnership with the EPA as well as the U.S. Army, International Truck and Engine Corp., and Eaton Corp.

The technology combines an efficient diesel engine with a hydraulic propulsion system in place of the conventional drivetrain and transmission. Hydraulic pumps and storage tanks store energy, similar to what is done with electric motors and batteries in hybrid electric vehicles. Fuel economy is increased in three ways, the EPA explains: Vehicle braking energy is recovered, the engine is operated more efficiently, and the engine can be shut off when stopped or decelerating.

In laboratory testing, the technology achieved a 60- to 70-percent improvement in fuel economy compared to conventional UPS package vans, according to the EPA. It also produced a 40-percent-plus reduction in carbon dioxide emissions.

The EPA estimates that when the hybrid components are manufactured in high volume, the added costs could be recovered in less than three years through lower fuel and brake maintenance costs. The trucks may also be eligible to qualify for a tax credit of up to 40 percent of the incremental cost of the vehicle, the EPA says.

A question of cost
Boesel reports that today's research initiatives go well beyond the fuels themselves to include ways to improve aerodynamics, boost fuel economy, and reduce vehicle weight. In fact, today, the drawback to greater deployment of innovative technologies is often not so much the availability of the technology itself, but cost. Batteries for hybrids are heavy and expensive. Conversion costs to make use of new fuels can be high. "The technology manufacturers need to keep working on lowering costs," concedes Boesel. "We are getting to the point on a life-cycle basis where these systems are making sense, but often fleets buy on the purchase cost."

As for how to make the technology more affordable, the answer could be as simple as scaling up production. As demand for a technology picks up, unit costs would likely fall. But that's not quite as easy as it sounds. "We have the chicken and the egg," Boesel says. Producing advanced technology trucks in low volume limits demand, but demand is required for manufacturers to ramp up production. The issue is creating the demand. But if market forces don't do it, regulation and law might.

Take the current and controversial proposal by the ports of Los Angeles and Long Beach. The two ports have proposed to the Federal Maritime Commission a plan to implement what they call their Clean Truck Program. According to an analysis by the National Industrial Transportation League, which is contesting the proposal, this program would require drayage companies to meet an accelerated schedule for implementing state and federal emissions standards.

Additionally, the California legislature late in its session this year adopted a bill aimed at raising smog abatement fees for all vehicles to fund research on alternative fuels. In mid-October, Gov. Arnold Schwarzenegger signed the bill into law.

In the meantime, fleet managers continue to investigate a range of possibilities. UPS's Hall says, "Over the short term—the next five to 15 years—it appears that hybrid electrics will be the leaders in getting us where we need to be. CNG and propane can play a role as well." He agrees with Boesel's assessment that technological advances and lower prices will spur more widespread adoption.

The road ahead
Right now, additional research is under way under a variety of auspices. The DOE's National Renewable Energy Laboratory, for example, sponsors research under the umbrella of its Advanced Heavy Hybrid Propulsion Systems Project. NREL says on its Web site that it projects that its efforts will "increase the fuel efficiency of heavy trucks and buses by as much as 100 percent, and improve their emissions to meet the Environmental Protection Agency's 2007-2010 emission standards."

Also active on the research front is the 21st Century Truck Partnership, an industry-government collaboration among heavy-duty engine manufacturers, heavy-duty truck and bus manufacturers, heavy hybrid powertrain manufacturers, and four federal government agencies. The consortium, which develops both public and proprietary research projects, supports research, development, and demonstration projects in five areas: engine systems, heavy-duty hybrids, idle reduction, safety, and parasitic losses (factors like aerodynamic drag resistance and rolling resistance).

In the meantime, the switch to alternative fuels and technologies is already under way in both public and private fleets, driven by economic, political, regulatory, and other forces. Given the size of the nation's fleet and the infrastructure challenges, the revolution will likely be slow to ignite. But ignite it will. A warming planet and volatility in oil supplies have put alternative fuels and technologies back in the spotlight for the first time since the energy crisis of the '70s—and this time, it's likely for good.

About the Author

Peter Bradley
Editor Emeritus
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.

More articles by Peter Bradley

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