Making Zero Emissions Trucking Possible
Making Zero Emissions Trucking Possible
Making Zero Emissions Trucking Possible
TRUCKING POSSIBLE
An industry-backed, 1.5°C-aligned
transition strategy
Sponsored by
Supported
by knowledge
partner
McKinsey
& Company
1 Zero-emissions truck technology is or will be viable for almost all use cases. The sector remains a challenge to decarbonise because of the scale of change, the costs
for some users, and new infrastructure required.
The model used and the analytics behind it will be made open
access to promote transparency and collaboration, such that
the inputs and assumptions are available for inquiry, and future
iterations may build on this effort. This open-access approach
lends itself to regular refinement as data and insights evolve.
Critically, it also ensures that the industry can align behind a
strategy it considers technically and economically feasible,
subject to appropriate value-chain collaboration, finance, and
policy support.
Angie Farrag-Thibault
(World Economic Forum and MPP Trucking Sector lead)
Dave Mullaney (RMI)
Manosij Ganguli (Energy Transitions Commission [ETC])
Patrick Hertzke (McKinsey & Company)
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Main report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
EXHIBIT A
Heavy-duty trucking demand expected to grow through 2050
Annual trillion tonne-kilometres
China India United States Europe
12
11
10
6 6
6
5
4
3 3
2 2
2
0
2020 2050 2020 2050 2020 2050 2020 2050
Surging trucking demand and expected technology Zero-emissions trucks (ZETs) are in early-stage production
availability have largely dictated this report’s recommended by manufacturers, are just starting to have an equivalent total
decarbonisation strategies.3 Renewable diesel, renewable cost of ownership (TCO) with diesel vehicles for many uses,
natural gas (RNG), and other transitionary fuels can play a and are already experiencing an encouraging level of adoption.
role in the near term with legacy vehicles but have drawbacks, Further actions can help ensure that trucking achieves two goals:
and other new fuels are likely to be prioritised for use in other reaching zero emissions by 2050 and reducing the cumulative
sectors such as aviation and marine. amount of GHG emissions between now and then. Those actions
include stakeholders putting in place the market incentives,
The main pathway to decarbonising trucking will be developing policy frameworks, continued vehicle development, and timely
and using new vehicles and drivetrains: battery electric trucks charging infrastructure necessary for this major transition. It also
(BETs) and hydrogen electric trucks (HETs), powered with fuel depends on the rapid deployment of renewable generation for
cells. This analysis concludes that achieving net zero by 2050 both electric vehicle charging and hydrogen production.4
requires all trucks sold by 2040 to be either BETs or HETs.
2 Autonomous vehicles, though not modelled in this report, would likely further increase total freight miles travelled and increase each vehicle’s miles per year.
3 Efficiency improvements, such as shortening supply chains, ensuring that truck trailers are carrying fuller loads, and shifting to trains and ships, do play a role and
can reduce trucking’s emissions intensity by 20%.
4 In the MPP model, 100% of the H2 is assumed to come from renewable sources. Electricity for BETs in the four regions is expected to be sourced from a grid that is
90% renewables and storage, with the remainder using carbon capture and sequestration. Reports from the International Energy Association and the Energy Transi-
tions Commission consider a 90% renewable grid feasible. See the Appendix for more information on grid assumptions.
5 Total cost of ownership is the cost of the truck, the fuelling infrastructure (diesel, electric, or hydrogen), and the ongoing fuel and maintenance operating costs over
the vehicle’s lifetime. The Appendix further describes the analysis.
6 The EU has introduced targets for heavy-duty vehicles to reduce emissions by 15% as of 2025 and by 30% as of 2030.
depending on usage, technology First is the Expected Adoption scenario as the TCO of BETs and
HETs improves. This is a market-based scenario. Many fleets
development, and policy choices will buy ZETs because they make financial and operational
sense, and by 2050, 80% of trucks on the road will produce
2025 2030 2035 2040 2045 2050
zero emissions. Yet without additional action to support ZETs,
trucking will not achieve zero emissions by 2050. Trucking
will also create 41 Gt CO2e between now and then, consuming
nearly 6% of the world’s remaining “carbon budget”. TCO
BET
improvements, infrastructure development, and new policy are
needed to enable a zero-emissions industry by 2050.
Long haul
The second scenario, the Rapid Technology Improvement
H2 scenario, is also solely market based. However, the
HET significant economic superiority of ZETs leads to a nearly
zero-emissions trucking sector by 2050, even without policy
intervention.7 This scenario is modelled in two different ways:
accelerated BET deployment and accelerated HET deployment.
They include achievable improvements in vehicle supply, fuel
BET costs, and fuelling station usage. In these scenario models, we
also relax non-cost constraints on BET adoption (e.g., battery
Regional weight makes hauling heavy loads impossible), reflecting
non-cost technology gains, such as greatly increased battery
H2
energy density.
HET
It is possible that technological improvements will happen
more quickly than is currently anticipated. (Consider that
zero-emissions vehicle prices have decreased far more
than was projected a decade ago.) This scenario assumes
BET
rapid development of renewable electricity generation
Urban and transmission, as well as hydrogen production and
transportation.8 Complementary clean energy investments in
H2 adjacent sectors can also help, including:
HET
• Charging infrastructure for medium-duty vehicles
Note: Flags reflect TCO dates of Expected Adoption scenario. Bars reflect range
of TCO breakeven dates for the other modelled scenarios. HDT is legally • Hydrogen production infrastructure for heavy industry
restricted from urban deliveries in India; the country is therefore excluded from
the segment analysis.
• Lessons and economies of scale from light-duty electric
Source: MPP analysis
powertrains and battery production that reduce BET costs
EXHIBIT C
Fully decarbonising trucking requires market forces
and other action
Annual GHG emissions by scenario, Gt CO₂e
Do Nothing Expected Adoption scenario Zero-Emissions scenario Accelerated Zero-Emissions scenario
Additional emissions savings Additional emissions savings from Additional emissions savings from
from “Do Nothing” Baseline to Expected Adoption scenario to Zero-Emissions scenario to Accelerated
Expected Adoption scenario Zero-Emissions scenario Zero-Emissions scenario
3.0
2.5
2.0
Cumulative
emissions savings:
24 Gt CO₂
1.5
7 Gt CO₂
1.0
6 Gt CO₂
0.5
0
2020 2025 2030 2035 2040 2045 2050
Source: MPP analysis
9 Well-to-wheel emissions, including tailpipe emissions, are included in this report’s greenhouse gas analysis.
10 See Appendix for a detailed review of TCO and main TCO assumptions.
EXHIBIT D
Capital
expenditure
17
18
27
15 16
EXHIBIT
EXHIBIT EE EXHIBIT
EXHIBIT FF
Charging
Charging and
and refuelling
refuelling BETs
BETs and
and HETs
HETs ICE
ICE trucks
trucks Capital
Capital expenditure
expenditure Operating
Operating and
and maintenance
maintenance expenditure
expenditure
infrastructure
infrastructure
United
United States
States Europe
Europe United
United States
States Europe
Europe
6.2
6.2 6.3
6.3
5.5
5.5 5.2
5.2
3.0
3.0 2.9
2.9 3.8
3.8 2.5
2.5 4.0
4.0 2.9
2.9
2.4
2.4 2.3
2.3
2.4
2.4 3.0
3.0 2.3
2.3 2.3
2.3
Do
Do Nothing
Nothing Zero-Emissions
Zero-Emissions Do
Do Nothing
Nothing Zero-Emissions
Zero-Emissions Do
Do Nothing
Nothing Zero-Emissions
Zero-Emissions Do
Do Nothing
Nothing Zero-Emissions
Zero-Emissions
Baseline
Baseline scenario
scenario Baseline
Baseline scenario
scenario Baseline
Baseline scenario
scenario Baseline
Baseline scenario
scenario
India
India China
China India
India China
China
13.9
13.9 13.5
13.5
8.5
8.5 7.9
7.9
8.2
8.2
11.7
11.7
5.6
5.6
4.6
4.6
3.5
3.5 7.3
7.3
2.2
2.2 5.6
5.6
1.3
1.3
3.5
3.5 2.2
2.2
1.3
1.3
Do
Do Nothing
Nothing Zero-Emissions
Zero-Emissions Do
Do Nothing
Nothing Zero-Emissions
Zero-Emissions Do
Do Nothing
Nothing Zero-Emissions
Zero-Emissions Do
Do Nothing
Nothing Zero-Emissions
Zero-Emissions
Baseline
Baseline scenario
scenario Baseline
Baseline scenario
scenario Baseline
Baseline scenario
scenario Baseline
Baseline scenario
scenario
Source:
Source: MPP
MPP analysis
analysis Source:
Source: MPP
MPP analysis
analysis
A fleet’s access to financing depends on national financial these new and expensive technologies. The transition should
infrastructure and the fleet’s size. Typically, larger fleets have include innovative financing and business models that can
better access to capital than small ones, meaning they will be minimise economic harm to individual firms.
in a better position to finance the purchase of expensive ZETs
and ultimately recoup those extra costs through operational Furthermore, many truck operators understand the promise of
savings. However, globally, most fleets are owned by small ZETs but see substantial near-term risk in the transition. ZETs
businesses, which sometimes have just a single vehicle. are a new technology with a relatively short track record. If they
fail prematurely, they will be very expensive to replace or repair.
These small businesses typically have much less access to Offering extended warranties for critical components such
capital than their larger competitors and often have less as batteries and including original equipment manufacturer
ability to maintain and repair new technologies such as ZETs. (OEM) service agreements can bolster fleets’ confidence in
The market needs models that reduce this burden on small ZET ownership and accelerate the transition. Another way to
businesses and enable them to gain access to ZETs without increase fleets' confidence is to strengthen the residual value of
having to make large upfront payments or develop specialised their end of life trucks. Though this analysis does not measure
maintenance capabilities. Business models such as truck-as-a- second hand market value for either diesel trucks or ZETs,
service (TaaS) and battery-as-a-service (BaaS) are short-term cultivating the downstream battery recycling industry helps the
leasing arrangements that can help small fleets gain access to environment and improves the ZET business case.
Although trucking decarbonisation is ultimately enabled and created increased costs to fleets. Especially in the early
accomplished by ZETs that are technically and economically stages of market development, increased demand alone is
superior to ICE vehicles, local policy designed to promote ZETs not sufficient to draw supply into the market in a way that is
can help secure the transition — especially in the early stages. compatible with ambitions for zero emissions. Policies designed
Those enacting policy should focus on simultaneously bringing specifically to induce supply must also exist. Such policies could
to market the supply of ZETs, creating demand for them, and include tax incentives or other subsidies to produce ZETs, such
ensuring the upstream infrastructure that enables them. If any as in the Netherlands, as well as specific regulatory regimes
of those three elements is lacking, the transition will be slowed that require the ZETs to make up an increasing share of vehicles
and net zero may not be achieved by 2050. sold, as in California.
Of the three, demand has historically been where most policy Finally, both supply and demand for ZETs are contingent on
action has been focused. A very common policy approach upstream value chains that enable the production and use of
increases demand for ZET technologies with vehicle purchase those vehicles. Policymakers should look upstream at issues
incentives that support early market development. A similar such as the ability of OEMs to ethically source raw materials for
approach is to alter the economics of operating trucks in critical ZET components and should invest in the infrastructure
favour of ZETs by increasing the prices of fossil fuels and to distribute electricity and hydrogen to places where trucks
subsidising the purchase of green electricity and hydrogen. will need it.
Finally, more forceful demand-side tools such as diesel bans
and diesel truck purchase requirements have been announced As they formulate these portfolios, policymakers should ensure
in several jurisdictions. both that they are catalysing the action needed from all parties
(supply, demand, and infrastructure) and that any costs created
Although demand is crucial, if policymakers stimulate demand by their policy portfolios to a particular party do not exceed the
for ZETs that is then unmet by supply, they will only have ability of that party to pay.
10 10
5 5
0 0
2025 2030 2035 2040 2045 2050 2025 2030 2035 2040 2045 2050
100 100
50 50
0 0
2025 2030 2035 2040 2045 2050 2025 2030 2035 2040 2045 2050
Note: Overnight chargers are assumed to have a capacity of 100 kW and fast chargers are assumed to have one of 500 kW.
By 2030 about 1.4 million to 1.8 million overnight depot chargers models 500 kW public fast charging, charging of a MW or more
and 400,000 to 700,000 public high-speed chargers will be can improve BET economics. With higher powered chargers, each
needed for BETs, and 1,000 to 19,000 hydrogen refuelling station can serve more vehicles and potentially access lower
stations across key markets will be needed for HETs. Putting such cost electricity generation. Improved economies of scale and
an infrastructure in place requires cooperation with governments lower energy costs would improve TCO, particularly for long-
and utilities, which must enable and support it. haul trucking. Parties have to coordinate charging and vehicle
investments to be successful.
A gradual build-out of public charging is already happening in
urban areas. Continued infrastructure development of major Needs go beyond charging infrastructure availability. Increased
transportation routes and the electrification of HDT hubs (e.g., electricity generation, grid upgrades, and the development of
large harbours, large industrial areas) would trigger the transition green H2 production and distribution are also required to meet
to ZETs for longer and more heavy-duty cycles. For infrastructure significant demand increases over the next decades. Electricity
build-out, it will be necessary to balance the needs of various demand for HDT will likely increase more than 100-fold between
stakeholders. For example, fleet operators need enough 2020 and 2030, and in our Zero-Emissions scenario, green
conveniently located charging stations to serve their routes, hydrogen demand takes off from zero in 2020 to as much as
whereas charging station developers need to have sufficient 1,000 terawatt-hours (TWh) in 2040 (Exhibit H).
station utilisation to justify their investments. While this report
5,000 100
4,000 80
64%
3,000 60
2,000 40
1,000 20 36%
2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050
5,000 100
4,000 80
53%
3,000 60
2,000 40
47%
1,000 20
2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050
ZERO-EMISSIONS TRUCKING:
A HEAVY-DUTY
TRANSITION STRATEGY
Decarbonising TRUCKING:
IMPORTANCE, Challenges,
and Solutions
BETs have some very attractive operational features. They are HETs operate differently. Hydrogen can be quickly added to
quiet and have no tailpipe emissions, enhancing driver comfort tanks in time frames that are competitive with those of diesel.
and reducing their negative effects on nearby people and However, although hydrogen is very light, it uses a lot of space.
businesses. They also have very high torque and can recover To be moved, it must be transported either as a liquid or as a
11 https://www.epa.gov/dera/learn-about-impacts-diesel-exhaust-and-diesel-emissions-reduction-act-dera.
The 2022 diesel prices are some of the highest ever.13 If diesel Furthermore, BETs qualify as zero emissions only if the electricity
remained persistently expensive, ZETs would enjoy an earlier used to charge them also qualifies as zero emissions. Many
and larger cost advantage, and market-based ZET adoption countries have plans to decarbonise their power sectors with
would be faster. In a high-cost diesel world, policy would play a renewables. Doing so is likely to require substantial investments
12 Combustion engines for hydrogen have lower manufacturing costs than fuel cells in the short term but have fundamental efficiency and pollution disadvantages.
13 United States Energy Information Administration, No. 2 Retail Diesel Prices, June 24, 2022, https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=-
PET&s=EMD_EPD2D_PTE_NUS_DPG&f=M.
These types of credit trading schemes, which both incentivise Operational patterns also differ by country. For example, the
the entry of EV suppliers to markets and enable EVs to be sold United States — a large land mass with low population density,
at a price the market will bear, can be applied to trucks as well. and economic centres on its East and West coasts — generates
For example, California has applied ZEV credit principles to very long trips for trucks. This length of haul makes truck
its Advanced Clean Trucks (ACT) rule, and the EU is planning decarbonisation more challenging. Europe, on the other hand,
to expand the light-duty average CO2 requirements to heavy- tends to have shorter lengths of haul due to greater population
duty markets. densities and more even distribution of economic activity. China
is similar to Europe in this regard. Although it is a very large
It is likely that regulators and ZET manufacturers in different land mass, both its population and its economic activity are
geographies will craft unique paths to spur the ZET transition. highly concentrated on its east coast and in certain economic
But in all markets, ensuring vehicle supply that meets demand mega regions such as the Pearl River Delta or the greater
at a price that markets can bear will be a key enabler of net Beijing area (known as Jing-Jin-Ji).
zero by 2050.
Given the still immature economics of trucking decarbonisation, In India, trucks travel shorter daily distances at slower speeds.
policy has been its main driver. Currently, Europe is doing Furthermore, much of the truck traffic in India is concentrated
the most to incentivise truck decarbonisation; it has an array in several corridors that are collectively known as the golden
of policies already in place, creating an early lead for truck quadrilateral. However, the easiest-to-electrify use case,
decarbonisation in that region. These measures include planned urban transportation, is nonexistent in India. This argues for a
phasing out of diesel and petrol, and incentives to buy ZETs. In relatively late starting transition in the country, but one that is
the United States, there is little policy support for ZETs at the potentially fast moving once it gains momentum.
national level, but strong policy from California and some other
states. This is likely to lead to a rapid but uneven transition, Finally, infrastructure availability may affect technology
some states leading and others lagging. selection. For example, India has a relatively underdeveloped
power grid compared with those of the United States, Europe,
China, on the other hand, has strong national policy for and China. Delivering the power to provide high-powered
electrification of lighter vehicles, but little policy focus to date charging for millions of trucks may conflict with other goals
on heavy-duty trucks. As a result, China is trailing in heavy truck such as increasing power reliability to existing users. This,
decarbonisation. However, China has shown itself to be capable combined with suitable geography for hydrogen production,
of rapidly driving transitions to electric vehicles through policy may lead to an increased use of HETs. Similar situations may
and infrastructure packages. If China does make a policy move play out in other countries where power delivery to certain
to decarbonise trucking, it is likely to be effective. sites is prohibitively expensive, leading to hydrogen use in
Finally, India is a relative newcomer to the electric vehicle world, applications where BETs would otherwise make sense.
• In Shihezi industrial park, a fleet of 100 battery electric • Tata Steel contracted for 27 electric trucks in 2021 to
trucks serve business based in the park. The trucks, with a transport finished steel. The trucks have a 35-tonne
gross weight rating of 38 tonnes, are manufactured by Sany carrying capacity and are equipped with a 2.2-tonne,
and SAIC Hongyan and feature swappable batteries ranging 230.4 kWh lithium-ion battery pack.
from 275 kWh to 425 kWh. The trucks typically make trips
of about 100 km and swap batteries at a facility in the • Dalmia Cement Bharat is set to purchase 22 electric trucks
industrial park. as part of its e-truck initiative. Dalmia will deploy the RHINO
5536 manufactured by IPL TECH trucks, which has a gross
• In July 2021, HeSteel Group deployed 30 fuel cell trucks vehicle weight of 55 tonnes and a 258 kWh battery pack.
transporting iron ore on a 150 km round-trip route. The company also commissioned two charging stations at
its Rajgangpur unit in the Sundergargh district of Odisha.
• In 2021, the Baoding government deployed 100 fuel cell
trucks for short-distance transportation of construction 1.3.4 United States
materials to building sites in Xiong’an. By 2024 it plans to
deploy a total of 1,000 such trucks along with 6–10 hydrogen • NFI. The North American supply chain solutions provider is
fill stations en route. testing a pre-production Volvo VNR electric with over 280
km of range and a class 8 terminal tractor out of its Los
1.3.2 Europe Angeles–area depots. It has plans to operate over 100
battery electric tractor-trailers by early 2023.
• DHL has announced plans to accelerate the transition by
deploying 44 new Volvo trucks (Volvo FE and Volvo FL) for • Frito-Lay North America. In Modesto, California, the
routes in Europe. These trucks will be used for package packaged-foods giant is using electric vehicles in its
delivery in urban areas. warehouse and delivery operations. That includes electric
forklifts, yard trucks, and six 220EV Peterbilt electric box
• Amazon has launched five electric 37-tonne trucks in the trucks for local distribution. The company has also placed an
UK. They are operating from the fulfilment centres in Milton order for 15 Tesla semi-trucks.
Keynes and Tilbury. Four more electric trucks are expected
by the end of 2022. • Anheuser-Busch. The world’s largest beer producer is
adding 20 electric trucks to its California fleet, including a
• Dachser, a family-owned logistics company from Germany, Class 8 BYD electric tractor-trailer.14
will introduce at least 50 additional battery electric trucks
on European routes by the end of 2023. • A.P. Moller-Maersk. A global leader in shipping services that
employs approximately 95,000 people, it recently ordered
110 Volvo VNR and 300 Einride electric trucks. It expects to
deploy 450 electric trucks in North America from various
manufacturers in 2022–23.
14 More information on fleet and vehicle performance can be found at NACFE’s Run on Less website: https://runonless.com/participant-profiles/.
A Model to Understand
the Transition to
Zero-Emissions Trucking
BOX 1
2. Increase supply chain efficiency. Shorter, less transport- Collectively, these strategies could reduce HDT sector demand,
intensive supply chains could potentially reduce the total thus reducing emissions by roughly 20%.18
travelled distances by about 3.5%.17
15 High-cost CO2 removal solutions are expected to play a limited role in heavy-duty trucking, because technologies are already available for the industry to
transition to ZETs.
16 Association of American Railroads, “Sustainability Fact Sheet”, 2020, AAR.org; and Rapid Transition Alliance staff, “On Track to Full Electrification: Low Carbon
Railways”, Resilience, July 21, 2021.
40
36.6
35
–30%
30
–6.1
+106% –1.5 25.6
25
–3.4
20
17.7
15
10
2020 demand 2050 reference case Mode shift Supply chain efficiency Logistical efficiency Low-demand case
Although mode shift, efficiency, and reduced fuel usage cannot number of zero-emissions trucks required, and efficiency
create a zero-emissions industry, they reduce the remaining reduces the industry’s electricity, batteries, and hydrogen
need for full decarbonisation. Demand reduction lessens the requirements.
2.1 MPP models a cost-effective The model approaches the decision to deploy ZETs much as a
transition to zero-emissions trucks truck purchaser would, by seeking to minimise the cost of the
truck over its lifetime — known as its total cost of ownership
Although MPP recognises the importance of demand (TCO) — while complying with applicable regulations. TCO
reduction as a decarbonisation tool, actually meeting covers the full cost associated with putting a truck on the road
demand with ZETs will deliver the bulk of the sector’s (purchase cost, registration fee, charger/filling station cost, and
decarbonisation. To understand how this transition is likely other costs) and the net present value of operating expenses
to play out, we have developed a model that estimates how (i.e., fuel, maintenance, CO2e costs, insurance, charger/filling
quickly ZETs can be deployed and what the rough costs of station costs) discounted over the truck’s lifetime using a 5%
doing so will be. real discount rate.19
19 The model includes some ZET adoption ahead of TCO-positivity and some ICE use afterwards for users that choose ICE vehicles even after ZETs make greater
economic sense.
We recognise that although the market is nascent, some Zero-Emissions — ZET Mandate scenario
degree of ZET adoption is likely through 2050 and beyond.
To understand how far the transition to ZETs is likely to go Sales mandates or sales bans are a common tool used by
without aggressive policy action and more rapid technological policymakers around the world to achieve ZET adoption targets.
development, we model an Expected Adoption scenario. In this The Zero-Emissions — ZET Mandate Scenario models a policy
scenario, there is no additional policy action by government, of phasing out new fossil fuel truck sales by 2040 to ensure a
and we use consensus estimates of the evolution of fuel and zero-emissions fleet by 2050. This captures the logic at play in
truck prices through 2050. policies such as California’s ACT and Advanced Clean Fleet rules
and the diesel bans enacted by several European countries.
Rapid Technology Improvement scenario
Accelerated Zero-Emissions — Carbon Cost scenario
Over the past decade, many analysts have drastically
underestimated the rate at which zero-emissions technologies In the Zero-Emissions — ZET Mandate scenario, operators still
(e.g., wind, solar, batteries) would decline in cost and gain minimise TCO, but the cost of carbon increases the TCO of
market share. Similarly, the adoption rate of passenger electric non-zero-emissions technologies. This second policy-focused
vehicles has frequently outpaced market forecasts, requiring scenario captures the dynamics at play in policies such as the
analysts to revise new forecasts upwards. To capture a similar EU Emissions Trading System (EU ETS) or California’s Low
potential for ZETs, we model a separate policy-agnostic Carbon Fuel Standard (LCFS).
scenario, the Rapid Technology Improvement scenario, which
sees faster development of low-cost BETs and HETs. The purpose of the scenarios described above is not to
advocate for any path that they describe, but rather to have
Both the Expected Adoption scenario and the Rapid Technology a framework to evaluate the costs and benefits of different
Improvement scenario see significant levels of ZET adoption, approaches (Exhibit 2.1). We anticipate that individual countries
and they are both market based. However, it is also likely that will ultimately formulate their own policy packages that
some policy action will be required to achieve zero-emissions implement features from each scenario and also add other
trucking by 2050. For that reason, we model two policy-focused elements that we have not modelled (e.g., subsidies, particular
scenarios, below. tax treatments).
20 In the short term, battery supplies are constrained because of growing demand for long-range passenger electric vehicles. Battery production capacity is growing
rapidly. Trucking is highly cost-sensitive, and if battery supply remained constrained, the passenger car market and others might be willing to pay more per kWh for
batteries than truck purchasers are.
Note: Carbon cost is based on BP Energy Outlook 2050, and diesel phase-out timeline is based on maximum vehicle lifetimes.
Source: MPP analysis
96% 97%
4 80
BET parity year
72%
2025
3 60
2 40
1 20
United States
5 100
95% 96%
4 80
64%
3 60
2 2026 40
1 20
2046
China
5 100
80 72%
4
67%
3 60
52%
2 40
2028
2049
1 20
2%
Note: HDT is legally restricted from urban deliveries in India; the country is therefore excluded from the segment analysis.
Source: MPP analysis
Europe
2.5 100
97% 97%
2.0 80
BET parity year
72%
1.5 2026 60
1.0 40
0.5 20
HET parity year 2040 1%
United States
2.5 100
1.5 60 63%
2028
1.0 2046 40
0.5 20
China
2.5 100
75%
2.0 80
71%
1.5 60
48%
1.0 40
2032
0.5 2049 20
5%
India
2.5 100
88%
2.0 80 67%
1.5 60
2034
1.0 2049 40 37%
0.5 20 11%
Europe
2.0 100
71% 62%
80
1.5
BET parity year 60
1.0 2033
40
0.5
20 11% 35%
HET parity year 2040
United States
2.0 100
80
1.5
57%
2036
60 66%
1.0
40
0.5
20 7%
2049 32%
China
2.0 100
80
1.5 48%
2038 60
1.0 45%
40
2040 28%
0.5 20 36%
India
100
80
2041 60 41%
40
43%
20 7% 36%
2048
75 75 39%
50 55% 50
59%
30%
25 25 16%
3%
2020 2030 2040 2050 2020 2030 2040 2050
To create cost breakthroughs that enable a more market- Many European nations have effectively committed themselves
driven trajectory to zero emissions, both governments and to this path through announcements or bans on internal
private financial institutions must direct capital to high- combustion engines at specific dates in the future. Furthermore,
priority research and development, such as breakthrough the EU has mandated two binding reduction targets for each
battery chemistries or low-cost hydrogen electrolysis. manufacturer’s sales, setting a target of 15% in 2025 and
Countries must also continue unbottling renewables through 30% in 2030 from the 2019 baseline. Some countries in the
new electricity generation and transmission, and hydrogen European region have gone further. The UK government has
distribution capabilities. announced its intention to phase out the sale of new diesel
and petrol heavy-duty trucks by 2040. The Netherlands has
3.2.2 Altering costs through policy levers announced that cities will allow only ZET deliveries after 2025.
to achieve zero emissions In the United States, California is already following this path
through its ACT and Advanced Clean Fleet rules. The Global
Even with strong investment and innovation, technology MOU is further encouraging ambition around the globe.21
development is an inherently uncertain process. If technology
development is unable to maintain the strong pace of the Under this scenario, sales until 2035 follow the same trajectory
previous decade, governments can intervene to ensure truck as they would under the Expected Adoption scenario.
decarbonisation. However, beginning in 2035, sales of ZETs ramp up rapidly
as the requirement begins to be enforced. For geographies
3.2.3 ZET sales and purchase requirements that already have seen extensive market development led by
favourable TCOs, such as Europe, this ramp-up in sales is not
One policy is a sales mandate requiring that supply to enter particularly steep. However, for markets with less favourable
the market. In this Zero-Emissions — ZET Mandate scenario, we TCOs in the early years, the ramp-up in sales after 2035 is more
model a required sales trajectory starting in 2035, which leads to abrupt (Exhibit 3.5).
a full exit of fossil fuel–powered trucks from the fleet by 2050.
21 Sixteen leading nations signed a Global Memorandum of Understanding (MOU) for ZE-MHDVs. The MOU establishes the goal of at least 30% vehicle sales being zero
emissions by 2030 and 100% by 2040 at the latest. Supported by over 50 subnational government and industry endorsements, the MOU aligns with Paris Agree-
ment goals and establishes a pathway for the commercial on-road transportation sector to reach net zero carbon by 2050.
80 80
60 43% 60
47%
40 41% 40 44%
32% 30%
20 20
15%
3%
2020 2030 2040 2050 2020 2030 2040 2050
China India
100 45% 51% 100 47% 51%
80 54% 80
60 60
55% 48% 53%
49% 49%
40 40
27%
20 20
7%
2020 2030 2040 2050 2020 2030 2040 2050
Source: MPP analysis
80 80
60 60
40 40 48%
36%
20
11% 24% 20
7% 15%
3%
2020 2030 2040 2050 2020 2030 2040 2050
China India
100 67% 53% 100 52%
80%
80 80
60 60
47% 48%
40 40
25% 33%
20 20
2% 7% 11%
2020 2030 2040 2050 2020 2030 2040 2050
Source: MPP analysis
Together, the modelled policy and market scenarios form an Population, millions of trucks
emissions envelope and provide insights into how the HDT 15 8.9
industry can transition to net zero (Exhibit 3.9). 12
9
6.1
6 5.9
3
0.7 1.4
2020 2030 2040 2050
Source: MPP analysis
EXHIBIT 3.9
Annual GHG emissions by scenario, Gt CO2e
Do Nothing Expected Rapid Technology Zero-Emissions Accelerated
Adoption scenario Improvement scenario, BET scenario Zero-Emissions scenario
3.0 Cumulative
emissions
(Gt CO2e)
2.5
66
2.0
42
1.5
33
1.0
36
0.5
29
EXHIBIT 3.10
Trucking fleet population Expected Adoption scenario
by scenario 10
8.4
8
Europe
6 6.1
Number of trucks, millions
4
Diesel Biodiesel
2
1.4
BET HET 0.3 0.5
2020 2030 2040 2050
Rapid Technology Improvement scenario, BET Rapid Technology Improvement scenario, HET
10 10
8.9 8.2
8 8
6.6 5.9
6 6
4 4
2 1.8 2
1.4
0.4 0.8
2020 2030 2040 2050 2020 2030 2040 2050
6.5 6.3
6 6
4 4
2 2
1.6 1.6
0.4 0.7
2020 2030 2040 2050 2020 2030 2040 2050
Source: MPP analysis
EXHIBIT 3.11
Trucking fleet population Expected Adoption scenario
by scenario 8
6.5
United States 6
4.3
Number of trucks, millions 4
Diesel Biodiesel 2
Rapid Technology Improvement scenario, BET Rapid Technology Improvement scenario, HET
8 8
7.4 6.2
6 6
5.0
4 4
4.3
2 2
1.1 0.9 0.9
0.2
2020 2030 2040 2050 2020 2030 2040 2050
2 2
0.9 1.2
0.1 0.7 0.3 0.9
2020 2030 2040 2050 2020 2030 2040 2050
Source: MPP analysis
EXHIBIT 3.12
Trucking fleet population Expected Adoption scenario
by scenario 20
China 15
11.2
Number of trucks, millions 10
8.4
Diesel Biodiesel 5
Rapid Technology Improvement scenario, BET Rapid Technology Improvement scenario, HET
20 20
15 15.8 15
8.1
12.8
10 10
7.5
6.1
5 5
4.3
2.7
1.5
2020 2030 2040 2050 2020 2030 2040 2050
5 5
4.0 5.0
2.6 3.2 3.6
0.9 0.4
2020 2030 2040 2050 2020 2030 2040 2050
Source: MPP analysis
EXHIBIT 3.13
Trucking fleet population Expected Adoption scenario
by scenario 15
12
India
9 7.7
Number of trucks, millions
6
Diesel Biodiesel 4.0
3
BET HET 0.6 1.4
2020 2030 2040 2050
Rapid Technology Improvement scenario, BET Rapid Technology Improvement scenario, HET
15 15
12 12
11.4
4.9
9 9
6.9
6 6 5.8
3.7
3 3
1.3 0.6 0.3
2020 2030 2040 2050 2020 2030 2040 2050
12 10.4 12 8.6
9 9
5.7
6 6
5.5
4.0
3 3
2.2 2.0
0.6 0.1 1.3
2020 2030 2040 2050 2020 2030 2040 2050
Source: MPP analysis
23 The model also reflects the benefits of urban density for fast-charging infrastructure. Europe’s urban fast chargers achieve higher utilisation because they have
more potential users nearby.
EXHIBIT 4.1
10 10
5 5
0 0
2025 2030 2035 2040 2045 2050 2025 2030 2035 2040 2045 2050
100 100
50 50
0 0
2025 2030 2035 2040 2045 2050 2025 2030 2035 2040 2045 2050
Note: Overnight chargers are assumed to have a capacity of 100 kW and fast chargers are assumed to have one of 500 kW.
Between 2025 and 2035, the demand for electricity for HDT Increased green hydrogen supply will translate into higher
will multiply by almost 10 in both the Zero-Emissions scenario electricity demand, as renewable energy is required to power
and the Accelerated Zero-Emissions scenario. By 2035, total the production process. However, this electricity for hydrogen
electricity consumption of 900–1,300 TWh is expected to power production is not included in the electricity demand in Exhibit
BETs, equivalent to 20%–35% of total final energy used in the 4.2, which refers to end-use electricity only. For reference, the
HDT sector. China is likely to see the most dramatic change in H2 multiplier (defined as the kWh of energy required to provide
consumption due to the size of its BEV fleet, followed by the 1 kWh of energy to the HET wheels) is estimated to be between
United States and Europe, whereas India’s electricity grid will 4 and 10 in 2030 and between 3 and 8 in 2050.
5,000 100
4,000 80
64%
3,000 60
2,000 40
1,000 20 36%
2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050
5,000 100
4,000 80
53%
3,000 60
2,000 40
47%
1,000 20
2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050
In the Glasgow Climate Pact, agreed upon in 2021, the parties ZETs or an inability to purchase ZETs or their fuels does not
to the United Nations Framework Convention on Climate derail positive developments in TCO.
Change (UNFCCC) recognise “that limiting global warming to
1.5°C requires rapid, deep and sustained reductions in global HDT stakeholders should target key areas for interventions
greenhouse gas emissions, including reducing global carbon in the 2020s in order to unlock decarbonisation’s potential.
dioxide emissions by 45 percent by 2030 relative to the 2010 Identified actions include:
level”. They add that this will require accelerated action this
decade, on the basis of the best available scientific knowledge. 1. Use milestones that collectively indicate whether the
transition is on course.
Although the HDT sector may not reach this 2030 goal, rapid
decarbonisation is technically and financially possible. Industry, 2. Create and deploy policy frameworks.
policymakers, and other stakeholders need to ensure market
adoption in two critical ways. First, stakeholders must continue 3. Stimulate innovative business models, financing models,
reducing costs in batteries, electricity, and public charging that and industry partnerships.
drive zero-emissions TCO. Cost decline trends must maintain or
exceed their current trajectories. Second, fleet operators need 4. Coordinate with other sectors to achieve economies of scale.
support so that soft costs related to considering or deploying
24 Jakob Fleischmann et al., “Unlocking growth in battery cell manufacturing for electric vehicles”, McKinsey Insights, October 2021, https://www.mckinsey.com/
business-functions/operations/our-insights/unlocking-growth-in-battery-cell-manufacturing-for-electric-vehicles.
5.2 Create and deploy policy Building ZET factories alone is not enough; a whole supply
frameworks that enable the chain of ZET components must exist if that factory is to
produce vehicles. These upstream activities also have their
transition and address key own financing and permitting needs. Policymakers should
bottlenecks in vehicle supply, coordinate closely with ZET manufacturers to understand
demand, and fuelling and address operational constraints on ZET production due to
upstream issues.
In the near term, the transition to ZETs will be difficult
because of high costs resulting from poor economies of scale Although incentives and soft cost reductions for both vehicle
and technological immaturity. Policy action can help to both production and upstream supply chains may help spur
catalyse the industry to take on those costs and enable the supply, the effects of financial support on production levels
costs to be allocated to different segments of society so that are unpredictable. To achieve certainty of supply at a price
they remain bearable. which the market will bear, policymakers can introduce sales
requirements, as currently exist in California and the EU. These
5.2.1 Supply can take the form of ZEV credits, as is common in California
and China, or the form of CO2 credits, as is common in Europe.
Investing in the new supply chains needed for a ZET transition In either case, these credit-based systems both guarantee
will challenge manufacturers. New factories or factory retoolings sufficient supply and create a market framework in which
are very expensive and require years of planning and permitting the incremental cost of bringing ZET supply to the market is
to be built. Policymakers can extend financial incentives ultimately borne by the producers of ICE vehicles — not the
through tax credits, preferential land use, or other policy levers purchaser of the ZET.
5.4 Coordinate with other sectors 5.4.2 Coordinating with industry and
to achieve economies of scale shipping on creating scaled
on the shared path to net zero production of green hydrogen
Trucking decarbonisation will require a wholesale shift to new Like electricity, green hydrogen will be a key enabler in
fuel sources to become a reality. However, ZET actors are not decarbonising hard-to-abate sectors. Ocean shipping will need
on this path alone. Other industries will be undertaking similar hydrogen to make ammonia, for example, and many industrial
changes on a similar timeline — creating opportunities for processes that currently use natural gas for heat, such as steel
shared costs and economies of scale in both the production and production, will switch to hydrogen as a heat source. Like
distribution of those fuels. Those opportunities include the below. many other fuel production processes, hydrogen electrolysis
shows strong economies of scale. A hydrogen electrolysis plant
5.4.1 Sharing the cost of electricity grid that is directly connected to utility-scale wind and solar can
upgrades with buildings, industry, produce green hydrogen at far lower costs than can a smaller
installation or one that is grid-connected. By co-developing
and light-duty vehicles regional hydrogen production hubs that supply multiple users
The “electrification of everything” is a key pillar of the of green H2 in each area, the trucking industry can both benefit
decarbonisation of the global economy. To achieve this from economies of scale in production and help reduce the
outcome, sectors as varied as heating and cooking in buildings, need for hydrogen transportation.
passenger transportation, and many industrial heat processes
are also moving towards electrification. These actions will also 5.4.3 Coordinating with aviation
require new capacity to generate and move electricity. Sizing on biodiesel production
the required upgrades to the needs of all electrifying sectors
from the start will reduce the total cost of infrastructure borne Although we see a minimal role for biodiesel in a fully
by any single sector. Furthermore, by avoiding individual decarbonised world due to limited cost-effective sustainable
upgrades for individual sectors, electric utilities can save time feedstock, the trucking industry should use what zero-carbon
and soft costs related to permitting and regulatory approvals liquid fuels are available to it. The primary user of biofuels is
for investment. expected to be the aviation industry. In many SAF production
pathways, both SAF and biodiesel are co-produced. This can be
valuable in the trucking market. By coordinating with SAF plants
to use those by-products, trucking can have a supply of liquid
fuels to enable the decarbonisation of use cases that are not
appropriate for either hydrogen or battery electric trucks.