Navigant Research Blog

E-Trucks : The Outlook for 2012

— January 11, 2012

As we think about what to expect for 2012, I have assembled a short list of what I am watching in the world of medium and heavy duty trucks.  Here are several key trends that we are watching in the truck market in 2012:

1)      The world economy is improving (albeit slowly), such that overall truck purchases are expected to rise this year.  The United States saw consumer confidence and spending grow slightly in the last quarter and should be able to extend this into 2012, despite continued risks in Europe.  Speaking of Europe, the crisis in Ireland and Greece appears largely averted.  While other countries remain worrisome (looking your way, Italy), the leadership finally appears to be taking this seriously and 2012 is looking to be a bit smoother than 2011.  Interestingly, a cloud that hangs over early 2012 is China’s potential trade deficit with the United States.  Slowing exports may mean that China’s employment may not keep up with its growing urban population, which would stunt domestic economic growth.  This could potentially add to the economic growth in the U.S. and Europe as imports to China rise.  However, expect that the Chinese government will make some policy changes (stimulus or monetary changes) to bolster specific domestic economic sectors – likely producing a positive impact on the truck market in China.

2)      We anticipate that 2012 will be the year that hydraulic hybrids will move from demonstration projects to full commercialization.  These hybrids will be focused in the largest users of fuel (we have seen them in delivery vans and refuse trucks for the most part so far).  This focus will continue, but wider fleet adoption is expected in 2012.

3)      Natural gas is growing in heavy applications (transit buses and Class 8 trucks) where the upfront cost of hybrids and plug-in remains a significant hurdle.  In 2012, this trend is likely to continue, particularly in European and developing Asian markets.  The lower cost of the natural gas conversion and the availability of low cost refueling infrastructure in some markets will push transit agencies in particular to focus on CNG as the fuel of choice. 

4)      Plug-in electric truck growth has been slow in 2011.  A large part of this is due to the industry being focused on the United States, Japan, and China for plug-in trucks.  Japan spent a good part of 2011 rebuilding from the disastrous earthquake, leaving China and the weak economy of the United States to lead the global sales of plug-in trucks.  China is expected to be flat or even slightly lower in 2012 depending on how item #1 plays out, leaving the focus to remain on U.S. into 2012.  However, Pike Research expects that Europe will start to see significant growth in plug-in trucks as well.  Smith Electric Vehicles of the U.K. (now part of the U.S. Smith Electric Vehicles) is well positioned for growth, and Daimler and Mitsubishi Truck & Bus (Daimler owns 85% share) have demonstrated the Fuso Canter E-Cell battery electric truck based on one of the most popular truck platforms in Germany.  Transit buses are another source of interest in heavy duty electric drivetrains in Europe, with electric bus projects showing up in the U.K. and France.

5)      Small fleets will continue to be neglected in 2012.  While the big fleets (think Fedex, UPS, DHL, Perolator, Fritolay) capture the headlines because of their large green truck purchases, a large part of the volume in the medium and heavy duty truck market comes from small fleets.  These small fleets have been largely ignored by emerging plug-in and hydraulic truck technology, leaving CNG and hybrids to take a lead in this market.  This won’t likely change in 2012, though hybrids may start to play a bigger role in this market as Hino, Navistar, and Freightliner continue to push their hybrids through their large dealer networks.  However, most smaller fleets will continue to look towards truck and engine downsizing, and alternative fuels as their best options for reducing fuel costs.


Victory for Greenpeace as Facebook Un-Likes Coal

— January 10, 2012

The release last month of a joint announcement by Greenpeace and Facebook marks the end of one of the most interesting green campaigns of recent years.  Greenpeace first targeted Facebook 20 months ago, after the social media giant announced a new purpose-built data center, which it turned out would depend on electricity mainly generated from coal.  Facebook cited its commitment to building an energy-efficient data center, but Greenpeace argued that ignoring the prime source of energy for the site undermined other green elements of the strategy. 

According to the new statement, Facebook is now committed to using renewable energy in future data centers and also offers to promote this approach to other companies:

Facebook is committed to supporting the development of clean and renewable sources of energy, and our goal is to power all of our operations with clean and renewable energy.  Building on our leadership in energy efficiency (through the Open Compute Project), we are working in partnership with Greenpeace and others to create a world that is highly efficient and powered by clean and renewable energy.

A number of specific activities are also mentioned in the statement.  Facebook has committed to adopting a siting policy that states a preference for access to clean and renewable energy supply, and funding research into energy efficiency that will be shared through the Open Compute Project.   The company will also “Engage in a dialogue with our utility providers about increasing the supply of clean energy that power Facebook data centers.”

Greenpeace, meanwhile, will help support for the Open Compute Project, by encouraging companies to join in, use the technology, and share their own efficiency innovations, and will encourage utilities to offer ways for customers to get their utility data.

Purists may decry the lack of specific goals or actions relating to existing data centers, but the statement clearly marks an acceptance by Facebook of Greenpeace’s basic argument.  The biggest irony of the campaign of course is that Greenpeace used the facilities of Facebook to campaign against Facebook.  More than 700,000 people signed up to the organization’s Unfriend Coal page on Facebook (which now includes a timeline description of campaign).  Now that same platform (though not necessarily that page) will be used to encourage energy efficiency and to convince other companies to adopt clean energy sources.

The Open Compute project mentioned in the statement was started by Facebook as a means of sharing its own work on energy efficiency in the data center.  While the initiative sought to counter some of the flack being received from Greenpeace, it also addressed an important criticism of many of the major Internet companies with regard to their secrecy over their data center operations.  The new sense of cooperation between Facebook and Greenpeace is likely to put more pressure on other Internet and cloud providers to increase their transparency in this area.  The campaign demonstrates the importance and visibility that is now attached to data center facilities and the fact that citing a low power usage effectiveness (PUE) rating isn’t enough to satisfy environmental campaigners.

The power of Facebook, Twitter and other social media is now becoming evident on a daily basis.  In our recent report Social Media in the Utility Industry, for example, we estimate that in 2011 more than 57 million utility customers worldwide will use some form of social media to engage with their electricity providers, and that number will grow to 624 million by the end of 2017.  As Facebook found, important conversations are already going on that will impact your business, whether you’re involved or not.


On Clean Transportation Policy, Less Is Not More

— January 9, 2012

Political developments in the last couple of months of 2011 highlighted the quagmire into which U.S. energy policy has sunk.  In November the Obama Administration postponed a decision on a 1,700 mile pipeline to deliver tar sands oil from Canada to refineries in Texas called the Keystone XL until 2013 (the GOP-led Congress subsequently moved this timetable up to February of this year, to ensure the decision comes before the general election).  Shortly after that both Enbridge and TransCanada floated alternatives and partial solutions designed to reduce the bottlenecks that the Keystone XL pipeline was supposed to solve.  At almost the same time in Danville, NY, the Department of Environmental Conservation held public hearings on permitting hydraulic fracturing for natural gas in New York. 

While each of these events had their own specific issues and implications, all could have an impact on motorists.  The Keystone XL pipeline was designed specifically to add pipeline capacity to utilize excess oil refining capacity in Texas.  While this will not have an impact in the short-term, by 2015 the current pipelines will be at capacity and fuel costs will increase.  The administration’s move to delay approval of this pipeline is seen as either an environmental win or short-sighted instance of kicking the can down the road, depending on which side of the issue you sit on.

Although New York’s fracking debate is a state-specific issue, this is more a representation of the issues facing the natural gas vehicle industry.  Between the push-back on hydraulic fracturing and the now all-but-defunct NATGAS Act, it seems clear that while politicians often express support for natural gas vehicles, that support is largely hollow.  While the NGV market may not need political support to survive, what’s more disturbing is the lack of national guidance at the federal level on new oil and gas extraction technologies, which means that the effort to monitor and improve fracking safety will likely be left to states and local governments.  This may in fact be the single greatest negative threat to the NGV market in the coming years.

Meanwhile, a bill has been introduced in Congress to end the Advanced Technology Vehicle Manufacturing Loan (ATVM) program.  This will inevitably be linked to the loans offered to Solyndra, the solar cell manufacturer that collapsed last fall.

All of these developments demonstrate that when it comes to clean transportation, U.S. policy is a mess.  The ATVM loans and the postponement of Keystone XL both have the potential to change the way Americans drive, through technology and higher petroleum costs.  This, in combination with increasing availability of public transit, is the strategy that the Obama Administration appears to have fallen into – a sound, long-term, high-cost strategy that clearly isn’t supported on either side of the aisle.  Meanwhile, the market for NGVs struggles toward viability.

The one-word answer to the question of U.S. policy on clean transportation would be simply “Less” – less oil, less technology, less alternative fuels.  Unfortunately, “less” is not a strategy, and neither the Obama administration nor Congress seems willing or able to come up with one.


The Smart City – From Vision to Reality

— January 9, 2012

The news that the 2012 TED Prize has been awarded for the first time to an idea, The City 2.0, is further evidence of the importance of cities in addressing global issues of sustainability, economic development and technology innovation.  The TED Prize is linked to the acclaimed TED conferences and video series promoting ground-breaking technical, scientific and cultural ideas.  According to the prize director, the idea behind the award is to challenge the TED Community “to embrace radical collaboration on one of the most pressing issues we face: how to build sustainable, vibrant, working cities.”

The TED announcement is just one of series of new studies, events and initiatives all focused on taking sustainable urban development programs to the next level.  Eric Bloom has already covered the recent IBM-sponsored smart city gathering in Rio de Janeiro.  He highlighted the innovative projects in Rio that are addressing systemic challenges and preparing the city for the arrival of the World Cup and the Olympic games.  The UN has provided another useful example of how major events can propel new thinking about city design and development.  It has pulled together lessons for sustainable cities drawn from the Shanghai World Expo in 2010, which had  the theme of Better City, Better Life.  The Shanghai Manual, A Guide for Sustainable Urban Development, provides a 300 page overview of the opportunities for cities to take new approach to issues such as economic development, transport, building, waste management and the use of ICT.  The manual is part of the UN’s attempt to educate and train city authorities around the world on how they can make their cities a positive force for economic development and environmental sustainability.

The core themes of the UN study were also the common topics of conversation at the Intelligent City Expo, which I attended in November.  Over three days in Hamburg – European Green Capital 2011 – city managers and political leaders, not-for-profit organizations and suppliers debated the way forward for cities.  There was general agreement that a smart city is one that combines a commitment to sustainability with continued economic and social development supported by the innovative use of technology.  Much of the discussion focused on the practical challenges of developing the political leadership, citizen engagement, and new operating models that enable the transformation to a smart city.

One of the biggest challenges is how to provide the financial underpinning for that transformation.  In fact, the first question asked at the conference to the opening panel was “Who pays?”  I chaired the panel that addressed this topic on the second day of the conference, comprising representatives from European investment bodies, including the European Investment Bank, and also from the private equity sector.  In Europe at least, investment funds are available for trials and pilots, but taking projects to large-scale deployment is still uncharted territory in most cases.  It’s also clear that the private sector is eager to find new ways to work with city authorities but they need to find the right service and right business models.

One area of growing interest is the value of information and data assets in helping to reimagine the way the city operates.  This issue has been taken up by The Climate Group, in a new report on smart city economics, Information Marketplaces: the New Economics of CitiesThe report, produced with the help of Accenture, Arup and the University of Nottingham, examines the potential for cities to use untapped data and information assets to improve decision making, make better use of city infrastructure and develop new forms of  cooperation with the private sector and with citizens.  It’s a useful contribution to the growing debate as to how city data and information assets can provide a technical and financial basis for smart city transformation.   The challenge for cities is to understand what data they should make available, in what form and above all what partnerships they need to forge to ensure that that hidden value is realized.


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