Battery and hydrogen-powered electric trucks are considered vital for net-zero trucking, but adoption depends on region, duty cycle and supporting policies.¹³⁸

Absolute emissions, measured by gigatonnes of CO2 equivalent, are influenced by various factors such as fuel burn, load factors, vehicle type and route type. Currently, around 64% of the industry’s total life cycle emissions arise from day-to-day operations, including vehicle use, maintenance and repair.¹⁴⁸ Addressing long-haul emissions could potentially decarbonize 86%¹⁴⁹ of the fleet in the EU. As BETs and hydrogen-electric trucks (HETs), scale up commercially, absolute emissions are expected to reduce almost equally between 2030-2040 and 2040-2050.

Emissions intensity in the trucking industry measures the amount of CO2 released per gigajoule of energy generated through fuel combustion. This intensity is influenced by vehicle types and combustion rates. Over the last four years, emissions intensity has reduced by around 14% due in part to efficiency measures, operational improvements and an increase in biofuels in the fuel mix. Currently, BETs have a high emissions intensity due to the reliance on coal and other fossil-based fuels for power generation. However, as clean power scales up, emissions intensity is expected to approach zero by 2030. To achieve net-zero targets, the trucking sector should aim to reduce emissions intensity by roughly 30% by 2030 and approximately 80% by 2050.¹⁵⁰

The key decarbonization strategy is to replace diesel combustion trucks with BETs, with HETs playing a smaller role. Immediate measures to accelerate emissions reduction include increased operational efficiency in transport and distribution, fuel efficiency measures and modal shift from trucking to rail. Achieving a predominantly ZEV fleet by 2050 requires collaboration among industry stakeholders, government and global advisers.¹⁵¹ Priorities include investing in charging and refuelling infrastructure, advancing R&D for long-haul BETs and HETs, and stimulating market demand for zero-emission trucks (ZETs). These coordinated actions aim to accelerate infrastructure development and reduce overall ownership costs, promoting adoption throughout this decade. Despite the current dominance of fossil fuels in the fuel mix, a 53% emissions reduction is projected between 2030-2040 as commercial-scale BETs become widespread.¹⁵²

Two leading zero-emission pathways have emerged, with BETs being more advanced. HETs are expected to become commercially available by 2025. Both BETs and HETs have the potential to reduce in-transit emissions to near-zero. However, adopting these technologies could increase TCO by 33-133%,¹⁵³ depending on duty cycle and range.

The main challenges to widespread adoption include limited range, challenges in charging and refuelling infrastructure, and onboard storage restrictions, especially for long-haul applications. Consequently, adoption remains limited to around 1%.¹⁵⁴

BETs and HETs have the potential to reduce life cycle GHG emissions by up to 84%¹⁵⁵ and tailpipe (tank-wheel) emissions to around zero. BET technology is currently commercially available for light and medium duty trucks, though adoption is low, at around 1%¹⁵⁶ of the global fleet. Hydrogen-electric trucks are not available at commercial scale, with expected availability around 2025.¹⁵⁷ However, sufficient onboard storage of clean hydrogen and large lithium battery capacity requires additional vehicle length, restricting the applicability to long-haul applications. While Adani Enterprises,¹⁵⁸ for example, signed an agreement with Ashok Leyland and Ballard Power to launch a pilot project in 2023 to develop a 55-tonne hydrogen fuel cell electric truck for mining applications, most projects are limited to the demonstration stage.

The implementation of BET and HET technologies includes a TCO increase of up to 1.3 times¹⁵⁹ due to the retrofitting requirements, fleet renewal requirements and necessary modifications to the existing fleet.

Recharging of BETs has yet to achieve commercial parity with the speed and convenience of refuelling diesel vehicles, charging can take up to 8 hours. While technology advancements have been made, with companies like bp announcing their first ultra-fast charging station aimed at recharging a heavy-duty truck (HDT) in 45 minutes, similar projects are generally limited to the demonstration stage.¹⁶⁰

Transition fuels are less carbon intensive than legacy fuel sources, with emissions reduction potential ranging from 70-75%.¹⁶¹ Renewable gas, synfuels and biofuels are commercially available today and are being adopted at a higher rate than low-emission technologies. However, these fuels are more emissive in terms of both absolute emissions and intensity than BETs and HETs, and in some cases are blended with fossil-based diesel.

The commercial scaling of BETs and HETs hinges on the availability of crucial infrastructure. Currently, less than 1% of the necessary infrastructure is in place,¹⁶² falling short of what’s needed to enable the adoption of BETs and HETs. To enable the industry to meet 2050 targets, substantial investments ranging from $2.1 to $3.3 trillion¹⁶³ must be allocated within the trucking industry.

To support the projected target of 53% BETs and 47% HETs on the road by 2050,¹⁶⁴ the trucking industry will require a significant boost in clean power capacity. Specifically, this translates to approximately 8.5 times the current clean power capacity of the entire UK annually and a 54-fold increase in global clean hydrogen capacity.¹⁶⁵ The associated costs for this are estimated to be up to $1.3 trillion.¹⁶⁶

For BETs to become feasible for medium and long-haul transport, they need access to charging infrastructure, both on-site and roadside. By 2050, an estimated 11 million charging stations will be required to meet the rising demand for BETs.¹⁶⁷ Some promising initiatives are under way in Europe, exemplified by Milence,¹⁶⁸ a joint venture between Volvo, Daimler and Traton, aiming to install at least 1,700 ultra-fast charging points across Europe by 2025. Companies like Siemens¹⁶⁹ are exploring alternative solutions to traditional wired charging, including overhead catenary charging and in-transit wireless charging,¹⁷⁰ which may provide a variety of options for future charging requirements.

HETs require access to onsite hydrogen refuelling infrastructure. To meet the demand for HETs by 2050, an estimated 190,000 refuelling stations will need to be established, incurring costs from $0.3-0.7 trillion.¹⁷¹

In 2022, the market demand for ZETs stood at approximately 1%.¹⁷² As such, the ability to absorb a 33-133% green premium for BETs and 100-300% HETs remains untested at scale, with HDTs attracting the higher end of this range.¹⁷³
The tight margins in logistics suggest the industry would struggle to absorb these premiums at commercial scale. Present adoption rates fall short of the industry’s net-zero trajectory, where ZET sales are expected to constitute 100% of the 2050 net-zero scenario.¹⁷⁴ To stimulate demand, estimates suggest a green premium of 10-15% would be necessary to maintain ZETs affordability in the market. However, only a small portion of the price premium, around 1-3%, is expected to be passed to end consumers due to transport costs accounting for around 5% of a product’s retail price.¹⁷⁵

Efforts to increase demand-side market measures include near-term ZEV sales mandates in countries like China, Canada and Norway, which are anticipated to accelerate adoption towards 2030. Some major carriers, including DPD, have imposed green surcharges ranging from 14-27% on fossil fuel use.¹⁷⁶ However, the uneven development of clean captive and grid-based power infrastructure poses a risks of temporary emissions intensity spikes in regions where power sources primarily rely on fossil fuels, until clean power capacity catches up. Additionally, slower policy development to support the growth of charging and refuelling infrastructure, crucial for maintaining regular business operations, may result in cost penalties for fleet owners, and oversupply issues for original equipment manufacturers (OEMs). However, emerging business models like trucks-as-a-service (TaaS)¹⁷⁷ may help OEMs mitigate these risks, creating an additional revenue stream to ease the impact of high green premiums, while reducing CapEx and on-site charging requirements for fleet owners.

Currently, few manufacturers have successfully demonstrated models of zero- emission HDTs for long-haul application.¹⁷⁸ With limited availability of ultra-fast charging infrastructure, operators are exploring alternative business models such as battery-as-a-service (BaaS) to meet growing ZET demand.¹⁷⁹ Under the BaaS model, fleet owners purchase the truck body, while batteries are owned and maintained by service companies. Fleet owners subscribe to a monthly fee, and their drivers can quickly swap HDT batteries at charging stations in as little as 2-3 minutes.¹⁸⁰ The Chinese State Power Investment Company (SPIC) has already sold 10,000 BaaS-enabled trucks and established 100 charging stations.¹⁸¹ Private companies like Golden Concord Group (GCL) are advancing this effort, with 10 stations along the Beijing-Shanghai highway by year-end, and an additional 175 planned stations in China.¹⁸²

Trucking policy has evolved to incentivize the adoption of ZEVs with sales targets and purchase subsidies, notably led by the EU. The trucking industry is highly fragmented, with a mix of both large and small players, truck types, services, duty cycles and load types. It is usually regulated at supra-national (EU), national and sub-national levels, depending on regional dynamics. While tailpipe emissions have been a focus, addressing GHG emissions is equally important.

Effective public policies should facilitate ZEV adoption by developing essential clean power, hydrogen generation and charging infrastructure. The EU stands out with comprehensive policies, while other regions also implement measures such as ZEV sales targets, fleet decommissioning incentives and purchase subsidies to drive adoption.

The trucking industry will require an estimated $2.1 trillion by 2050,¹⁹⁵ requiring $78 billion in additional annual investments for fleet owners for fleet owners to retrofit their trucking fleet with battery electric powertrains. This represents four times the current annual expenditures in the trucking industry of $18 billion.¹⁹⁶

Recent data suggests the business case for investing in zero-emission trucking remains weak due to high costs and uncertain returns. The industry’s current profit margins of roughly 15%¹⁹⁷ and WACC of 10%¹⁹⁸ suggest it may struggle to absorb these extra costs and generate adequate returns solely from internal cash flows.¹⁹⁹ As technology scales and economies of scale take effect, investment requirements are expected to decrease.

Facilitating the funding necessary to support this transformation in developing nations will play a pivotal role in enabling a zero-emission trucking sector. International multilateral finance institutions should adjust their investment portfolios to align with the requirements of the trucking industry. In the United States and Europe, where internal combustion engine (ICE) trucks are substantially more expensive than in India and China, the upfront net capital investment required to achieve net zero is 25% to 30% more than continuing to use mostly diesel. However, in India and China, where ICE trucks are cheaper, the incremental costs of ZETs and their infrastructure are more significant.²⁰⁰

The existence of ZETs depends on both the supply of these vehicles and the demand for them, which are interconnected with the upstream value chains facilitating their production and use. Policy-makers should focus their attention upstream by addressing concerns like the ethical sourcing of essential raw materials for ZET components by OEMs. Additionally, investing in the infrastructure required to distribute electricity and hydrogen to areas where trucks will require these resources is crucial.

Worldwide, governments are stimulating both the desire for and availability of ZETs by enforcing more stringent emissions goals, fuel criteria or both. Prominent logistics firms and major truck purchasers are pledging to reduce carbon footprints and cut emissions, thus creating growing demand for ZETs. Established OEMs and emerging players are making substantial investments in the advancement of ZET models, while fleet operators are channelling investments into acquiring vehicles and establishing on-site infrastructure. An example of innovative ZET deployments includes Shihezi industrial park in China, a fleet of 100 BETs serve
business based in the park. The trucks typically make trips of about 100km and swap batteries at a facility in the industrial park.²⁰¹

The fragmented nature of the industry makes aggregating data on net-zero commitments by companies challenging.