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Mapping a Decarbonization Path for Logistics

The central objective of global climate change policy is to keep the increase in average global temperature, since pre-industrial times, to within 2° C by 2100. To achieve this, emissions of greenhouse gases (GHG) worldwide will have to drop by 50% by 2050 relative to a 1990 base year. This means an 80% to 90% reduction in emissions from developed countries, whose emissions are currently well above average.

I believe it is unlikely that all economic sectors will be set the same GHG reduction target. The potential for cutting GHG emissions and its cost effectiveness will vary from industry to industry. The European Commission, for example, has decided to set a 2050 GHG-reduction target for transport of 60% – substantially lower than the 80% to 95% target for the EU economy as a whole.

Rising demand for logistics

Superficially, this seems like good news for logistics managers. As freight transport accounts for around 90% of total GHG emissions from logistics, they may feel blessed with a below average target. I expect, however, that even this lower target will be extremely difficult to meet, mainly because demand for logistics services will rise steeply over the next 40 years.

It has been forecast that freight ton-kms by all modes will triple between 2010 and 2050. This growth will be reinforced by the effects of climate change adaptation and mitigation measures. Adapting our environment to climatic change will entail moving vast quantities of materials for the construction of flood protection and realignment of infrastructure. The decarbonization of other sectors of the economy will also impose additional burdens on logistical systems. For example, mass programs of home insulation and the creation of renewable energy systems will be very logistics-intensive.

Switching energy sources

Dependence on fossil fuels also makes logistics difficult to decarbonize. Most countries’ climate change strategies rely on the decarbonization of electricity generation, by switching to renewable and, in some cases, nuclear energy. Most industrial sectors are powered by electricity and so will benefit indirectly from the predicted drop in GHG emissions per kilowatt-hour. Some logistical activities, such as urban van deliveries, electrified rail freight services, terminal handing and warehousing can operate directly or indirectly (via batteries or hydrogen) on low-carbon electricity. Most others, however, such as shipping, long haul trucks and aircraft, will have to continue running on liquid, carbon-based fuel for the foreseeable future. By 2050, the net carbon content of this fuel will, nevertheless, be much lower than it is today. Environmentally-sustainable forms of biofuel will have displaced fossil fuels across much of the freight transport system by then.

While use of lower carbon power sources will significantly reduce GHG emissions from freight movement, the strong growth in ton-kms will mostly negate its effect. To achieve an absolute reduction in logistics-related emissions, it will be necessary to supplement ‘repowering’ with other measures. The International Energy Agency sees the use of alternative power sources yielding only around half of the potential savings in carbon emissions from trucking by 2050. In its main scenario, the other savings would accrue from a shift to greener transport modes and efficiency improvements.

Alternative modes and infrastructures

Increasing the proportion of freight carried by transport modes with relatively low carbon intensities (expressed as g CO2 per ton-km) is likely to prove one of the most effective ways of decarbonizing logistics. A key element in the European Commission’s carbon reduction plan for transport is its policy objective to have 50% of freight tonnage traveling distances greater than 300 kms move by rail or waterborne transport by 2050.

To accommodate this enormous increase in rail ton-kms (and the accompanying growth in rail passenger volumes), the capacity of European railway infrastructure will have to at least double, even allowing for some lengthening of trains and a reduction in empty running. This expansion will not only be very expensive; it will also carry a high carbon penalty. To date, comparisons of the GHG impact of different modes have been largely confined to vehicle emissions. Extending the boundary of the carbon calculation to include the development and maintenance of infrastructure alters the relative carbon intensity of the various modes.

More research is needed on the wider carbon implications of a major shift to rail and water. Companies and policy-makers should also recognize that advances in transport technology over the next 40 years will decarbonize modes at different rates and by differing amounts. So, devising an optimal freight modal split for a tightly-carbon constrained world of 2050 is fraught with difficulty.

Improving efficiency

Less contentious are efficiency improvements within individual transport modes that cut fuel consumption and raise vehicle utilization. Several studies have forecast 20% to 40% improvements in the energy efficiency of new freight vehicles, vessels and aircraft by 2020-2030. However, one must allow for the fact that the diffusion of new logistics technologies can be slow, particularly in the maritime, aviation and rail sectors, where vehicle replacement cycles span several decades. On the other hand, benchmarking surveys reveal that many companies can operate, load and maintain their existing vehicles much more effectively to cut energy use and emissions per ton-km.

The prospects for improving vehicle utilization are also good. The opportunities for consolidation are being greatly enhanced by the new spirit of logistical collaboration that is emerging in several industrial sectors. By closely coordinating their logistics activities and sharing more vehicle and warehouse capacity, companies can improve asset utilization at a supply chain level, yielding both cost and carbon savings.

New geographies and economics

One much-quoted prescription for decarbonizing logistics is the reversal of the globalization trend and a return to localized sourcing. This would certainly reduce the transport-intensity of the global economy and freight-related emissions, but possibly at the expense of higher emissions from production, handling and storage operations. As the life-cycle GHG emissions of the average product are much more sensitive to the carbon-intensity of the production operation than to the distance it is transported, sourcing locally need not minimize total emissions. Indeed, by 2050, we may see pronounced clustering of manufacturing capacity in low carbon locations, where companies can exploit plentiful supplies of renewable and/or nuclear energy.

I believe that over the next decade or so, there is likely to be a diffusion of ‘cap and trade’ emission pricing schemes, both geographically and across economic sectors. Carbon restrictions and prices will be fully integrated into the management of supply chains well before 2050, with companies and their logistics providers skilled in the analysis and optimization of cost-carbon trade-offs.

Beyond mitigation

All this assumes that companies and governments manage to achieve the required emission reductions by 2050. It also assumes that, over the next 40 years, global warming will occur gradually, giving us time to adjust. There is mounting concern in the scientific community, however, that climate change and its related environmental effects will be non-linear.

If climate change proves to be catastrophic rather than incremental, or if our carbon mitigation efforts fail, we may be forced to resort to so-called ‘geo-engineering’ options. These fall into two categories: carbon dioxide removal, through, for example, fertilizing the oceans with nutrients to promote ‘algal blooms’ or ‘enhanced weathering’ of silicate rocks crushed and spread across wide areas; and solar radiation management, entailing the dispersal of aerosols, mainly of sulfur dioxide, into the stratosphere. To stand any chance of being effective, these geo-engineering measures would have to be applied on a planetary scale and involve the movement of vast amounts of material. So, in the bleakest of scenarios, logistics may ultimately play a critical role in keeping the planet habitable for human life.

4 Comments

  • Bonded warehouse

    The global markets for 3PL (Third Party Logistics) services registered a growth rate of 6.8% in 2010 compared to 2009, according to Armstrong Associates. Asia Pacific region is only second to Europe in the areas of supply chain outsourcing 3PL revenues.

  • Haley Klappholz

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  • Oldrich Nos
    Read more

    Dear Sir;
    Much money and fuel has been wasted, grants invented and collected to save the Mother Earth. Facts show this to be a Hollywood production.
    Slower ships reduce consumption of fuel and pollution. It satisfies the Government quota, but the consumers, every single citizen, will pay more for any item, since everything is affected by transpot. Not the smartest solution.
    I am in the propulsion and other exotic solutions for some half Century. For some reason I do not understand people vehemently opposing, not even considering my technologies: I suspect lobby of a sinister group stricken with megalomania.
    My latest engine 1 m. dia., 1 m. long powered by ferrofluid achieves torque of 140 kg/m. Scaled up to two torpedo-like tubes flexibly joined to stern, no adaptation to the ship itself, with 2 contra-rotating props, each 8 m. dia., 24 m long they will produce 52,280 kg/m torque. Some losses difficult to calculate may apply.
    Absolutely free and perpetual power, no polution.
    Most frequent reeply I get to my generous offers is a quote from “Thermodynamics Fairytales”. No guts to touch upon facts.
    I am giving up on people shedding crocodile tears.
    Regards,
    Oldrich

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