Tell us about your role at ARI.
My role is essentially to help our clients effectively lower their carbon footprint. You can do that in two basic ways: implementing alternative fuel vehicle solutions, where it makes sense, and enhancing the overall fuel efficiency. We help guide fleets through that process; to understand the requirements and to implement some of these measures. For alternative fuels, there are a lot of things that you have to look at for it to make practical and feasible sense. I help clients understand the ROI implications of introducing some of these measures, along with the full total cost of ownership and emissions impact of these decisions.
When a client approaches you with an eye to greening their fleet, how do you help them?
First, it is important for us to understand the makeup of their fleet and how they are driving these vehicles. After we have a full understanding of what the vehicle requirements are, we can start brainstorming some effective strategies for how we can ultimately reduce the carbon footprint.
With certain fleets with certain driving applications, alternative fuels make really good sense, but there are a lot of different alternative fuel types. We need to have an understanding of what kinds of vehicles they have, their driving pattern, where their fuel and footprint is in relation to existing fueling infrastructure, where the service maintenance facilities are for these alternative fuel vehicle applications. These are all things that we have to research to properly understand the feasibility of implementing these measures.
The vehicles that can operate alternative fuels have an initial capital cost that is very expensive. Where the savings come in is through the operating costs. A lot of these alternative fuel options have low-cost fuel, so the more low-cost fuel you consume the faster your ROI is. So, we effectively target high fuel consuming vehicles for these kinds of applications and that is at a very high level.
What sorts of trends are you seeing in this industry?
We are seeing a lot of change. There is a lot of R & D being placed into clean technology. It is really an exciting time in the automotive space just understanding and keeping track of all these different types of clean technologies – from gas alternative fuels to hybrid electric vehicles to fully electric vehicles to telematics. If you are able to measure a lot of data points for your fleet you are able to identify opportunities for improvement. That has huge sustainability implications, greening implications for fleets that play a vital role. It is a rapidly changing space. There are a lot of options out there for fleets to pursue. At ARI, we help fleets understand what their options are and which options make sense for their fleet.
When you examine the options for alternative fuels, what are some of the things that you take into consideration?
For basically any of the alternative fuels it is really important to take a cradle to grave, holistic approach. Really understanding first what the objectives are that the fleet is trying to obtain. Typically, it is going to be to reduce the TCO, the total cost of ownership, and reducing the carbon footprint. But once you have a specific idea of what a fleet’s exact measures and KPIs that they want to improve, the next thing we do is understand their fleet’s requirements and needs. What are the things the fleet needs to do to successfully meet that fleet’s purpose and mission?
Once we have those two pieces of the puzzle together, we can start conducting the research and analysis in terms of all of the things they need to think about when they want to successfully incorporate these measures in a fleet. This starts with vehicle acquisition. What are the implications from an ROI standpoint in terms of what kind of budget do they have? Can they afford the additional capital costs for these vehicles early on amidst the financial savings that they will accrue during their operating cycle?
In addition to vehicle acquisition they have to look at fueling. Where are they going to get their fueling? If they can’t leverage and take advantage of existing public fuel infrastructure, they have to think about potentially installing additional infrastructure to fulfill their fleet’s needs.
Service and maintenance – a lot of these new technologies, even if they have the fueling in place, if they don’t have the appropriate service and tech support for these vehicles once they are on the road, this whole project can be a failure. So, understanding where their vehicles can get the service they need is another very valuable factor in this whole process.
And then, finally, remarketing – what kind of residual value can they see getting with these vehicles? Unfortunately, at this point in time there is not a lot of data on what kind of residual value you can get given there are so few of these vehicles on the road. Over time this data will become a lot easier to obtain and be a more significant component for understanding the full business case for these initiatives.
Where do you see electric vehicles appropriate for fleets?
In talking about electric vehicles, in order to properly vet out whether an electric vehicle makes sense for your fleet or not really depends on, again, the fleet’s application, the fleet’s driving pattern and, basically, the fleet operation. The electric vehicle space has made tremendous advancements in just the last ten years alone. If you just look at the cost of batteries, they are going continuously down. If you are looking at the range capacities of these vehicles, they are going up.
I think the electric vehicle space is moving in the right direction. I think a lot of that is partially due to the significant R & D that is being placed into this technology. There are a lot of stake holders that are interested in seeing this product succeed and at this point in time it is tough to develop a strong business case for it partially because the battery costs are still very expensive. But, if you have a vehicle that is driving in largely urban settings where it can really capture a lot of the energy of the battery through regenerative breaking, then that is a good application for this type of vehicle.
With any kind of vehicle that consumes a lot of fuel, you really are going to get that slower ROI timeframe by taking advantage of the low cost of electricity relative to the gas and diesel prices that you would normally deal with. It really depends, as with most applications. My role is to understand and match these technologies for the right fit and make it work.
Do the same considerations apply to hybrids?
Absolutely, there are different types of hybrids out there; you have plug-in electric hybrids, regular hybrids, and extended range electric vehicles. The Chevy Volt is a good example of that, so, each of these vehicles within that class of electric hybrids has their own pros and cons. It is important to understand what exactly that fleet is doing and once you have that information you can understand what makes the most sense for which vehicle you want to go with.
Brian joined ARI in early 2013 as Manager – Strategic Consulting, Sustainable Strategies. Previously, he worked as a project strategist for the U.S. Environmental Protection Agency’s Sustainable Materials Management program and as an analyst for a consulting firm in Mexico City, Mexico, where he conducted environmental policy research on sustainable development initiatives for governments and multinational corporations.