Reflections on a changing industry

In 2005, Environmental Defense Fund launched a project to cut greenhouse gas emissions from commercial fleets. The problem was clear: over 3 million cars and trucks populating national fleets that are driven much more regularly than personal vehicles and tend to have larger engines. The result? Tons and tons of emissions.

We knew that there was a clear business case for cutting emissions: less fuel consumption equals less expenditures and lower emissions. To capture these reductions, though, we needed to redefine what it meant to have a “green” fleet program that focused on performance rather than tools. A tool-focused approach, such as exclusively increasing the number of hybrid or flex fuel vehicles, often cost added costs and affected only a small percentage of the fleet.  A performance-based approach could touch every single vehicle and capture savings from the lowest hanging fruit such as decreased idling, higher MPG vehicles and better routing.

So how is this effort going? From a high level – very well. More fleets than ever have emission reduction goals, and many of them have done so publicly. All of the major fleet management companies offer a service for reducing greenhouse gas emissions, and largely catching on strategies for right-sizing vehicles, cutting idling and working with drivers. Overall, the industry saw a significant decrease in emissions per vehicle of 18% from 2006 levels.  The recently released green practices survey from PHH Arval enables us to dig a bit deeper, though, and explore some clear industry trends.

Companies are increasingly tracking fleet emissions
The first step to a robust performance-based green fleet program is to track emissions. When we began the project in 2005, anecdotal evidence suggested that only a tiny fraction of companies were tracking fleet emissions – between 5% and 10% of companies with large fleets. The PHH survey has marked an increase since 2008 from 28% to 49% of fleets that are actively tracking emissions.  The availability of measuring services from the fleet management services and open tools, such as the EDF-NAFA calculator, had made measurement more accessible. The quality of the measurements has improved too. Over 60% of fleets that are measuring emissions use actual fuel data.  All in all, the fleet industry has made good progress.

Of course, the flip side is that 51% of fleets are failing to measure emissions at all – a disappointing number given that no clear barriers exist today around measuring emissions. Interestingly enough, 68% of companies stated that they had an environmental goal for fleet, which means that 20% of fleets have a goal but don’t track the most significant environmental impact of their operations. I’d like to hear from any of those fleets:

What’s keeping you from measuring your emissions?

Availability of lower-carbon vehicles
For the past three years, PHH has asked about challenges fleets face. Over the past three years the response “Can’t get the vehicles” has dropped nearly by half (28% from 42%). My sense is that this reflects the growing availability of higher MPG conventional vehicles (such as the Chevy Cruze and the Ford Transit Connect), as well as the availability of more advanced technology vehicles.

Cost Concerns
Another challenge PHH inquired about was costs, which has been an increasing concern over the past three years.  In its white paper on the survey, PHH noted,

There may be multiple reasons for this. First, many fleets have already undertaken some of the ‘easy’ ways to reduce emissions – right-sizing vehicles and putting the drivers in the most efficient vehicle in each class. Some of the next steps – which might include hybrids, alternative fuels, driver training, or telematics – all cost money, and fleets have to very carefully evaluate the payback. In the ongoing economic uncertainty, many companies are cautious about spending money without a quick, proven payback.”

While I agree that we’ve made a lot of progress in right sizing vehicles, I don’t think we’ve gathered all of the low-hanging fruit. As PHH noted, strategies such as driver training have yet to be adopted. Carried out well, these strategies can have a good return on the required investment. The problem is not one of overall cost, though, since the company can reduce its overall expenditures through a good driver training program. Rather, it’s about investment. Like barriers to other energy efficiency efforts, companies are not allocating the funding to undertake these programs that will payback fairly quickly.  How can we start to overcome this barrier with fleets?

It’s clear that while trends are moving in the right direction, significant work remains. Together, the fleet industry needs to speed up the movement toward greenhouse gas management, break down the barrier to effective strategies that require a modest upfront investment, and continue to incorporate advanced vehicle technology to enhance our understanding of how they can help meet the duty cycle while cutting back on emissions.  EDF looks forward to doing our part in meeting these goals.

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