Moving to a low-emissions model is challenging for the freight sector for various reasons, including infrastructure limitations, high upfront investment costs, developing technology, economic pressure (risk aversion) and the long lifespan of existing vehicles.

“While a key barrier to transition is the cost of technology, there is now an increasing number of finance avenues available to operators, including tapping into government funding,” says Justin Tighe-Umbers, CEO of the National Road Carriers Association.

Government funding accelerates investment

The government recently launched the Low Emissions Heavy Vehicle Fund (LEHVF) to increase the number of low and zero- emissions vehicles on New Zealand roads and provide market signals to OEMs to encourage supply. The fund, administered by EECA (Energy Efficiency and Conservation Authority), offers grants of up to 25% of the purchase price of new battery electric or hydrogen fuel-cell electric trucks.

Alternatively, those wishing to convert recently registered diesel trucks to battery electric, hydrogen dual fuel, or plug-in diesel-electric hybrids can receive a grant of up to 25% of the cost. Total grant amounts are capped at $1 million per end customer and $4 million per vehicle supplier. Vehicles must be 5.9 tonnes or more to be eligible for an LEHVF grant.

EECA has been supporting the heavy transport sector to trial and demonstrate how low and zero-emissions vehicles can reduce operating costs and emissions for New Zealand businesses through a range of contestable funding since 2016.

Projects include co-funding two Scania battery electric trucks for NRC member Reliance Transport – the first of their kind in New Zealand. Reliance subsequently received funding for its Sany SRSC45E electric reach stacker, another New Zealand first.

Upfront costs are a recognised barrier to embarking on a low-emissions journey. However, this diminished with the LEHVF reducing upfront costs by up to $90,000, making the EV’s seven-year TCO nearly 3% cheaper than a diesel equivalent.

Reliance Transport’s Scania trucks have achieved impressive savings: 75% in energy costs (supported by solar installation at Reliance’s Wiri depot), 30% in maintenance and 91% in emissions. According to Reliance Transport’s Mark Darrah, “emissions reductions equal cost reductions”, which, in a competitive industry, gives operators a much-needed edge.

In NRC’s recent On Schedule podcast, EECA’s Richard Briggs, group manager delivery and partnerships, confirmed the that government recognises the need for ongoing support to drive the transition and grow momentum.

New funding for low and zero-emissions heavy vehicles

Briggs says the LEHVF aims to overcome the main barriers the heavy transport sector faces to adopting low and zero-emissions vehicles.

“This new funding is specifically designed to help companies overcome the inherent risk associated with trying something new. Risk disincentives innovation, so by increasing and broadening the fund to support decarbonisation specifically for heavy vehicles, EECA are attempting to remove one of the major hurdles businesses face to getting on the decarbonisation journey,” says Briggs.

Operational insights to shape the future network

“Not only do EECA want to attract new supply and accelerate uptake of zero and low emission heavy vehicles, but they are also keen to gather operational insights that will help inform future user experiences and support power availability,” says Tighe-Humbers.

“Gaining an understanding of where vehicles are located, vehicle type (battery electric, dual fuel, hybrid, etc), expected routes, kilometres travelled, charge and fuel plans, range impact and vehicle lifespan are just a few of the metrics that will help EECA determine where future efficiency gains can be made,” says Briggs.

“This will then help determine not only where we need to invest in charging infrastructure but will shape what the infrastructure needs to look like, for example, depo or public charging.”

Building a network that delivers productivity and low emissions

Funds such as the LEHVF are just part of the mix when it comes to supporting a just transition towards transport decarbonisation, looking at the operational insights and understanding what needs to be scaled up to support a low emissions future is just as critical.

“Government recognises investment in the heavy vehicle charging network is a key part of the puzzle, and EECA is already in discussions with heavy vehicle suppliers to gain a better understanding of what support is required. This will lead to clear plans and future investment in a heavy vehicle charging network that supports productivity, minimises grid impact and delivers on low emissions goals,” says Briggs.

Advocating on behalf of industry

With 44% of the country’s energy-related emissions attributed to the transport sector, the reality is reducing transport emissions is a priority for the government, regardless of their colour.

“NRC strongly believes the industry needs to be around the table so we can shape our future,” says Tighe-Umbers.

“Part of being at the table means fronting up with a willingness to get on the journey. We recognise it is not without its challenges, which is why we are in constant contact with government to look for ways to support a just transition across the transport sector.”