The Future of Energy in Transportation

Speakers

• Scott Wicker, Vice President of Corporate Plant Engineering and Chief Sustainability Officer, UPS
• Ned Harvey, Chief Operating Officer, Vice President of Finance, Rocky Mountain Institute (RMI)
• Bryan Jacob, Director of Energy Management and Climate Protection , The Coca-Cola Company
• Eric Olson, Senior Vice President, Advisory Services, BSR (Moderator)

Highlights

• Fleet operators are currently working to improve fuel efficiency and explore new fuel technologies.

• There are powerful opportunities for collaborations to develop the demand necessary to advance the economics of new technologies and bring them to scale. Cross-sector collaborations are also a way to find broad solutions in overcoming challenges to adopting innovations.

• It is important for companies with large fleets to lead the way in identifying and fostering new technologies, then to help disseminate them to a broad market and audience.

Memorable Quotes

“The key thing to remember is you don’t have to do it all at once, and it’s foolish for us to talk about doing it all at once.” —Ned Harvey, Rocky Mountain Institute (RMI)

“[For] fossil fuels, as the demand for them goes up, the price for them goes up; as the demand for technology goes up, the price goes down. So it’s kind of a simple equation, and we’ve got to get the demand up.” —Scott Wicker, UPS

“You have to achieve scale for these [shifts] to get to the tipping point on prices that we need.” —Bryan Jacob, The Coca-Cola Company

Overview

Olson began the session by laying out three main approaches to energy issues: 1) identifying dramatic improvements in efficiency; 2) promoting, scaling, and commercializing alternative fuels; and 3) thinking about what to do with fossil fuels during the transition period to alternatives. He framed the discussion around considering the right way to think about a strategic approach to those issues, drawing on the different experiences of the panelists.

Jacob provided an overview of The Coca-Cola Company’s carbon and fuel efforts. After acknowledging the breadth of the business and its efforts in reducing carbon from manufacturing and refrigeration, he focused on the company’s work to “refuel” their fleet. This work involves a number of initiatives, including reducing idling time, rolling out a large hybrid-electric trucking fleet, purchasing hybrid passenger cars for the sales force, participating in the National Clean Fleets Partnership, and purchasing all-electric trucks.

Wicker explained UPS’s sustainability efforts across its aircraft and its fleet of more than 100,000 ground vehicles. Noting that fuel disruptions or price increases can cause real business problems, Wicker elucidated a dual focus on increasing efficiency and driving improvements through technological advances. For example, the company deploys approximately 2,300 green vehicles utilizing a range of alternative energy options. They also use sensor-based, onboard telematics technology to track truck speed, idling times, and routing to optimize fuel usage. Furthermore, UPS provides customer-focused greener shipping and logistics solutions. Wicker also observed that as demand for greener fuel solutions goes up, the price goes down, making it critical to collaborate to get the scale needed to realize solutions.

Harvey explained RMI’s vision and blueprint to move the country almost entirely away from fossil fuels by 2050. Identifying broad cross-sector approaches, RMI has indicated ways for businesses to drive the shift and be profitable, including improvements in vehicle efficiency, shifting to smaller power trains and electric vehicles, utilizing smarter logistics, extending personal automobile efficiency to trucks and planes, and eventually turning to biofuels. These shifts should not be simultaneous, but rather a progression.

Olson asked the panelists about barriers to progress. Wicker highlighted costs and the challenge and importance of crafting incentives. While larger companies might be able to handle some cost premiums, he observed that those decisions are harder for small companies. Jacob echoed those sentiments, pointing out that while Coca-Cola capitalizes on many available incentives, they just barely balance costs. Smaller operators might not have the time and resources to secure those incentives, limiting adoption. He also mentioned the difficulty of quantifying reputational benefits.

In the Q&A period, Erin Koch of Sempra Energy asked about how time-of-use electricity pricing affects electric vehicle economics. Wicker acknowledged that to be a factor, along with the on-site infrastructure required to charge a large number of electric vehicles. Harvey cited this as a great opportunity for fleet owners and utilities to collaborate on ways to charge efficiently while balancing peak electricity demand.

In response to a question from Peter MacConnachie of Suncor Energy about the role of diesel, Harvey asserted that increased efficiency is good for now. Nevertheless, the volatility of fossil fuel prices makes them untenable to bet one’s business on. At the same time, he acknowledged the importance of finding the most efficient ways of using fossil fuels in the short term. From here, the session split into three discussion groups, each of which discussed key opportunities and challenges. The group with Harvey emphasized the role of collaboration in promoting new technologies and communicating needs to the government. That group also pointed to the importance of thinking about consumers and gaining a better understanding of how consumers adopt to fuel efficiency, perhaps by drawing on lessons from other consumer-focused businesses.

The group featuring Wicker and Jacob discussed several approaches to advancing efficiency and new technologies. For instance, the group noted that companies could create awards for fleet drivers who demonstrate efficient driving behavior. The group also posited that companies could consider passing a portion of fuel savings on to drivers who optimize efficiency. Lightweight trucks were also underlined as an efficiency opportunity. The challenge here, however, is to find ways to foster these technologies to scale.

Olson’s group talked about BSR’s emerging work on the Future of Fuels, aimed at understanding the comparative impacts of different fuel sources, thinking about how companies can work on shifting their fuel procurement, and identifying opportunities for collaboration on fuels. The group expressed excitement and support for examining these issues, with the caveat that it would be critical to focus the scope of inquiry.