When it comes to sustainability and reducing carbon emissions, the microscope is on transportation; and rightfully so, given that the sector generates the lion’s share of U.S. greenhouse gas emissions. Against this backdrop, it’s little surprise that sustainability and electrification were dominant themes at this year’s Fleet Forward Conference.
During the “Fleet Vehicles and ESG: More Than Electrification” panel on November 9, I joined Utilimarc’s Gretchen Reese, Wheels Donlen’s Sara Sweeney and DriveItAway’s John Possumato to explore the dynamic role that environment, social and governance (ESG) directives are playing in fleet management, and dive deeply into considering fleet ESG from a more holistic vantage point.
As sustainability becomes an ever-growing priority for fleets everywhere, ESG leaders, fleet managers and owners/operators are all looking to electric vehicles as a key tool in the global shift toward decarbonization … and while EVs are making progress, they are not the only tool at our disposal. Although fleet electrification is an essential component to long-term decarbonization, solutions like alternative sustainable fuels and data analytics will be just as crucial to facilitate smooth, streamlined carbon reductions across the transportation sector.
Expectation vs. Reality: ESG Implementation
As the transportation sector stares down the energy transition, fleet managers are getting top-down directives to “go green” and as a result, are finding themselves having to manage not only their fleets, but energy as well. ESG programs are becoming more dialed and detailed, with increasingly aggressive timelines that often put fleet managers in the position to reconcile the high-level goals set out by senior leadership and sustainability directors with the realities of day-to-day fleet operations.
But often, those goals do not match the realities of fleet management, as senior leadership may lack firsthand knowledge of the operational complexities and budgetary constraints associated with successfully operating a fleet. Electrification, for example, goes far beyond simply putting drivers in EVs: the transition requires the successful convergence of vehicle procurement, availability of charging infrastructure, budgetary constraints, driver education, maintenance requirements, and more.
As the energy transition continues, fleet management must integrate with complex energy management if fleet owners and operators are to develop holistic, long-term plans for fleet operations. As the energy landscape complexifies, the burden of this expertise is getting higher as well.
Even this year, if you look at the fluctuations in conventional energy pricing, the expansion of renewable options, and the potential impacts of the Inflation Reduction Act, those managing fleet energy decisions are navigating an increasingly complicated landscape that will continue to require in-depth knowledge and dedicated attention.
As Sweeney of Wheels Donlen explained during the panel, the best tool we have in managing expectations and informing decisions is education through data and information sharing. Making these realities clear to all levels of management is key to ensuring successful outcomes. She noted that one in five public charging sessions ends in failure; ensuring that drivers, fleet managers, and senior leadership are aware of these limitations and other critical information is key to managing expectations and justifying robust backup options.
Offering data insights to all levels of a company allows fleet managers and senior leadership to see eye-to-eye. Insights can be used to demonstrate the realities of fleet performance using any range of fuel types and conditions. Insights can also be used to model which decarbonization solutions can be deployed successfully with any given fleet.
With services by providers such as Wheels Donlen, data is even tailored to specific audiences within companies — webcasts or dashboards that show high-level fleet insights or challenges faced might be targeted toward senior leadership, while fleet managers would gain more tactical insights like KPI-focused data analytics.
Altering the metrics used to track performance may also help manage expectations. Instead of thinking of carbon reduction on a “tailpipe emissions vs. no tailpipe emissions” spectrum, we should consider it from the metric of carbon intensity per mile, allowing for a more holistic view of carbon emissions involved. An EV may have zero tailpipe emissions, but carbon intensity per mile would take into account the carbon emissions generated by the mining of minerals to build batteries and the carbon burden from grid energy, making “zero tailpipe emissions” less sustainable than they seem.
When we look at carbon intensity per mile, it becomes more a question of the overall impact of each fuel source paired with its efficiency in the field. With sustainable alternative fuels, for example, there may be tailpipe emissions, but the overall impact may be offset by the use of renewable feedstocks or more sustainable mobile fuel delivery services like that offered by Booster.
Diversifying the Toolbox
Regardless of education and the driving forces of ESG directives, real progress is dependent on the tools fleet managers deploy and the feasibility of those tools in the real world. Lack of EV chargers, inclement weather conditions, improper maintenance, government incentives, and more all stand to complicate decarbonized transportation solutions. The key to success is to develop a range of solutions in each fleet arsenal that can address various needs, conditions, and goals.
During the panel, Reese of Utilimarc pondered the risks of relying on one decarbonization solution. She considered emergency events, questioning what happens when a fleet manager is completely reliant on stationary EV infrastructure to charge vehicles — and then the power goes out. How do you charge emergency response vehicles and how do people get to the grocery stores or food banks?
With a privatized grid, how can people afford the surge pricing that comes along with a major outage like the one Texas experienced in 2021? Her point: you must have the ability to actively deploy other solutions like mobile EV charging or sustainable alternative fuels. Diversifying the decarbonization toolbox is key to maintaining operations across unknown events and the changing landscape.
Diversifying the decarbonization toolbox is key to maintaining operations across unknown events and the changing landscape.
Sustainable fuels also offer a great solution, especially for fleets that might not be ready to fully electrify or who lack the grid power and infrastructure to support EVs. Given calls to speed adoption of decarbonized transportation solutions, the market is seeing an influx of sustainable alternative fuels that are fully fungible, healthier for internal combustion engine vehicles and 100% renewable.
What’s more, fuels from green feedstocks — renewable diesel made from used cooking oil, for example — have now reached a cost parity to fossil fuels in some areas due to government incentives. This opens the opportunity to take a fleet that was powered by fossil fuels on Monday, and convert it to renewable energy by Tuesday with no capital expenditure.
Building a diverse energy portfolio now will help fleets sustain success and profitability across the long term of the energy transition by making them adaptable. Implementing sustainable alternative fuels while developing electrification in parallel will allow fleets immediate sustainability gains and carbon reduction as well as longevity into a future where EVs are more widely supported by infrastructure and the market.
Managing Expectations and Embracing Holistic ESG
Reconciling high-level ESG goals with the operational and budgetary constraints may be a headache, but the ongoing tension between the boots-on-the-ground “doers” and the mandates from above present the opportunity to identify gaps and address them over time so that we make meaningful progress toward wide-scale electrification. Beyond that, the market itself still holds major economic and operational roadblocks to electrification that will impede fleets with limited resources, at least in the short term.
But if fleet managers break down the transition into smaller parts by focusing on education through data and iterative sustainability gains through diverse solutions, success is attainable.
Creating truly sustainable fleets will require approaching the transition from all angles, combining electrification, sustainable alternative fuels, education, data, and more to be sustainable not just from an environmental perspective, but from a profit and longevity perspective as well.