May 18, 2022

Botu Linum

The Car & Automotive Devotees

Near and long-term perspectives on strategies to decarbonize China’s heavy-duty trucks through 2050

10 min read

Scenario design

We developed four scenarios: a Reference Scenario that continues existing policies of incremental efficiency improvement and fuel switching; a Short-term Strategies Scenario with full adoption of technical efficiency improvements to engine and vehicle efficiency, commercialized cleaner fuel trucks, and systemic and logistics improvements leading to reduced trucking activity; and two NEV Adoption Scenarios reflecting early and delayed deployment, respectively, of battery electric and fuel-cell HDTs. We used a national bottom-up energy end-use model, China DREAM, based on the Low Emissions Analysis Platform (LEAP) to simulate energy and CO2 emissions for HDTs through 2050 for these four scenarios. Sensitivity analysis used additional scenarios to examine the impact of energy intensity changes, activity increases, and earlier adoption of hydrogen fuel-cell instead of electric vehicle technologies. Specific details on each scenario and the sensitivity analysis can be found in the “Methods” section.

Aggregate heavy-duty truck energy demand and impacts on diesel and natural gas consumption

Based on the latest technological and market trends, we developed four different HDT decarbonization scenarios in China: Reference, Short-Term Strategies, NEV Early Adoption, and NEV Late Adoption. The NEV Early Adoption and NEV Late Adoption scenarios builds on the Short-term Strategies scenario by adding in deployment of NEV HDTs under different timelines. Figure 1 shows the final energy consumption for each.

Figure 1

China’s heavy-duty truck fleet final energy consumption results under (a) reference scenario; (b) short-term strategies scenario with energy-efficiency and logistics improvements and LNG fuel switching; (c) NEV early adoption scenario; and (d) NEV late adoption scenario.

Under the Reference Scenario, total final energy consumption will continue to grow through the late 2040s. Under the Short-Term Strategies scenario, improvements in efficiency, logistics, and operations will help moderate future growth, with final energy consumption peaking around 2025 and plateauing thereafter despite meeting the same freight transport activity as the Reference Scenario (Fig. 1b). Under the Reference Scenario, diesel consumption will continue to grow through 2026 before declining slowly to a level that is 13% higher than the 2015 level (Fig. 1a). Under the Short-term Strategies Scenario, however, diesel consumption could plateau in the early 2020s and peak by 2025, followed by rapid decline to a 2050 level that is half of total 2015 diesel consumption. This is the combined result of lowered freight activity due to operational improvements and lowered diesel consumption due to efficiency improvements and greater switching towards LNG trucks (Fig. 1b).

Under the NEV Early and Late Adoption Scenarios, total final energy consumption for HDTs will also peak around 2025 and decline (in the case of NEV Early Adoption) or plateau (in the case of NEV Late Adoption) through 2050. Both scenarios will have lower final energy consumption in 2050 compared to the results of the Short-term Strategies Scenario, with smaller increased demand for hydrogen and electricity more than offset by larger reductions in both diesel and natural gas demand (Fig. 1c,d). The overall decline in total final energy consumption under the NEV Early and Late Adoption Scenarios is a result of switching from diesel and LNG trucks with higher energy intensities on the order of 12–15 MJ per vehicle-kilometer travelled, to alternative vehicles with lower energy intensities on the order of 5–10 MJ per vehicle-kilometer travelled. By 2050, diesel demand is nearly eliminated under the NEV Early Adoption Scenario and reduced by two-thirds from 2015 levels under the NEV Late Adoption Scenario. By 2050, hydrogen accounts for 6% and 15% of HDTs’ final energy consumption under the NEV Late and Early Adoption scenarios, respectively, and electricity accounts for 5% and 16% of final energy consumption, respectively.

Combined, the three short-term strategies of energy-efficiency improvements, fuel switching, and logistics improvements can reduce diesel use by more than half by 2050 from the 2015 level, with consumption peaking and plateauing in the early 2020s (Fig. 2). Individually, energy-efficiency improvements have the largest reduction potential of the three short-term strategies as incremental efficiency improvements on the order of 1.5% per year are possible through advanced engine technologies, improved aerodynamics and lightweight. As a result, efficiency improvements alone can result in diesel consumption peaking in the early 2020s.

Figure 2

Different strategies’ impact on heavy-duty trucks’ diesel consumption. EE energy-efficiency, NEV new energy vehicle (battery electric, fuel cell).

Delayed and slower adoption of NEV HDTs, including not introducing fuel-cell trucks until 2040, can still reduce 2050 diesel consumption by an additional 30% (25 million tonnes of oil equivalent or Mtoe) compared to the Short-term Strategies Scenario. This translates into a 45% (88 Mtoe) reduction in 2040 and 68% (124 Mtoe) reduction in 2050 when compared to the Reference Scenario. If NEVs are adopted earlier, with fuel-cell trucks entering the market as early as 2035, then diesel consumption will be further reduced by 55% (110 Mtoe) in 2040 and 94% (173 Mtoe) in 2050 compared to the Reference Scenario. These results show that diesel consumption can be significantly phased out of the heavy-duty trucking sector over time, but that significant reductions beyond existing short-term strategies will not occur until after 2035 when NEV deployment is expected to take off.

Improved efficiency shows the greatest potential to reduce diesel consumption in the near term through the mid-2030s, followed by fuel switching to LNG. In the longer term, from 2030 through 2050, fuel switching to both LNG and clean NEV HDTs will have greater potential to reduce diesel consumption than efficiency improvements alone as more LNG and NEV trucks replace existing diesel trucks (see Fig. 3). The diesel reduction from logistics and operations improvements also increases over time as freight activity grows.

Figure 3

Impact of different decarbonization strategies on heavy-duty trucks’ annual diesel consumption. Change in diesel consumption shown is relative to reference scenario and additive.

For natural gas demand, fuel switching to more energy-intensive LNG trucks under the Short-Term Strategies Scenario will increase overall natural gas consumption and offset reductions from improvements in efficiency, operations, and logistics, as seen in Fig. 4. The net increase in natural gas consumption under the combined Short-Term Strategies Scenario climbs to more than 10 Mtoe in the 2030s, the equivalent of nearly one-third of total natural gas consumption under the Reference scenario. The adoption of NEVs does not impact natural gas consumption because only diesel trucks are displaced by NEV trucks.

Figure 4

Impact of short-term strategies on heavy-duty truck natural gas consumption.

Interdependence of new energy vehicles and power sector decarbonization, and overall CO2 implications

HDTs’ CO2 emissions peak around 2025 under all three alternative scenarios but not under the Reference scenario (Fig. 5). Despite fuel switching and significant improvements in efficiency, logistics, and operations, CO2 emissions from HDTs will remain above 2015 levels in future years unless NEVs are deployed earlier in the NEV Early Adoption Scenario as final energy demand remains higher than 2015 levels. Corresponding to the magnitude of diesel consumption reduction potential, energy efficiency improvement also has the greatest CO2 emission reduction potential, followed by logistics and operations improvements in 2030 (Fig. 6). Despite LNG being a cleaner fuel with a lower emissions factor than diesel, switching to LNG trucks will actually result in a small net increase in CO2 emissions because LNG’s higher energy intensity offsets reductions in emissions factors, as seen in the increase of 16 MtCO2 in Fig. 6 for the year 2030. Additionally, unless there is stringent enforcement of the methane requirements of the China VI emission standards for heavy-duty vehicles, there could be higher than expected tailpipe methane emissions from switching to LNG HDTs31.

Figure 5

Comparison of heavy-duty truck CO2 emissions under reference, short-term strategies, and NEV adoption scenarios.

Figure 6

2030 heavy-duty truck CO2 emissions impact by short-term decarbonization strategy. Patterned bar denotes net increase in CO2 from LNG fuel switch.

CO2 emissions will peak in 2025 at 675 million tonnes (Mt) of CO2 under all three of the alternative scenarios, but the 2050 end-point in CO2 emissions varies significantly depending on the pace and scale of NEV adoption (Fig. 5). While CO2 emissions plateau under the Short-term Strategies Scenario between 2030 and 2050, CO2 emissions continue to decline under both NEV Late and Early Adoption Scenario through 2050 as diesel HDTs are switched to NEVs powered by increasingly cleaner electricity. This assumes an already relatively decarbonized power sector in China where non-fossil sources account for 45% of total electricity generation in 2030, 71% in 2045, and 84% by 2050. As a result of decarbonizing the power sector, the CO2 emissions intensity of battery electric trucks falls dramatically from 6.20 kg (kg) CO2/kg oil equivalent (kgoe) in 2020 to 2.45 kg CO2/kgoe in 2045, compared to diesel emissions intensity of 3.4 kg CO2/kgoe and natural gas emissions intensity of 2.8 kg CO2/kgoe. Based on NEVs’ significantly lower CO2 emissions factor compared to vehicles using other fuels by 2050, early adoption of NEVs can bring significant CO2 emissions reductions in 2050, resulting in 30% lower emissions compared to 2015 levels for an HDT fleet that is double the current size.

By 2050, adoption of NEVs will result in notable net CO2 emissions reductions for the heavy-duty trucking sector as the power sector significantly decarbonizes (Fig. 7). Adopting NEVs earlier, with subsequently higher shares of battery electric and fuel-cell trucks, will result in significantly greater net CO2 emission reductions annually in 2050. Compared to the strategies undertaken in the short term, early adoption of NEV HDTs has the largest (236 MtCO2) emissions reduction impact in 2050, followed by energy-efficiency improvements alone with 210 MtCO2 emissions reduction potential. In contrast, delaying the adoption of NEV HDTs could have significant impact on future CO2 emissions reductions because starting to deploy hydrogen-fuel-cell trucks later, in 2035, will, along with slower battery electric truck adoption, result in much smaller CO2 emissions reduction of only 75 MtCO2 in 2050.

Figure 7

2050 CO2 emissions impacts of heavy-duty truck decarbonization strategies.

Overarching barriers to short and long-term decarbonization strategies

For HDT decarbonization to be realized, China’s automotive industry needs to address significant barriers to the short-term strategies of energy-efficiency improvements, LNG fuel switching, and logistics improvements, as well as to long-term adoption of NEVs. Although the industry has made significant research and development investment and technological improvements in recent years, the fundamental manufacturing processes in China’s heavy-duty vehicle sector still lag behind those of other advanced economies, making it more difficult to adopt high-efficiency and NEV technologies. Key high-end production equipment is lacking, and overall manufacturing quality still needs to be improved, particularly in areas such as high-strength, precision, thin-cast iron casting; carbon fiber structure forming and connection; and precision low-temperature extrusion and forming technologies. Domestic vehicle component manufacturing companies are small in scale with minimal technological capacities, making it difficult for these small manufacturers to produce high-value-added and high-quality components, such as powertrain electronic systems, chassis electronic systems, and super-low friction components. As a result, some key vehicle components are still imported or manufactured by foreign-owned companies in China27. China still lags significantly in its adoption of key advanced technologies for HDTs; for example, all U.S. tractor-trailers and 70% of EU tractor-trailers have adopted advanced turbocharging technology, but only 5% of Chinese tractor-trailers have adopted this technology4.

China’s trucking industry has distinct institutional characteristics that also influence the potential of short-term decarbonization strategies and NEV truck deployment, including vehicle ownership and decision-making processes, and profit and financing structures. In 2016, a truck driver earned, on average, 100,000 RMB per year, and a new, traditional (internal combustion engine) HDT typically cost about 400,000 to 500,000 RMB. As a result of this profit-to-cost ratio, 84% of truck drivers who were surveyed relied on banks that provide low or zero down payments for truck loans (down payments ranged from 0 to 100,000 RMB) or other informal financing mechanisms32.

Moreover, because 71% of the truck drivers own their vehicles, policies or initiatives that increase awareness, provide driver training, and make alternative vehicles more attractive for drivers may be difficult to implement32. Being contracted through a logistics company consolidates the trucking industry and can improve operational efficiency, but different logistics companies may have different rules, fees, charges, and requirements. Promoting awareness and aligning goals and objectives across logistics companies therefore becomes another important strategy to increase the potential of NEV HDT deployment.

For both battery electric and fuel-cell technologies specifically, infrastructure development could directly increase or limit the potential for NEV HDT deployment in China. There is concern regarding whether NEV trucks can achieve the 500-mile driving range that is typical of conventional diesel trucks and whether there is variation in actual range due to temperature and grade, load, speed, and installed versus usable battery capacity33. As of 2019, China had installed 515,000 public charging stations and 703,000 private charging stations. In 2020, this is estimated to have grown to over 1.7 million total charging stations as a result of new infrastructure stimulus announced in March 202034. Tesla has also installed more than 1000 superchargers for its light-duty vehicles in China, but fewer than 18% of total charging stations in China are fast chargers. HDTs with large battery capacities to support longer driving ranges of 400 miles or more, such as the Tesla Semi, also require a fast charging speed—10 times faster than the current fastest Tesla superchargers. A reasonable charge time of 30 min for HDTs requires a very significant draw from the power grid, with power output greater than 1200 kW35. Also, repeated (i.e., 25 times or more) fast charging can damage batteries by causing cracks, leaks, and loss in storage capacity resulting from the battery’s exposure to high temperatures and high resistance36. Other key issues related to electric vehicle charging infrastructure development include suboptimal distribution of charging stations, mismatch between demand and supply of electricity for charging, low utilization rates, compatibility issues among charging stations, parking difficulties, and long charging times.

Closely related to the successful deployment of NEV HDTs will be the rapid decarbonization of China’s power sector needed to realize the CO2 emission reduction potential of increased NEV HDT adoption. We assumed non-fossil generation will increase to account for 45% share by 2030, up from reported 32% share in 202037, and rise to 84% by 2050, but deep decarbonization of the power sector will require significant policy support and continued power sector reform. Although China is the world’s leader in renewable capacity growth, China still has the world’s largest coal-fired fleet of over 1000 GW with long remaining lifetimes for most coal plants38. Government-driven long-term vision and continuous policy support have helped transform China’s power mix in a short-period of time, but wide-ranging market reforms and coal phase-out are still needed to achieve rapid deep decarbonization39. Possible strategies for phasing-out coal power could include cancelling planned projects, shutting down a subset of existing but poor performing plants, and reducing hours for remaining plants to mainly meet peak load demand38. At the same time, modernizing grid transmission and distribution and developing storage and reducing institutional barriers to inter-regional power trade can help improve renewable integration while addressing intermittency challenges40.

Our scenarios assume that the barriers identified above will be addressed through policies, programs, and market-based changes, but the timing of removal of these barriers will determine the cumulative diesel and CO2 reductions from decarbonizing HDTs.