The Catch-22 Paradox of Green Fleet Initiatives
Each month we are in contact with hundreds of fleet managers who manage fleets ranging from fewer than a hundred vehicles to mega-fleets of tens of thousands of units. This link provides us a strong pulse of what’s happening in the marketplace. Emerging trends are identified after hearing similar comments repeated by a variety of fleet managers in different industry segments. One oft-repeated comment involves the proliferation of corporate green fleet initiatives designed to help curb emissions and reduce a corporation’s overall carbon footprint. Although fleets have been investigating green initiatives for the past several years, they are now beginning to implement them. Driving this groundswell in green fleet initiatives is corporate senior management.
A recent survey by PHH Arval revealed that 77 percent of fleet managers have been asked about the environmental impact of their fleet in the past year. Seventy-seven percent! These survey results rings true with what we hear from commercial fleet managers. Initiatives to reduce a corporation’s carbon footprint are proliferating. They are corporate-wide and fleet is just one component. Green fleet initiatives include a variety of strategies ranging from right-sizing vehicles, adding hybrids to the vehicle selector, spec’ing flex-fuel vehicles, changing employee driving habits, and acquiring greenhouse gas offsets.
Proliferating Green Initiatives
Corporate green initiatives are beginning to influence 2008 vehicle selector decisions. One company greening its fleet is Ecolab. It is evaluating models to reduce CO2 emissions and changing some vehicle types to smaller models or spec’ing different engines. A similar strategy is being implemented by Novo Nordisk, which is scrutinizing all vehicles more closely for their eco-friendliness. Other fleet managers are starting to track CO2 emissions by establishing fleet emission baselines. One such fleet is USG. It is establishing baseline emissions and fuel consumption based on its current fleet selector. It plans to track improvements based on vehicle changes. One change being considered by USG is switching its trucks to diesel engines.
Another company pioneering fleet emissions reductions is Infinity Property & Casualty Corp., which has replaced approximately 400 SUVs with Jeep Compass models as part of the PHH GreenFleet program. As a result, Infinity anticipates reducing operating costs by 10 percent, improving fuel economy by 25 percent, and cutting greenhouse gas emissions by 16 percent.
A growing number of fleets are making significant investments in hybrids, despite higher acquisition cost and limited availability of appropriate models. Roche Pharmaceuticals has expanded its hybrid fleet to 242 vehicles, reducing annual greenhouse gas emissions by 1,033 tons and saving 80,253 gallons of gasoline each year. Verizon is ordering 100 hybrids for use in five states and is testing the use of B-20 biodiesel in its truck fleet. A number of other commercial fleets have hybrids in fleet operation, such as DuPont, State Farm, Intel, FedEx, Purolator Courier, Coca-Cola Bottling, GlaxoSmithKline, Charmer Sunbelt, UPS, and Florida Power & Light. Hybrid penetration in commercial fleets promises to increase as OEM hybrid offerings proliferate in future model-years.
Many corporations, such as PepsiCo, have implemented broad-based sustainability strategies. One element of PepsiCo’s sustainability strategy is the acquisition of hybrids, which now represent a growing segment of its fleet. Another example is Pepco Holding. It will transform its 2,000-vehicle fleet to hybrids and alt-fueled vehicles to reduce its fuel fill and curb greenhouse emissions.
Likewise, New Jersey’s largest utility, Public Service Electric & Gas, says it will buy hybrid vehicles to replace nearly one-third of its 1,300-unit car and light-truck fleet over the next decade to reduce tailpipe emissions linked to global warming. Several fleets have made the decision to become all-hybrid fleets. One such fleet is SECURA Insurance in Appleton, Wis. “Our fleet will eventually be Ford Escape Hybrid only, until a good hybrid mid-sized car comes on the scene,” said Jean Ayotte, fleet administrator for SECURA Insurance. This isn’t just a U.S. phenomenon. The Swedish retailer Ikea is switching its entire UK fleet to hybrids as a prelude to a possible company-wide shift to greener vehicles. Ikea’s switch is part of a company-wide push to reduce its carbon dioxide emissions nine percent by 2010.
A Fleet Paradox
Although green fleet initiatives continue to grow, the PHH survey revealed that managers do not feel they have the appropriate tools to select environmentally-friendly vehicles, influence driver behavior, and measure changes in environmental performance. New metrics are being developed. For instance, GE Capital Solutions Fleet Services now includes CO2 emission reports when conducting annual reviews of fleet clients.
Green fleet initiatives present a Catch-22 paradox to fleet managers. On one hand, fleet managers are tasked to reduce overall fleet expense, while simultaneously tasked to implement green initiatives that increase a fleet’s overall expense. Of course, management’s response is to do both – reduce costs and go green.
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