(NEW YORK, NY) Broader collaboration among key stakeholders and a new generation of finance solutions will be important to electrify trucks and buses at scale, according to a report released today by Environmental Defense Fund, MJ Bradley & Associates and Vivid Economics. These solutions form a Total Cost of Electrification Toolkit that policymakers, fleet owners, utilities and investors can use as a roadmap to accelerate demand for electric trucks and buses, while reducing barriers to investment.
“Our nation is at a tipping point - the plummeting costs of zero-emission technology and the growing demand for cleaner vehicles all indicate we’re ready to transition away from the diesel trucks and buses that pollute our neighborhoods and threaten the climate,” said Andy Darrell, Chief of Strategy, Global Energy & Finance for EDF. “We’ve got to move beyond the traditional paths for vehicle finance and unlock the private capital needed to electrify these vehicles at scale.”
While diesel-powered trucks and buses make up only about 4% of vehicles on U.S. roads, they have an outsized impact on our climate and health. Electrifying these vehicles can tackle some of the biggest sources of climate and air pollution, while contributing to creating millions of jobs across the country. But financing is still a major barrier to this transition.
To date, traditional government grant programs have helped fleet owners replace diesel trucks with cleaner ones. These programs typically focus on one-to-one vehicle replacements, rather than the system-wide investments now needed to support the transformation of this sector.
This new report provides technical details about these challenges, as well as solutions that can help policymakers, fleet owners, utilities and investors overcome the financial barriers to electrification.
- Many fleet electrification barriers - like vehicle upfront costs - are known and accounted for in traditional Total Cost of Ownership (TCO) calculations. However, various softer costs, risks, uncertainties and market frictions, like those that stem from emerging technologies, local permitting and changes to operational patterns must be considered.
- A new framework, called Total Cost of Electrification (TCE), can help policymakers, fleet owners, utilities and investors begin to account for and better understand these diverse barriers.
- The TCE Toolkit, a first-of-its-kind resource, matches the most significant barriers to innovative financing solutions (like green bonds) and non-financial support tools (like battery health programs) to overcome them.
- Researchers interviewed over 30 fleet operators, public and private finance professionals, as well as EV public policy experts to inform these resources.
“The electrification of trucks and buses offers a massive investment opportunity, especially at a time when cities, counties, states and the federal government are exploring ways to merge economic stimulus initiatives with a commitment to build back better,” said Richard Kauffman, Chair of the Board of Directors at Generate Capital, Adjunct Senior Research Scholar at the Columbia Center on Global Energy Policy and former New York “energy czar.” “Success will take focused collaboration among policymakers, fleet owners, utilities and a wide range of capital providers each doing their part to accelerate the transition. The solutions featured in this report will help catalyze the electric vehicle transformation.”
The innovative finance mechanisms showcased in this report are an important part of a collection of solutions that can accelerate the transformation of the large truck and bus fleet.
Durable, long-term emission standards must be the centerpiece of this transition. These can be complemented by innovative financing, investments in charging infrastructure, development of smart electricity pricing structures, and programs that prioritize deployment within the communities most burdened by air pollution. With bold leadership, we can ensure 100% of the new trucks and buses entering the fleet are zero-emission by 2040.
For more information on this report, see our website at EDF.org/FinancingTheTransition, which includes an interactive TCE Toolkit.
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Environmental Defense Fund (edf.org), a leading international nonprofit organization, creates transformational solutions to the most serious environmental problems. EDF links science, economics, law, and innovative private-sector partnerships. With offices in the United States, China, Mexico, United Kingdom and Indonesia, EDF’s 750 scientists, economists, attorneys – and our partners and allies – work in 26 countries to turn our solutions into action. Connect with us on Twitter @EDFEnergyEX and @EnvDefenseEuro. For more information: edf.org/eumethane
Environmental Defense Fund Europe (edfeurope.org) is a registered charity (charity number 1164661) and a company limited by guarantee, incorporated in England and Wales (company number 09217493).