Navigating the complexity of choice for off highway sustainable fuels

Many countries are implementing stricter emissions regulations to reduce pollution and combat climate change. Decarbonisation pressures are driving a shift from carbon intensive fossil fuel power systems across all sectors.  The off-highway sector often relies on heavy-duty equipment and vehicles that use diesel fuel but multiple drivers are now pushing the sector to adopt cleaner fuels and technologies.  

Albert Zenié, a Senior Consultant for Ricardo, explains the pressures leading the change, the obstacles for switching to sustainable fuels in the off-highway industry and how he sees the landscape for mobility in the off-highway sector evolving over the next decade. He outlines what companies need to do in order to make the right choice for future fuel and power converter. 

Q: Why are the choices of fuel and power converter more complex and uncertain than they used to be?  

Since the early 20th century, Diesel engines have been utilised to power vehicles and industrial machinery and have become the most popular power systems used in off-highway equipment. In the last 10-20 years, increased environmental awareness has driven global actions to tackle the  climate change. The 2015 Paris Agreement was an important milestone, in which global governments pledged to reduce global greenhouse emissions to limit the rise of global temperatures. As a result, these decarbonisation pressures are driving a shift away from carbon intensive fossil fuel power systems across all sectors, including off-highway. 

There are several propulsion system options that are being considered to reduce GHG emissions from the off-highway sector such as battery-electric systems, hybrid-electric systems, hydrogen fuel cells and ICEs powered by sustainable fuels such as hydrogen, biofuels, and e-fuels. Each solution features specific benefits and challenges from an environmental, economic, performance and practical perspective. For instance, battery electric systems can provide significant GHG reductions however the adoption of these powertrains may come at the expense of worsened total cost of ownership (TCO) and productivity in some applications due to a combination of high battery costs, longer charging times, limited range, and reduced payload capability. 

The off-highway sector is very diverse and encompasses machines ranging from small forklifts operating in warehouses to multi-megawatt hauling trucks operating in remote mines. Each application features different requirements and as a result there is no “one solution fits all” for the off-highway sector. Moving forward, the choice of fuel and power converter will no longer be predefined but will require careful alignment with usage patterns and specific operator requirements. 

Q: What are the drivers for switching to sustainable fuels as an alternative to diesel fuel?  

Net-zero carbon pressures are one of the drivers resulting in the switch to sustainable fuels in the off-highway market. Although no direct CO2 targets are currently applied across the sector, decarbonisation efforts are being driven through several indirect measures.  

One of the most important measures is scope 3 emission requirements for Environmental, Social and Governance (‘ESG’) initiatives, which is driving GHG reductions in upstream processes where off highway machines are used. This is especially the case in mining equipment, where increased demand of raw materials for low carbon technologies such as wind turbines, solar photovoltaics, and electric vehicles, is driving the decarbonisation of the mining industry to reduce product lifecycle global warming potential. 

For construction and industrial equipment, local regulations targets are also driving a shift away from fossil fuels. For instance, low and zero emission zones introduced in cities such as London, Oslo and Budapest are aiming to reduce emissions from off-highway machinery. Furthermore, airports and ports are setting GHG reduction targets to support decarbonisation in the maritime and aviation sectors, resulting in changes to the fuels used in non-road machinery. 

Q: What are the obstacles for switching to sustainable fuels in the off-highway industry? 
Sustainable fuel propulsion systems for off-highway equipment feature economic, performance and practical challenges. 

Firstly, the price of sustainable fuels can be significantly higher than diesel without incentives. For instance, green hydrogen is expected to currently be ~5 times more expensive than diesel, which significantly impacts the economic viability of H2 in off-highway machines. Furthermore, sustainable fuel energy converters and energy storage systems are also expected to feature a price premium vs. conventional diesel ICEs. 

Secondly, sustainable fuel power systems need to match diesel ICE durability. End-users expect off-highway machines to work in any condition including harsh environments with minimal issues. Therefore, power system solutions need to be rugged and well proven to minimise downtime. Sustainable fuel solutions are relatively new and there is uncertainty and consumer skepticism on whether sustainable fuel energy converters can be as durable as diesel engines. 

Additionally, most sustainable fuels are subject to lower energy density and the associated energy converters are expected to feature lower power density. As a result, if autonomy and power is to be preserved, off-highway machines powered by sustainable fuels would need to be larger and likely feature payload reductions.  

Another key challenge to sustainable fuel adoption in the industry is the uncertainty of future availability. The establishment of global supply chains for all sustainable fuels will require significant time, and in the next 5-10 years, renewable fuel availability is expected to be collocated with fuel production across specific green corridors. Differing national policies and fuel feedstock availability in different regions will drive adoption of different fuels across the globe, at least in the near term. This uncertainty adds another level of complexity for OEMs and end-users who need to make informed decisions on which fuel options to develop or adopt in different global markets. 

Finally, different fuels will feature different hazards, and therefore the switch to sustainable fuels will require changes to safety procedures especially for fuel handling to protect the health of operators.  

Q: What factors influence the choice for application and customer case? 

First and foremost, the level of decarbonisation required in each use case will heavily impact the propulsion system choices. For instance, construction equipment that needs to be operated in a zero-emission construction site will need to be powered by zero-carbon fuels. 

Secondly, the total cost of ownership is expected to vary across different applications and customer cases due to a combination of factors, namely: durability requirements, duty cycles, utilisation, range requirement and local fuel prices. For instance, applications where machines are operated consistently at high loads with high durability requirements are expected to continue to benefit from traditional ICEs. Engines cater themselves to consistent high load operations, where they can provide high thermal efficiencies without significantly impacting durability performance (unlike for instance in fuel cells). The total cost of ownership is also sensitive to utilisation, where the relative importance of capital, fuel and maintenance costs are expected to vary depending on machine uptime. For example, machines with higher uptime will be well catered for by solutions powered by lower cost fuels with longer time between overhauls.  

The expected location of use of a machine also plays a role in the choice of sustainable fuel option, due to expected variations in fuel availability and potential synergies with available feedstocks. For instance, construction equipment used in cities could benefit from automotive fuel/charging infrastructure to source hydrogen and electricity. On the other hand, agricultural tractors may benefit from the use of biomethane produced on site from waste organic matter.

Furthermore, national government policies will also impact regional fuel availability and costs. 

Q: How do we see the landscape for mobility in the off-highway sector evolving over the next decade?  

Over the next decade there will be a gradual shift away from fossil fuels, especially in the largest off-highway markets: China, Europe, and North America. Small equipment ~<56 kW, will continue to be increasingly electrified due to low power and low autonomy requirements. On the other hand, larger equipment, which requires longer autonomy and higher durability, will start a shift away from diesel ICEs in favour of engines powered by sustainable fuels such as hydrogen, biofuels, ethanol, and methanol.  

Q: What do companies need to make the right choice for future fuel/power converter?  

To make the right choice for future fuel and power converter companies need to firstly understand the end-user requirements and use cases. Using this information an environmental performance comparison of different options can be carried out through Life Cycle Analysis. A total cost of ownership analysis can then be used to compare the economic performance of different options. Furthermore, understanding future technology and industry trends allows companies to understand future technology availability and expected performance. Cross-sectoral macroeconomic modelling can be used to determine expected fuel availability by modelling expected demand and supply. This includes fuel competition from different sectors (i.e., automotive, maritime, aviation, etc.), policy direction in different markets, which affects infrastructure development, and fuel price incentives. 

The off-highway industry is exploring sustainable fuels to address environmental concerns, comply with regulations, leverage technology, and ensure long-term viability. However, there are several challenges that come with making this shift, and there is no ‘one-size fits all’ approach when it comes to sustainable fuel selection. With many available options, companies must make informed decisions early on to ensure their product is successful. Concerted efforts are necessary to overcome major challenges and accelerate sustainable fuel adoption.

If your company is considering switching to sustainable fuels in the off-highway industry, learn how Ricardo can proactively help you mitigate associated challenges. Sustainable Fuels | Campaigns | News and insights | Ricardo