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Challenges of Alternative Energy in Transportation

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Technology is fundamentally shaping the world we live in. It seems that rarely a week goes by without announcement of a new advancement in the energy or transportation industries. As technology continues to rapidly evolve and life looks ever different, the one constant the industry can count on is that it will, undoubtedly, continue to change.

This is particularly true of alternative transportation energies. While 2017 data shows that diesel still had 94.5 percent US fuel volume, new fuel and energy types are becoming more widely available. From electric vehicles to natural gas, advancements in more sustainable transportation technology are on the horizon, and the industry is incredibly optimistic about this diversification.

Amidst the excitement of alternative energies, challenges do exist, however. These challenges must be scaled collectively by the transportation industry to proliferate the adoption of diverse energy types.

Cost of Entry

As with any new technology, a high level of capital investment from a diverse array of stakeholders is necessary to permeate the market, bringing innovative technology to the road across the US. When technology is fresh, initial production costs remain high until enough adoption occurs in the marketplace to scale production for the mass market.

This process creates a positive feedback loop—high costs keep investors at bay, waiting for early adopters to initiate the movement. But without early adopters are unlikely to move quickly when costs remain high. Such is the case for most alternative transportation energies today—battery electric, CNG, LNG, among others. While the industry is starting to see some early applications from a few first movers, widespread use is yet to be seen.

Infrastructure Limitations

New CNG station builds peaked in 2014 at 163. Since that time, the number of new stations declines each consecutive year. There are only 41 new stations registered through 2017 and 8 new stations so far in 2018. Infrastructure in the hydrogen fuel cell and electric spaces has yet to develop.

 

Because adoption of new transportation energy technology proves to be a relatively slow process, developing adequate infrastructure to support it, in turn, takes time. To date, infrastructure remains one of the largest challenges the transportation industry must scale to fully adopt battery electric, hydrogen fuel cell, CNG, RNG, and other fuel types. This leads back to the issue of cost where a game theory-esque dance over who will first invest in infrastructure occurs. If the industry can collectively commit to developing infrastructure, the benefit for all parties stands to be highest. This is not to say infrastructure is stagnant. Efforts to expand fueling and charging stations are mobilizing—whatever pace they may take.

Standardization

The pace of change in the transportation industry has become exponential. Year over year new advancements in both fuel and equipment are making the alternative energy landscape more efficient and more ideal for implementation in real-world applications. This does, however, pose different challenges—how do corporations keep up? It seems the newest model is released before the prior technology even has a chance to take hold in the market.

To combat the short lifecycles of new technology, collaboration around standardization is essential. The industry needs to collaborate and decide, “to what are we plugging into?” and “how can we plug and play with the equipment and hardware that currently exists?” Manufacturers need to find solutions that don’t require consumers to reinvest from the bottom up every time technology changes. For example, many telematics software and much of today’s connected vehicle technology have shifted away from the equipment itself and into the cloud so that updates can be made via air-wave technology—eliminating the need to reinvest in the next model year-over-year.

Lack of Awareness

While the financials, economics, and physical data are easy to point to as challenges because of their quantitative nature, simple awareness of how each technology works, plans of action, and their effect on the industry needs to be a priority. If investors and key players in the alternative energy landscape do not have appropriate information and education, they are far less likely—if at all—to enter the game.

Further, educating the public to foster acceptance and reduce unfounded fears is necessary to facilitate engagement with new programs. Because these are technologies that the public will directly interact with on the road, their support has huge staying power when it comes to taking on risk and investing in new technology.

Overcoming Challenges for the New Wave of Energy

While these challenges are very real and affect the transportation industry at large, it is not impossible to overcome them. Many organizations are committed to confronting each one head-on. Investment is growing, and individual companies have pledged their commitment by ordering new equipment, announcing go-forward plans, and scaling back current use of fossil-fuel-based fuel types.

Collaboration is budding as all members of the transportation community have the same goal: to remain economically and functionally viable regardless of what the energy landscape looks like in ten years. For this reason, it is safe to say that the industry is both aware of these challenges, and will rally to overcome them in the future.

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