How green is Australian transport?
With the world community now formally committed to curb global warming, new strategies are needed to transport freight in a sustainable way. Is Australia up for the challenge?
In December 2015, representatives from almost 200 countries came together in Paris to sign a historic climate accord aimed at preventing an unsafe global temperature increase that would, for the first time, commit the entire world community to lowering greenhouse gas emissions systematically.
According to the Paris agreement, which is slated to come into effect in 2020, the world will aim to stabilise global warming below two degrees above a set pre-industrial level and force businesses to sharply reduce the use of fossil fuels in the decades to come.
What the landmark agreement could imply for Australia’s road transport industry – which is almost entirely reliant on burning diesel fuel – is anyone’s guess, according to Australian Financial Review correspondent, James Chessell. But, while he is confident there won’t be any dramatic shift in the short-term, a change of course is almost unavoidable in the long run.
“The United Nations climate agreement has opened the way for Prime Minister Malcolm Turnbull to continue with subtle shifts in Australia’s climate change policies,” he explains with view to the domestic economy. “[These shifts will take place] despite his promise to climate change sceptics during his leadership coup to stick with existing policies.”
Pointing out that the Paris agreement marked the first successful UN climate change agreement since the adoption of the Kyoto Protocol in 1997 – and the first ever that required all countries to confront the problem – James expects the Australian government to adjust its Direct Action climate policy after an already scheduled 2017 review – albeit with the intention of not impacting the nation’s economic performance.
While that assurance is likely to give the commercial road transport community breathing space until at least 2018, Dr Peter Hart, Chairman of the Australian Road Transport Suppliers’ Association (ARTSA) and Prime Mover columnist, is still convinced that work on a change management strategy has to begin now. “The political winds are slowly shifting,“ he says. “The Paris agreement should change our thinking and drive change in our industry. After all, climate change is a serious problem that we are obligated to respond to.”
What’s crucial to understand in that context is the difference between ‘green’ and ‘clean’, according to Peter. “You need to appreciate that clean and green are not the same thing. Historically, we have focused on cleaning up diesel engines by reducing the emission of microscopic carbon particles and nitrogen oxide (NO) – with the result that today’s engine generation is exceptionally clean compared to 1990. But it’s not automatically greener than 25 years ago.”
Agrees Mark Hammond, Chief Technical Officer at the Truck Industry Council (TIC). “To the general public and even the media, emissions are all the same and equally bad. But you need to differentiate between CO2, which is the greenhouse gas responsible for global warming, and a separate group of noxious, or poisonous emissions,” he explains. “These kind of emissions are regulated by the various ADR emission regulations we have in place, but they do not contribute to global warming and as such cannot and should not be tagged as green or not green.”
Mark and Peter agree that failing to differentiate between clean and green has misguided the sustainability debate in the past and may even hold back future progress. For the sake of a productive discussion on the ‘green rating’ of Australian transport, they argue that the focus should therefore be on CO2 reduction.
According to Peter, almost all of the CO2 Australian transport is currently emitting is diesel-based, and since that ratio is not expected to change any time soon, a measured response should target diesel usage first. “The introduction of natural gas as a viable alternative to diesel has failed in Australia, and electric solutions are still not ready for heavy-duty work, so diesel will almost certainly remain the pre-eminent fuel source for the next decade. Change should therefore focus on fuel economy first, as less fuel burnt would equate to less CO2 emitted.”
Unlike a passenger car, however, a commercial vehicle is usually judged by the amount of CO2 emitted per tonne of freight moved per kilometre, which is where the situation could become “a little more complex,” as Mark puts it. “We have a very old truck population with an average age of 14 years or more, and the older trucks in our fleet are simply not as technologically advanced or as fuel efficient as new ones,” he says. “And, even new trucks can have quite different fuel consumption, with SCR engine technology being more fuel efficient, and thus greener, than EGR technology.”
Compared to most of Europe, Japan and the US, where the average truck fleet age is somewhere between five and eight years, Mark says Australia is quickly falling behind – with the risk of having to face a much more dramatic change of course come 2020.
However, there is one market segment where Australia may actually lead from the front: “Australia could be considered a leading force in the field of multi-combination design, with B-doubles, B-triples, road trains and most PBS-approved combinations able to translate high productivity into low emission per tonne-kilometre ratings,” he says. “That’s simply because we move more freight for every kilometre for every tonne of CO2 emitted, even when using comparatively old trucks. So, that one section of our truck fleet is very green already – arguably by default – but it could be even better if we were to replace the older trucks with new equipment.”
As a result, Mark says there may be a need for political guidance to help renew the nation’s truck population and keep pace with the rest of the developed world. “One solution could be for Government to incentivise operators for getting out of their older trucks and into new ones,” he details – pointing out that TIC has long supported a concept where the diesel tax rebate, currently 13.36 cents per litre, should be linked to the exhaust emission standard of the truck.
“Currently any truck over 4.5-tonne GVM that is used in a registered business can claim the 13.36 cents for every litre of diesel used – irrespective of the age or emission standard of the vehicle. TIC has presented to Government a plan that would see that rebate re-distributed, with trucks aged 13 years or more effectively being cut off. The millions of dollars saved could then be used to as a direct subsidy for operators to help renew our aging truck fleet.”
While lobbying for Government intervention to accelerate the green rating of Australian trucking has intensified of late – helped by the prospect of secondary benefits on the ‘clean’ emission front (to be discussed in part 2 of our sustainability series) – those opposing governmental influence argue that industry itself should take the first step and leverage the inherent fuel savings of modern transport equipment.
Already, blue-chip businesses across the nation are starting to put environmental performance high on the agenda, especially on the consignor side of the equation, where Corporate Social Responsibility (CSR) is becoming increasingly important.
The retail industry is especially proactive in that respect, with national supermarket chains like Woolworths proactively driving the renewal of Australia’s truck population via increasingly strict tendering processes. “The contracts we see today stipulate the type of truck or van required, as well as the age. Typically it must be new or near-new,” Mark explains. “For the consignor, it’s as much a question of Corporate Social Responsibility as it is smart marketing. On top of that, there can also be a tangible business advantage behind it, as new vehicles are more reliable and covered by the OEM’s warranty, so there is less risk for failure.”
Mark’s analysis is in line with the Australian Centre for Corporate Social Responsibility’s (ACCSR) most recent review of the State of CSR in Australia and New Zealand, which found that an increasing CSR focus and innovation leadership often go hand in hand. “Innovators are much more likely than other organisations to incorporate social and environmental attributes into their products and services, develop new markets by addressing social and environmental needs [and] focus on global sustainability issues,” the study found. “Innovators have a greater appetite to deal with complex social problems. They are part of a trend towards taking a global view on using sustainability challenges to create value and positive socio-economic outcomes for both organisations and their stakeholders.”
Driven by socially responsible companies like Woolworths or BHP Billiton, the ACCSR found that innovation can permeate the market all the way through to the transport and warehousing level, thereby actively driving the greening of Australia’s commercial road transport industry. “CSR is increasingly becoming a key aspect of strategy to achieve competitive advantage – and to achieve this requires innovation,” the report concluded – effectively saying that economic success on a blue-chip level will require a certain sense for social responsibility and commitment to innovation.
One unlikely ‘green activist’ to embrace that mentality is oil and lubricant specialist, Castrol, which is about to launch a range of carbon neutral engine oils under the well-known Castrol Vecton label. By measuring – and subsequently offsetting – the emissions caused during the production process and the subsequent use of the products, the company is aiming to proactively contribute to the green transport trend – and ideally attract environmentally conscious consignors and transport businesses along the way.
“What we’ve realised is that our customers’ customers are becoming increasingly conscious about their impact on the environment, so we decided to trace back the carbon footprint our own products create and try to neutralise it,” says Ashish Kochar, Commercial Vehicle Brand Manager ANZ at Castrol. “Vecton is what we call our ‘hero range’. It’s engineered with our most advanced System 5 Technology to maximise the performance of both vehicle and fleet and comprises of products that have value offers for the fleet businesses, so it made sense to start our green journey there.
“We’d like to think that industry can proactively contribute to greening Australian transport, and we enjoy being the driving force behind that new movement.”
Audited by Ernst & Young (E&Y) and Certified under the National Carbon Offset Standard (NCOS), Castrol’s contribution to the green transport debate is considered an Australian first and may help kick-start a move toward increased environmental consciousness on every level of the supply chain. “Putting sustainability back on the agenda is what’s driving us, even though we know we only play a small part in the grand scheme of Australian transport.”
Yet, with more and more private businesses actively pushing for a more substantial green debate and pressure for a governmental incentive scheme rising at the same time, Ashish is confident that Australian road transport may just be on the brink of a new green movement.
“While there may be a lot of room for improvement in terms of vehicle age and technology renewal, I think that private businesses can add a lot of momentum to the sustainability debate already. That’s not just a marketing ploy, but a genuine commitment to our country and the trucking industry. I believe there is a viable opportunity for Australia to be leading from the front once the Paris agreement is fully operational – if we all commit to the same goal now.”
The full story has appeared in the April edition of Prime Mover. To get your copy, click here.