PepsiCo, Walmart and setting a standard for sustainable fleets | GreenBiz

By Lauren Hepler – May 24, 2017

Mike O’Connell has a big job. As PepsiCo’s senior supply chain director for fleets and sustainability, he is tasked with overseeing the food and beverage giant’s fleet of 50,000 tractors, trailers, route trucks and other vehicles.

“We have a mix of about every truck type,” O’Connell observed. “We’re one of the larger private fleets in the United States.”

Amid an increase in fuel and electrification options for vehicles of all sizes, the company has moved to a blend of diesel, natural gas and even a handful of all-electric vehicles. But O’Connell and his peers overseeing other large corporate fleets have one problem: Until now, no one has really mapped out how the growing number of options stack up economically or in terms of environmental impact.

Enter the new Sustainable Fuel Buyers’ Principles drafted by companies such as PepsiCo, Walmart, UPS, Amazon and the nonprofit membership group Business for Social Responsibility, or BSR. The effort, an outgrowth of BSR’s ongoing “Future of Fuels” initiative, aims to bring fleet owners together to help grow the market for low-carbon or electric industrial vehicles.

“The story is definitely one of evolution,” said Nate Springer, who manages BSR’s Future of Fuels group. “There’s just a ton of information gaps and uncertainty and, frankly, disagreements on, ‘What is a sustainable fuel?'”

Springer hopes that 10 to 15 companies will be on board with the Sustainable Fuel Buyers’ Principles by year end. In the meantime, the group, which is free to join, will look to encourage fuel pilots, spur dialog about potential standards in the space and create case studies about successful implementations.

Modeled in part off the Corporate Renewable Energy Buyers’ Principles hammered out by the World Resources Institute and World Wildlife Fund to catalyze corporate clean energy deals, the idea is to inform automakers and other equipment manufacturers that the demand for traditional diesel alternatives exists.

“The buyers’ principles are signaling to the market that we really want to dig deeper,” O’Connell said. “There’s not one answer to the entire question of sustainable fuel or sustainable fleets. It would be great if I could just go buy one technology.”

Beyond efficiency

All told, the Environmental Protection Agency estimates that medium- and heavy-duty trucks account for about 23 percent of annual U.S. transportation emissions. That’s still well below the 61 percent that comes from cars and other light-duty vehicles, but it is an area of impact that companies and regulators have been looking to decrease for years.

Elizabeth Fretheim, director of logistics sustainability at Walmart, said much of her focus in recent years has been on doubling the efficiency of the mega-retailer’s fleet of 6,400 tractors and 60,000 trailers — almost all of which are heavy duty class 8 trucks. Lightweighting vehicles, improving aerodynamics, experimenting with tires and training drivers on downspeeding techniques are just a few tactics that Walmart has used to increase the number of cases shipped per gallon of fuel consumed.

Still, she said the company’s fuel portfolio remains “almost exclusively diesel,” a ratio that likely will have to change as Walmart embarks on a recently announced bid to cut 1 billion metric tons of greenhouse gas from its supply chain by 2030.

“We’ve been thinking of alt fuels for years, but we haven’t found a solution,” Fretheim said. “To fill the gap, we’re going to have to find alternatives.”

A dizzying array of biodiesel, natural gas and biomass options are commercially available today, although many come with their own environmental, performance and cost trade offs. Longer term, more radical alternatives such as electrification and hydrogen fuel cells are also on the horizon.

Springer said that BSR approaches the topic from a “fuel-neutral viewpoint,” but that the goal is to better understand the range of commercially viable power sources for vehicles. One way BSR hopes to answer that question is by producing more holistic data on the topic.

“Nobody has ever done a full demand study,” Springer said. “Ideally, this will help to give a sense of size and scope of the market.”

O’Connell, for his part, also cautions against an idealized view of all-electric trucks anytime soon.

“I don’t necessarily see a world where there’s no fuel,” he said.

[Learn more about low-carbon fuel and fleet options at VERGE 17, Sept. 19-21, in Santa Clara, California.]

The trouble with super-sized EVs

Given that a natural gas vs. diesel debate doesn’t thrill many environmental advocates, one longer-term issue to watch is how electrification translates to bigger vehicles.

As it stands, O’Connell and others said that there is still a disconnect between the range and availability of small vehicles operating on alt fuels or electric power trains and their bigger brethren.

PepsiCo, for instance, owns more than 100 medium-duty electric trucks used for short-range deliveries of 60 miles or less. The manufacturer of those trucks, Smith, is one of several niche providers that has faded.

“Unfortunately, due to the business environment, they didn’t sustain,” O’Connell said. “The problem is the industry is just not there yet. I’m very optimistic about what’s coming.”

A range of companies are eyeing the electric freight space, from upstarts such as Uber to major automakers including Volvo. Fretheim said she hopes one takeaway from the new fuel buyers’ principles is “a consistent message” that more advanced electrification options and other technologies would have buyers if they were commercialized.

Manufacturing issues aside, O’Connell said that arranging for the fuel or electric charging capacity to keep fleet facilities on the road is another problem. PepsiCo has helped finance natural gas stations near some of its distribution facilities, but electrification brings with it another set of infrastructure questions.

“There is a large amount of partnership with the utilities that’s needed if you scale up anymore to where you need more power,” O’Connell said.

With both fleets and the equipment needed to power them, Fretheim sees only one coherent path forward.

“We need to move forward as an industry because of the cost of the equipment and the cost of the infrastructure,” she said.

“Unless we move forward as an industry, I don’t think we’ll succeed.”

Source: PepsiCo, Walmart and setting a standard for sustainable fleets | GreenBiz