Here’s How Policy Can Design a Reliable and Resilient Zero Emissions Future for Transportation Fleets

By Luke McCollum, VP Supply Chain Sustainability, Walmart and Roberta Barbieri, VP Global Sustainability, PepsiCo

 Heavy-duty trucks are the backbone of the modern distribution system. Their safe and efficient operation is critical to continue delivering goods even during the toughest of times. At Walmart and PepsiCo, we are proud of our fleets and drivers who have been recognized as among the safest in the country for a long time. We also recognize the impact that our fleets and the on-road transportation sector has on the environment, as well as the need to rapidly transition to a zero-emissions future.

 The transportation sector is the single largest source of greenhouse gas (GHG) emissions in the U.S. While medium- and heavy-duty vehicles represent fewer than 5% of vehicles on the road, they account for 24% of the sector’s GHG emissions and are a primary contributor of the harmful air pollutant NOx. These vehicles, symbolized by the class 8 trailers that we see on roads across the country, are also the hardest to decarbonize. To fully achieve a zero-emissions transportation sector, robust public policy is needed to accelerate innovation, promote adoption of new technology, and support the buildout of essential infrastructure.

 A rich legacy in building transportation efficiency

Both Walmart and PepsiCo have been working on fleet efficiency and GHG emission reduction for over 15 years. Since 2005, Walmart has implemented numerous operational practices, like backhauling and trailer optimization, that have resulted in improving fuel efficiency by 11%, avoiding over 87,000 metric tons of C02e emissions and saving $140 million in costs.  PepsiCo has made similar progress, with its fleet of lower-carbon compressed natural gas trucks having logged over 64 million miles in 2020, and by implementing zero-emission and near zero-emission technologies at its plant in Modesto, California - reducing the site's fleet absolute GHG emissions by over half.

But we know we must do more.  

 Ambitious goals supported with pilots

Earlier this year, PepsiCo more than doubled its science-based climate goal, targeting a reduction of GHG emissions across its value chain of more than 40% by 2030, including a 75% reduction in emissions from its fleet. Already, 90% of our CNG tractors run on renewable natural gas and we continue to expand the use of CNG vehicles. In 2022, we will take possession of our first electric trucks from Tesla.

In 2020, Walmart set a commitment to achieve a zero-emissions transportation fleet by 2040 in the U.S. and Canada. This includes long-haul trucks as well as yard trucks, day cabs, and cargo vans that also make up Walmart’s fleet. To accelerate progress in the near term, while building a foundation for long-term success, Walmart is testing and piloting different technologies ranging from batteries to fuel cells, hydrogen and CNG, to identify scalable solutions that meet the unique demands of the distribution and logistics business. 

 The need: meaningful policy actions

It is increasingly clear that our federal and state leaders are committed to meaningful and bipartisan policy action to bring the transportation sector forward. The recently signed Infrastructure Investment and Jobs Act provides a transformative foundation for developing and investing in national EV and alternative fueling infrastructure and corridors  for all vehicles and that opens up critical funding for emerging clean technologies like hydrogen that will shape a zero emissions future. Additionally, the Biden Administration rolled out an executive order to advance light-duty electrification and “smart fuel efficiency and performance standards” for medium- and heavy-duty trucks.

 Walmart and PepsiCo are encouraged by this ambition and momentum and are ready to work with the Administration, Congress, and state and local officials in shaping effective solutions that will enable a zero emissions future for fleets. As national operators, it is important to us that policy makers work across jurisdictions – local, state, and federal – to align standards, workforce training and resources, systems, funding, and planning. Policy should be informed by collaborative public-private efforts that consider all the outcomes we wish to achieve: reducing emissions, correcting environmental pollution burdens, ensuring the reliability and resiliency of distribution systems, supporting our drivers, and promoting economic growth and commerce.

Four policy levers to help inform the policy dialogue

To help inform the ongoing dialogue and policy development efforts, here are four core principles Walmart and PepsiCo believe can serve as useful levers to decarbonizing fleets by 2040:

1. Encourage fleet efficiency and operational improvements – Policy can motivate and provide technical assistance to fleets to increase route optimization, backhauling practices, and other utilization strategies that promote efficiency and reduce “empty miles” (e.g., empty trailers on a return trip) while improving roadway safety. These are first steps, especially for fleets that are just starting on the decarbonization path.  
2. Incentivize flexible, technology-neutral pathways to zero and near-zero emissions fleets – Policy should advance operator flexibility and the ability to use a variety of available, zero or near-zero fuels and technologies including hydrogen, batteries, and renewable fuels. This can enable cost-effective, near and interim emissions reductions with less operational disruption.
3. Reduce upfront cost impacts of medium and heavy-duty zero emissions vehicles (ZEVs) and increase overall availability of zero and near-zero vehicles while maintaining an equitable user fee system for the roadway system –There are several mechanisms policymakers can use to lower the capital outlays for fleet operators and further motivate the availability of zero and near-zero technology. This includes policies such as manufacturer and producer tax credits, excise tax relief, road user fees, market-based systems for transportation emissions, emissions-based performance standards, and fuel-based standards.
4. Build out future-proof EV infrastructure that optimizes privately-owned commercial sites – Commercial fleets operate 24/7 and need to know when, where, and how much fuel is available at all times. Infrastructure planning should consider existing distribution networks to align environmental and logistics goals. Future-proofing charging assets and infrastructure means designing systems to efficiently upgrade as technology matures. There are several policy levers that can help accelerate infrastructure development that meets the charging demands of heavy-duty vehicles, including financial incentives for infrastructure installation and streamlined permitting processes.

 The shift to a zero-emissions transportation fleet has already begun and as it accelerates, it must also address the historic environmental burdens disproportionately carried by communities in close proximity to distribution and logistics operations. Walmart and PepsiCo believe that ZEV technology can address multiple quality of life concerns and are ready to work with policymakers on correcting environmental injustices through new technology, investments, and partnerships.

 Using these four principles will help advance a decarbonization trajectory that takes advantage of readily available technology and builds out the fleets and infrastructure needed for a zero emissions future.