Journalist Markham Hislop interviews leading energy experts from around the world about the energy transition and climate change.
Welcome to episode 310 of the Energy Talks podcast. I'm energy and climate journalist, Markham Hislop. Did you know that there are over a 1000000 commercial trucks in Canada? And even less well known fact according to an interview with the Trucking Association executive I did a few years ago, is that disabling emissions restrictions equipment is common. Since Canada's latest data pegs freight hauling emissions at 52 megatons a year, a good guess is that the official number is way too low.
Markham:All the more reason to support the switch from diesel to low emissions fuels for commercial vehicles. Pembina Institute has released a new report fueling the transition low carbon fuel choices for road freight, analyzing the role of clean fuels in the decarbonation of medium and heavy duty vehicles, a subsector of the transportation industry responsible for the highest levels of carbon pollution in Canada after oil and gas production. I'll be talking to Hong Zhu, Zhao, one of the report's authors, so welcome to the interview.
Hongyu:Hi, Malcolm. Thanks for having me. Happy to be here.
Markham:Well, I'm happy to be here too, and I apologize for mispronouncing your name. We gave it the old college try. We practiced a little bit before I came on, but we we did our best. Maybe we will start with an overview of the report, if you don't mind.
Hongyu:Sure. Thank you. So the goal of the report was really to help fleet owners and operators make decisions. You know, they are being told we need to decarbonize. I think most of them recognize there is a need to reduce emissions, and there are pending, regulations, environmental targets, and, carbon pricing issues like that that are going to increase the cost of the operations.
Hongyu:But a big question for them is how best can they direct their resources and investments, to achieve the most cost effective emissions reductions. And I think from a macro perspective as you are, we want to understand how can we help, fleet operators make those decisions in a way that makes sense for them as well as for the climate as a whole. So we look specifically at, for clean or alternative fuels. Now I know there's some crippling about that, but let's just go with that for now. Biodiesel, renewable diesel, renewable natural gas, and hydrogen.
Hongyu:And we kind of, assess the role of these fuels in decarbonizing fees during this transition as well as, during sorry, during both a transition period as well as a, part of a long term role of clean viewers for vehicle classes.
Markham:So, your report concluded that electrification is the most efficient way, the best way, and probably for a lot of medium duty vehicles like delivery vans, for example. That will be just fine. And in fact, I've interviewed experts who said that the delivery vans, medium vehicle medium duty vehicles as a rule works very well because they have predefined routes. They go, you know, x amount of kilometers per day. They go through their route.
Markham:They come back to a central location where it's very efficient to have them, re you know, recharged there, and so that works out really well. But for the heavier duty vehicles and class 8, for example, and long haul freight, that just doesn't work. Now will we be seeing electrification of those big semi trucks anytime soon? And I ask because the it looks like China is already making some progress in that direction.
Hongyu:Yes. Thanks for the question. I wanna go back a little bit, you know, just just to make a couple of points before I answer that question. I think the first thing that, we recognize in this report is that even for the medium duty trucks, where we we say and kind of agree that electrification is going to be the fastest and most cost effective, there's still gonna be a long period of time where we're going to have a lot of fossil powered, medium duty vehicles on the road. And so one of the key questions for clean fuels, which is also the core the clean fuel regulation, is what do we do to decarbonize these PDE goals or to at least reduce emissions in this interim transition period.
Hongyu:And that's where we talk about about biodiesel and immunobodiesal, coming in. But I think I think that's one important point I I I would like to make.
Markham:Can I jump can I jump in here if you if you don't mind? Yeah. So in the short term, while these vehicles are on the road because, you know, they have a life cycle. Right? I don't know what it would be for commercial, but I'm assuming maybe 10 years, 15 years, something like that.
Markham:And so what we're looking at is some kind of lower emission drop in fuel. Yes. Basically, that's and if that's biodiesel and renewable diesel, do you know I'm not even sure what those are or the difference between the 2. Maybe we could, if you could explain that for my listeners, please.
Hongyu:Sure. So, both biodiesel and renewable diesel are generally, as the name suggests, diesel made from biomass. You know, can be could could be canola, we saw it be in a a waste, biomass. And and the production techniques and the refining techniques are a little different for both. But the essential difference is that a biodiesel is usually blended with diesel.
Hongyu:There's There's a certain percentage of blending, and instead so that's the kind of blended diesel form. Whereas renewable diesel is chemically the same as diesel. So it's processed in a way that makes it, you know, it's a it's it is essentially a drop in fuel. You can change you can swap renewable diesel for diesel, in theory at least and mostly operationally as well. You can do that with with no problems.
Hongyu:So, biodiesel wise, I think there are some concerns. Although this is this is being addressed, but there'd be some concerns and experience with truck operators that above a certain, point, be I would say below a certain point, there are, freezing issues or clouding issues, you know, below 20 degrees or 10 degrees Celsius. Whereas with renewable diesel, there's less of a concern.
Markham:So the, the choice for the, commercial, the carrier will depend on their where they're located, the applications for which the truck is being used, those sorts of things.
Hongyu:Yes. And, also, of course, fuel availability. Right now, I think the main renewable diesel plants are in, British Columbia. So some operators, for example, say that they want to explore renewable diesel as a way to reduce the emissions, but they can't get it outside of the lower mainland. So that is changing in Canada.
Hongyu:You know, maybe this is a bit of a tension, but what we experienced in Canada is that most of the, biodiesel and even, renewable diesel production, is exported to the US because prices are better there, And then we import the rest of the BioTeesor. So it's kind of a weird way of doing it, but, you know, that's how the map the market operates. You know? So there have there are some new plants opening up in drop Canada, in Fiji, in Quebec, in Newfoundland. I'm sorry.
Hongyu:Atlantic problems as I should say. And those will increase in the production. It's expected to also increase in the US, so that may increase supply.
Markham:I've I have heard that, it's either happening or expected to happen that some of the conventional refineries will be converted to biodiesel or renewable diesel facilities. Is that happening?
Hongyu:I'm not my knowledge of this is about the same as you are. I think I am not totally privy to those news. Coproduction is a big element of where it occurs. We will do so is, it's mainly coproduced right now. So I'm talking more about standalone facilities, which are, you know, and type in, and come by chance in Newfoundland, the tight water facility as well.
Hongyu:So those are opening up. I'm not entirely sure about that, sort of process.
Markham:Okay. What are the likely effects of improvements to batteries that are coming in the next little while? We're already seeing in China, we're hearing Zeekr is putting out you know, installing a, 1,000 kilometer battery in in some of its vehicles. It's widely expected that by maybe 2026, 27, we'll have semisolid state batteries that can be charged faster, higher energy density, and then, of course, true solid state, coming hard on, on its heels, maybe 20, 28, 29. And that would suggest to me that the dramatic increase in density and the ability to charge much quicker would make electrification more, applicable to many of these vehicles?
Hongyu:Yes. So and and thanks for that, first step, to answering the the the first question you had about, the long haul segment and the, you know, where batteries are are currently right now a big challenge. So I think one of the points we make in this article is that on the report is that we are relatively, I would say, fairly confident about our assessments for the next 5 years, where we think that, you know, for the medium duty segment, pursuing electrification is it makes the most sense and as factories improve, they will continue to make the most sense. When we talk about the long term, predictions or assessments, I think we have a lot less confidence in where the market is gonna go, and that's where I think we recognize the importance of having a technology neutral policy. So for example, you know, outside of this report, we've we've also been strong advocates for 0 emission vehicle mandate.
Hongyu:I I believe the, the federal government, you know, in terms of the clinical regulations as well as the its targets for zero emission support for zero emission vehicles Generally supports either hydrogen or battery, electrification as both potential zero emission vehicle options. So for the long haul segment right now, most operators and most automakers think that hydrogen fuel cell vehicles are the most viable path because hydrogen lower recharging time, lighter batteries, you know, so it meets the needs stating for the long haul segment. That's where people are trying to go. But you are right. Better batteries and cooling batteries could make them competitive hydrogen, but I think we we we can't tell for now, and that's where the technology neutral, you know, zero emission approach is the is what we prefer.
Markham:Hydrogen is one of the most controversial topics, in, in my journalism. And whenever hydrogen comes up, there's a a small group of my readers and listeners who immediately take it upon themselves to educate me on how, unfeasible or infeasible, hydrogen is as a fuel for anything. And I had Michael Lieberk on this podcast, the founder of Bloomberg, NEF, and and he went into great detail about why hydrogen, is inefficient, uneconomic, can't be transported long distances. There are a lot of disadvantages, of hydrogen. My position has always been that we should continue to experiment with a wide variety of technologies, including hydrogen.
Markham:So we we need to know, in fact, what use cases there are. If there are if there are none, then we will have determined that there are none, and we can move on to something else. We don't we can you know, if if hydrogen just is not feasible in medium and heavy duty vehicles, move on. We'll figure something else out. But if it is, then we should know that.
Markham:We should have figured it out. And, frankly, 2 years ago, when the Alberta Motor Carriers Association, I think it's called the anyway, the long haul truckers in Alberta, they're currently running a test, on hydrogen vehicles. There are 2 hydrogen trucks running between Calgary and Edmonton. And I was at the announcement, and then I interviewed, the Edmonton city manager, Eddie Robards, about their hydrogen buses, and it looks like their hydrogen buses were a bust. They didn't pan out at all.
Markham:And I'm wondering if you have any insights into some of these other testing that's going on with hydrogen vehicles, like the one with the, the 2 long haul trucks.
Hongyu:Yes. I believe, so the automotive motor transport association, I believe, that the main actors in, trialing, hydrogen long haul trucks in Canada today. Although, of course, trials are occurring around the world as well, and we need to learn the lessons from, those trials happening as well, as in as much as that applicable to to Canada. Hydrogen buses, you know, there there there's some movement in Alberta, minimal movement elsewhere. I think there's as you as you said, a lot of it is at a preliminary stage.
Hongyu:I think that when we talk about the difficulties with hydrogen, I think we view we need to export those technologies. Another question that, needs to be asked is how many problems are we trying to solve at the same time? Because, you know, when we talk about production, whether it's the steam methane reforming or electrolysis, electrolysis may be more expensive, may be more challenging, and then they also pause the distribution and the problems with the end use case as well. Do we even have the vehicles to begin with? So I think this is where, you know, conversations with stakeholders and and we kind of, indicators in our report as well.
Hongyu:Right? We don't make any real conclusions in the report about where we stand on this. I think it's a contestable contested issue. But, that, you know, there's one school of thought that says, if we support hydrogen production through through steam methane reforming, they're just lost in natural gas that, you know, emissions aren't necessarily improved. And so, you know, it is is, it's a distraction, so to speak.
Hongyu:Right? But, I think the other question is, okay, if we want to pursue electrolysis and we try to solve all problems with the hydrogen network simultaneously, you know, the vehicles, getting the vehicles out there, getting the distribution, getting the production correct, is that even a achievable goal as opposed to, okay, let's talk about getting the vehicles and the distribution, where where the hydrogen comes from, we don't care, and then we can go back and try to solve the production. So I I think that's you know, when we think about hydrogen, that's that's those are 2, separate questions, in
Markham:my Interesting. Interesting. So the the focus is on the the the hydrogen fuel cell vehicles and distribution. We'll start there. Then we'll worry then we'll worry about producing hydrogen, with 0 emissions, and very, and much lower cost than it is than it is now.
Markham:And, okay. The, my take on this, I just give you my opinion from what I've read and and the interviews I've done, is that if hydrogen in transportation is going to have any kind of an application, it will be generated on-site. You know? So that if you have a refueling station for a long haul long haul trucks, it won't be produced someplace with steam methane reforming and then shipped by pipeline there.
Hongyu:Yeah. It's
Markham:just not gonna work. It it'll have you'll have an electrolyzer, maybe a meth a methane, pyrolysis, process, something like that, and you'll make it right there. Otherwise, it's just too cumbersome and expensive, maybe even dangerous to do it. So that's that's just an observation, and we'll see how that all that all pans out. So where are we, in those 4 fuels that you mentioned?
Markham:Where are we at with testing and and rollout? We've talked about hydrogen now, so that's very much at the preliminary stage. What about the other ones?
Hongyu:So, one thing I might add, is that, you know, again, in our conversations with stakeholders, for the hydrogen element is that there are a number of private operations that are trying to figure out on their own, and they have private fueling stations. Unfortunately, they aren't very willing to share information. And So this is something that, you know, we we don't we have very little daylight on, you know, and so that's something that maybe we're looking at. Another thing that I think most stakeholders expressed an interest in is that to the extent that public money is given for trials, those information should be publicly available. You know, I think there is some changes towards that, but data sharing and, you know, kind of, data sharing and kind of openness is something that's been little missing in the Canadian landscape, in the past.
Hongyu:So that needs to change if we want people and information to to grow. So yeah. Aside from hydrogen, I think we talked a little bit about I mean, again, the biofuels, biodiesel, renewable diesel, the technology you use it is widely known. It's fairly accessible. There's no real issues there.
Hongyu:The issue there is with, how do we scale up production in a sustainable manner. You know, so the key for regulations, you know, the cop when it calculates cover intensity, it includes, bio landscape use and agriculture emissions and things like that. Post a big game of controversies, indirect land use change, which is a lot harder to calculate, you know, where, where maybe, just just to explain a little bit what that means. It's where, direct land use change means where, crop growers convert land into agricultural users for the purpose of biofuels. Indirect land use change, it looks at a more larger market perspective, you know, to the extent that we have more biofuel demand or agricultural demand on the market that could cause agricultural land to expand and use to expand which, causes increased emissions.
Hongyu:But, you know so that's extremely hard to calculate. We don't really have a good grasp of doing that yet. But the I mean, we know how to do it. Scaling up sustainable production is is, is a question mark. So the the the last field that we kind of talked about is, renewable natural gas or, natural gas.
Hongyu:So I think we we separate those two things. Natural gas and vehicles, I think, something that a lot of, advocates, make the point, which is that, natural gas vehicles is a technology that is available today. We have the trucks. Even for long haul, I think there were many people saying that, there's a new, bigger engine that's being developed for the Canadian market for the long haul segment that is supposed to be a game changer. So, you know, it's recently released, so that's something that many people are paying attention to.
Hongyu:So the technology is there. In terms of fueling stations, we don't have as much at the moment, but we know how to distribute natural gas in this country. It's it's not a big question. You know? I think in Ontario, there have been some bad experiences in the past, but people at least the people I spoken to say that they've learned the lessons from the previous attempt to push natural gas, and that's something that they are Because that's what the, proposed method of decarbonization is.
Hongyu:Because that's what the, proposed method of decarbonization is. We will expand natural gas, and then we have renewable natural gas coming in to decarbonize the natural gas. There there are very different assessments about our ability to scale up renewable natural gas production, in a way that actually achieves us meaningful and sustained decarbonization of natural gas vehicles in a way that in a way that is being claimed, especially if, readable natural gas is also being used for other use cases. So right now, in BC and Quebec, which are the main provinces that push with the natural gas, is the the goal of renewable natural gas is is mixed into the natural general natural gas supply. So if you consider the natural gas is gonna use for home heating, for industry, and for transportation, the exact proportion of minimal natural gas that's gonna go to transportation is gonna be correspondingly low.
Hongyu:And, you know, in in Ontario, they have not been that's not really been settled yet. I think people are still trying to explore, the various options, but it seems to be where the the system is moving as well. So the key question there again is, can we scale up renewable natural gas production, in a sustainable way that's able to meet the demand and the claims that we so that we can carbonize natural gas and not lock in, natural gas vehicles and natural gas and transportation fuel. And that's why I think we expressed some concerns or some, you know, skepticism about our ability to do that. Obviously, this is very technology and market dependent.
Hongyu:There could be many innovations and changes to it, but I think, you know, Fortis, DTC did an assessment, and the problem, I think, for the Metro and Metro guest is that, the the more sources that we try to get natural gas from, minimal natural gas from, the more expensive it tends to become. So right now, the most accessible and cheapest from natural gas, we, minimal natural gas come from landfills, from, farm residue, from, you know, waste products. But there's a finite source of that. So we want to scale that. We're gonna look at forest waste.
Hongyu:We're gonna look at, wastewater. It's just increasingly more and more inaccessible and expensive places to obtain minimal natural gas from. So I think that's the the fundamental challenge that going to face the renewable natural gas industry is how do we scale up production in a way that's both sustainable and cost effective for end users.
Markham:One of the issues that's come up in conversations about the about long haul trucking is that not only, and this is a claim that's been made by folks that I've talked to. I don't know myself, but, about 25%, apparently, of the, trucks running out there are hauling loads heavy enough to require diesels or, you know, the kind of torque and horsepower that would re you know, would argue for a diesel. Many of them are lighter. Like, if you're hauling a, a load of, I don't know, bricks versus a load of potato chips
Hongyu:Right.
Markham:And going over the mountain, those are 2 very different things, and you we need very different drive trains. You you know? And so if we have 75% of the freight is light enough that it can doesn't require the maximum horsepower and torque that's comes with the diesel, Did that come up in your study at all?
Hongyu:Yes. So the camera came up with a number of ways. I think the first way it came up was, in this assessment that, trucks pool heavier waste than American trucks. And so that's often an issue when it comes to the availability of vehicles for the Canadian market. For most manufacturers, especially for the newer lower emission or hydrogen, natural gas, whatever it is, will sell to the American market before they sell to the Canadian market.
Hongyu:So in that way, we offer an alignment. The second, thing I would say is that, most, if not all, the stakeholders I spoke to talk about the need for data. We I you know, this is a concern I spoke to them, but we don't have that information. We don't know what the average weight is. We don't really know how far they travel or where they go.
Hongyu:It's very scattered data all over the place. StatsCan and Transport Canada no longer really do, commercial vehicle assessments or surveys. The initial, you know, Transport Ontario, the last commercial vehicles today was something like 2015 or, you know, before the pandemic, before Amazon even really goes up. It's supposed to be a 5 year cycle, but, they skipped. There was a pause because of the pandemic.
Hongyu:I know MTO according to MTO website, they were supposed to have done a survey last year, but I I, you know, the the results of that have still not been released. So, you know, we we we don't know. And I think so that's, I think, one thing that we at Pembina are working on with, with with, the federal agencies, but it's something that I think we definitely need to see more of provincially as well as federally. We we need to collect that data before we know. I would say also that, one issue there, and that again comes back in the data, is the averages could say one thing, but variation is also really important for a fleet operator.
Hongyu:You know, the fleet operator carries, heavy lowest than it is, so only 10% of the time, but it needs that truck for that 10%. Right? So it's not like they could use 1 truck for 90% and then another truck for 10%. That's that's not an economical way to do business. So, ultimately, feed operators if feed operators are going to say, we need a truck that can do that 10% of the work even though 90% of the time is not going to be doing that work, then we are going to have to cater to that or we need to think about how can we meet those needs, you know, other alternative business models.
Hongyu:But right now, given that the majority of can be a long haul truck in Canada is carried out by small fleet owners who have less than 5 trucks. They are not gonna be sitting around saying, I wanna use 1 truck for 10% of the time. That's that's there's no way that makes sense as a business model. Maybe if you have a huge fleet, then you could say, okay. For a long, for our long haul, the involves heavy fleets, we will use this specific fee, and that makes sense for them.
Hongyu:But for smaller fees, that's, you know, that's just not gonna happen.
Markham:Well, this has been a fascinating conversation, And the, a lot of times with the the energy transition, we're talking about, you know, big sort of sexy issues, if you will, like today's announcement by president Biden that there'd be a 100%, tariffs on, Chinese electric vehicles. But, really, a lot of what goes on in the energy system are these kinds of technical conversations. How do we do that? You know, we're making choices. We have options.
Markham:The options are changing over time. What what how do we do this? Where do we get data from? It's a, it it is a very, in some ways technical conversation, and I appreciate you coming on and and explaining it for us. Thank you very much.
Hongyu:Yeah. Thank you. I I would say that what makes the medium and heavy duty vehicle, but sector particularly challenging as opposed to the light duty vehicle sector is that the technology is just a lot more uncertain, and there's just a lot more option for that. And so they introduce the uncertainty, which we are trying this report to address and to reduce. And so I I hope I've done some of that.
Hongyu:Thank you very much for having me on, for taking the time to speak to me.
Markham:Well, we'll have you again. Thank you very much.