Tuesday, August 16, 2016

Major Freight and Road Haulage Outfit to Cut Emissions in Half by September

Introduction of HVO 100 Biofuel Will Have Major Effect on Logistics Supply Chain
Shipping News Feature
SWEDEN – NORWAY – FINLAND – In the Nordic countries a quiet revolution is taking place in the road haulage sector and statistics released this week from freight and logistics group DSV show that as early as next month the company’s Swedish road fleet handling all domestic groupage transport will discharge 50% less carbon dioxide than today. DSV says its domestic groupage loads are already handled in a closed HUB system that ensures maximum utilisation of cargo capacity and thus reduces the number of vehicles on the roads. Now the widespread introduction of HVO100 fuel is reducing carbon emissions, with a 90% drop the target envisaged, as ever more filling stations offer the fossil free alternative.

HVO 100 is one of the new alternative fuels, Hydrotreated Vegetable Oil, and it is gaining a strong foothold as a sustainable fuel in the road transport sector since DSV obtained permission from the manufacturers of Euro 5 and 6 engines to use the non-fossil fuel in its fleet of vehicles and that of subcontractors. HVO is actually a bit of a misnomer in this case as the compound DSV uses is extracted both from plants and abattoir waste. Christer Hagsund, CFO, DSV Road AB explained how his company is increasingly using alternative sources of power saying:

"Our groupage freight system uses 9 million litres of diesel a year, equivalent to 26,000 tonnes of carbon emissions. By converting to HVO 100, followed by thorough control of hauliers’ compliance with the rules, we’ll have reduced our emission by 13,000 tonnes already by this September. Today, we have 150 vehicles running on HVO 100 or biogas in our food distribution. Developments move fast and most new vehicles are approved for HVO 100.

“As more and more filling stations offer this fossil-free fuel, HVO 100 will become the most accessible biofuel that ensures a rapid transition to a non-fossil vehicle fleet. In accordance with our ISO 14001 certification, we work towards ongoing improvement and follow-up on our environmental efforts. Our goal is to successively enhance our performance and achieve reductions upwards of 90% when the prerequisites are in place.”

By March of this year Mercedes-Benz had followed Volvo, MAN and Scania in approving HVO 100 for various engine models and the aspiration of the industry is to appease the environmental lobby which points out the detrimental effect of diesel use by road haulage operators. HVO 100 is exempt from duty but the plague of all the biofuels is twofold. Firstly the question of supply, at the moment Neste Oils, based in Finland seems to be the largest player in the market, according to the Nordic Logistics Association, churning out up to three million cubic metres annually, almost double what a country like Norway uses in a year.

Neste produces fuels in the Netherlands and Singapore as well as its home country whilst other refineries are in place or under construction in Italy, the UAE and elsewhere. The advantage the manufacturers have is that all the biofuels are generally exempt from EU and other restrictions on their physical make up which hydrocarbon fuels are subject to. To be considered sustainable, biofuels must achieve greenhouse gas savings of at least 35% in comparison to fossil fuels. This savings requirement rises to 50% in 2017. In 2018, it rises again to 60% but only for new production plants. All life cycle emissions are taken into account when calculating greenhouse gas savings. This includes emissions from cultivation, processing, and transport.

The second problem is also a supply liked one, controversy rages over the constituent parts of fuels such as HVO 100. Palm oil particularly is under scrutiny as it is generally accepted that its production has led to widespread deforestation in areas where it is grown. Palm fatty acid distillate (PFAD) is a by-product of palm oil refining and caused outrage when it was deemed an acceptable ingredient in HVO fuels by the Norwegian Environment Agency.

One other concern for the road haulage industry is that, whilst major players such as DSV can employ the new resource, smaller operators may not have the economy of scale or purchasing power to compete, particularly if the fuel is in comparatively short supply. Additionally the production of the new fuels is unregulated as such, despite the oversight of the European Commission, and needs further official oversight to ensure unscrupulous suppliers are not feeding waste from unauthorised sources into the supply chain.