If the electrification of road transport takes longer than expected, road freight transport can also be made more sustainable in the short to medium term through the (greater) use of (more) renewable fuels. If demand for renewable fuels that are already widely used increases, this could lead to a shortage of biofeedstock, possibly resulting in price increases. Using other renewable fuels means that, depending on the type of fuel, truck engines will have to be modified or new engine types developed. This is one of the findings of the publication 'Renewable fuels in high blends in road freight transport’ by the Netherlands Institute for Transport Policy Analysis (KiM) in collaboration with studio GearUp.
Dutch policy for making road transport more sustainable focuses primarily on electrification, through the upcoming truck toll, zero-emission zone policy, and European CO2 standards for new vehicles. However, the pace at which heavy road transport will electrify is uncertain. Due to the renewable fuel targets of the European Emissions Trading System (ETS2) and the Renewable Energy Directive (RED), demand for these fuels in heavy road transport in 2040 is unlikely to be lower than it is today. If electrification proceeds more slowly than anticipated (e.g., due to grid congestion), demand for renewable fuel may even be (much) higher than it is today.
Modifying or developing engines
Currently, HVO (hydrotreated vegetable oil) and FAME (fatty acid methyl esters) are the main renewable fuels used in heavy-duty transport. FAME is cheaper than HVO but can usually only be blended with fossil diesel at a maximum of 7%. Biofeedstock for both HVO and FAME are ultimately limited in availability, while demand for them will increase (including, for example, from shipping and aviation), with a possible price-driving effect.
In order to be able to technically implement alternatives to HVO (or higher blending percentages of FAME), truck engines will have to be modified (retrofitted) or new engines developed, depending on the type of fuel. Manufacturers will only respond to this if they are certain that there is sufficient market demand and that they can recoup the development costs within a certain period of time. For fleet owners, the switch to an alternative engine-fuel combination will only be attractive if their total costs improve significantly and the alternative fuel is sufficiently available at filling stations. This applies to both the purchase of new engine types and retrofitting.
Role for the government?
In the context of the energy transition, security of supply and affordability are seen as public interests (see, for example, the Dutch National Energy System Plan). The increasing cost of HVO (and FAME) may be a reason for the government to encourage manufacturers to bring alternative engines to the market and to adapt existing truck engines, but also to ensure a greater supply of other renewable fuels. However, what message is the government sending if it is simultaneously fully committed to electrification and, in the period 2030-2040, to drop-in fuels via the fuel transition obligation? Moreover, transporters with fuel trucks have a way out when fuel prices rise. After all, electrification is an option; an option that the government wants to encourage. There is a risk that policies will work against each other.
Policy options
The perspective for action for the national government to reduce barriers to the transition to other engine-fuel combinations lies mainly in the financial sphere, for example in the form of subsidies, tax (exemptions) and guarantees. There are also opportunities in the area of fuel supply, such as energy diplomacy and the policy on the fuel transition obligation. Cooperation with neighbouring countries and at the EU level is essential, because truck manufacturers do not develop their products for the Dutch market alone.