: America’s ports have a pollution problem. All-electric short-haul trucking is one fix.

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About 30,000 semi trucks, some owned by large fleets and others by small operators with a single rig, shuttle imports and exports to and from California’s shipping ports to the distribution centers that pass the goods to the rest of the nation and much of the globe.

Long truck queues can mean idle time burning fuel and sending up tailpipe emissions while waiting to load and unload, and that’s on top of the some 1 billion annual miles these haulers collectively log. In response, statewide mandates call for older, higher-emitting heavy-duty vehicles (14 years old or more than 800,000 miles) to be cycled out of service beginning in 2023 as part of stricter greenhouse gas (GHG) pollution laws in California.

The new rules have ramped up a private-sector response to update trucks on California roads in favor of all-electric fleets and single vehicles, including from Forum Mobility, which this week announced new funding rounds from commercial real estate giant CBRE Investment Management CBRE, -1.64%, a stakeholder in shipping due to its distribution warehouse properties, and the climate-change funding arm of major delivery retailer Amazon.com AMZN, -2.11%.

The port communities of Long Beach and Oakland will be among the first to integrate Forum Mobility’s fleet upgrades. Both Long Beach and its neighboring Port of Los Angeles have long held the top two spots as America’s busiest ports, and Oakland ranks in the top 10. But new reports show some Northeast docks taking over the heaviest volume for now.

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Still, there’s no denying the significance should California succeed in converting more of its trucking fleet to electric. For one, the state clocks in as the fifth largest economy in the world and is arguably an incubator for climate-change initiatives that might be scalable in other parts of the U.S.; it was a first mover on personal EVs, for instance.

Under California’s rules, new short-haul, heavy-duty trucks must be all-electric by 2024, while companies would need to completely retire existing diesel- or gas-powered trucks by 2035.

This type of short-haul trucking is known as “drayage,” or transporting freight over short distances from an ocean port to a destination. It’s also often described in the transit world as the “first mile,” with the “last mile” the final leg in delivering packages, groceries, expedited mail and more via van, car, bicycle or other mode from local distribution sites to home addresses. Like the buzzing ports, the “last mile” is also scrutinized for both positive and negative contributions to Earth-warming emissions compared to brick-and-mortar retail, which may encourage fewer small orders than online delivery, but also feature large parking lots catering to emissions-spewing personal vehicles.

Economic and environmental emphasis

Forum Mobility says making sure that economic justice shares equal consideration with environmental justice is the driver of its business model. That means providing incentivized financing and the latest offerings of electric trucks even in single sales, as well as modern and efficient charging right at the source of freight distribution. It also means attracting customers that include major fleets and small mom-and-pop truck operators alike, so that all have a chance to meet the state’s requirements.

“We knew when we started the business, we wanted something that was going to generate big depots or charging infrastructure with a lot of power. That’s the only way to make California make this transition,” Matt LeDucq, CEO of Forum Mobility, which has been operational for just 18 months, told MarketWatch.

“We made a business model where any trucker could come to our facilities and either bring their truck or use a truck from us for a flat monthly price. That way we might have any trucker participate in the transition,” said LeDucq, who before electric trucks was a veteran at renewable-energy pioneers NextEra and SunTech. “30,000 trucks, like I said, and 80% of those trucks are independent and small operators.”

Much of the transition push must focus on the charging infrastructure, not just the trucks.

“Electric trucks work. But to deploy them at scale, we need to build a tremendous amount of charging infrastructure,” said Rodrigo Prudencio, principal at Amazon’s Climate Pledge Fund. The California Energy Commission estimates that to comply with these state rules and other proposed vehicle regulations, the state will need 157,000 medium- and heavy-duty chargers for commercial vehicles as soon as 2030.

According to LeDucq, the total need will require that 53 chargers a day for medium- and heavy-duty trucks be installed between now and 2030. And that demands two- to three-acre multimegawatt facilities — which, he says, is why tapping capital markets and bringing on CBRE, Amazon and others is key.

The climate-focused Inflation Reduction Act passed last summer also included incentives for drayage hauling. For one, there’s a $40,000 electric-truck incentive tax credit. And, according to LeDucq, “there’s a pretty healthy transferable tax credit for charging infrastructure, carveouts that help clean up disadvantaged communities and a distributed-energy tax sweetener. As a whole, the IRA was a big win.”

As for the environmental justice aim, LeDucq said it’s a major part of what’s driving the state changes. Increased data collection has shown that residents near ports tend to suffer more respiratory afflictions and face a higher cancer risk than other communities.

West Oakland residents, for instance, have twice the cancer risk compared to other parts of the county due to diesel particulate matter. Area residents also experience higher rates of asthma-related ER visits and hospitalizations, especially in children under five. 

“The transportation sector is the largest contributor to GHG emissions, and heavy-duty transportation in particular has long been considered one of the hardest to decarbonize,” said Robert Shaw, managing director, private infrastructure at CBRE Investment Management, which has made three investments in sustainable transportation infrastructure since 2019. In all, CBRE, Amazon and Homecoming Capital are contributing $400 million to Forum’s venture.

Emissions of carbon dioxide in the transportation sector accounted for 38% of energy-related emissions in the U.S. in 2021, the latest year for complete data. That marks the largest share of such emissions of any sector of the economy.

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Still grid-reliant

Forum will source its charging power from the California electrical grid, itself still reliant in part on energy from emitting natural gas NG00, -2.77% along with wind, solar and other sources. Just how “green” electricity generation is remains one of the major sticking points as the broader economy transitions away from fossil fuels to electrifying vehicles and buildings.

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Increasingly, major vehicle-charging centers are hoping to advance localized technology to tap into more alternatives: reliable solar right on the charging center’s roof, for instance. For now, the state’s grid — subject to brownouts and, even worse, blackout risks during periods of high strain — will have to suffice because it is an established source of electricity and truckers need assurance they can charge at any time.

Still, LeDucq stressed that usage rates and times are top of mind. The round-the-clock nature of drayage shipping means that the Forum fleets can likely charge during a community’s lower-use periods.

He’s aware that truck drivers might need more incentives to move sooner rather than later, such as giving preferential access for freight drop-offs and pickups to electric trucks via a “clean lane.”

He considers the small-operator economic considerations the biggest sweetener of all.

“It’s really easy to say ‘get the old dirty trucks out of circulation.’ It’s really hard to do it in a way that is equitable — the oldest, dirtiest trucks aren’t those backed by private equity, right?” LeDucq told MarketWatch.

“That’s why I think of our financing and our technology a bit like a branchless bank. It’s got tons of scale, and we can deploy our capital, but with a really fascinating mission associated with it. This transition is a requirement for clean air, but how do we do it in a way that is fair to the small businesses?”

This article was originally published by Marketwatch.com. Read the original article here.

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