RUCs Under Review

Grundon, the UKs largest waste management and environmental service company, began trials with ULEMCo’s dual-fuel hydrogen-diesel technology in 2018.

KiwiH2 will be offering customers a bundled leasing and fuel package for a monthly fee.

“This package will provide businesses with a cost-effective way to immediately reduce their carbon emissions, making it an ideal transition technology for existing diesel fleets and putting industrial businesses on track to meet the 2050 emissions targets.”

KiwiH2 CEO Victoria Sim concurs: “We believe that some emissions reduction right now is critical rather than waiting for new technologies to be commercialised that will eventually arrive in Aotearoa New Zealand in the medium term. We consider there is real social value in providing a choice for New Zealanders to capitalise on the awareness and support for change as soon as possible.

“It’s essential that all industrial vehicle owners, be they single owner-operators, SMEs or large industrial corporates in New Zealand are made aware of the opportunity to reduce their emissions today. We have deliberately structured the business model for delivering the product (long-term leases with bundled fuel) to remove complexity and upfront costs to ensure that it is accessible to all industrial vehicle owners,” Sim says.

For the present, neither EECA or KiwiH2 are prepared to release details of the fleet(s) involved in the trial, the truck models or their work cycles, citing confidentiality. However, KiwiH2 has released some details of the conversion technology.

The onboard storage tanks (total volume will vary from vehicle to vehicle depending on available space) will operate at a pressure of 350-bar (5000psi), as will the associated refuelling nozzle, pipework and regulators.

From a safety viewpoint, the control system is fitted with both dynamic and static leak detection and a pressure relief mechanism. Should anything untoward happen, the flow of hydrogen will be cut off immediately. In addition, a side impact absorbing framework will be fitted around the tanks, which are sited either under the chassis or behind the cab for minimal intrusion into load space.

Depending on available space and range desires, the hydrogen tanks and delivery systems will add up to 200kg to the vehicles’ tare weights.

ULEMCo’s control system is calibrated to produce the same performance as the base engine, meaning there’s no observable difference from the driver’s seat. And should the hydrogen run out, the system will automatically revert to full

For both fuel cell and combustion use, hydrogen refills and storage is at 350-bar pressure for larger commercial vehicles. Passenger cars like the Hyundai NEXO and Toyota Mirai are refuelled at 700-bar pressure.

diesel, again with no observable difference.

At the engine level, the conversion involves not much more than the fitting of hydrogen gas injectors, a job not too far removed from converting petrol cars to LNG or LPG. Little wonder, then, that the job will be handled in NZ by the team at Auckland’s Fuel Conversions & Automotive Repairs, who have 40 years’ experience in the segment.

Government-monitored trials in the UK have demonstrated that a medium urban delivery truck will reduce its annual CO2 emissions by around 70 tonnes using green hydrogen in an ULEMCo system. Note the word ‘green’ in this context, denoting that the gas has been produced via the electrolysis of water, during which not only were no little furry critters harmed, but no carbon was released.

Sadly, barely 5% of the world’s current production of hydrogen is green. The majority is ‘grey’, being extracted from natural gas via a process called steam methane reforming (SMR). And guess what’s the primary by-product of SMR? Right, carbon-bloody-dioxide. Natural gas is a hydrocarbon after all, and once you’ve dragged the hydrogen out the carbon’s what’s left over.

In fact, both grey hydrogen production and diesel combustion account for nearly the same carbon output, around 0.25-0.27kg of CO2 per kWh of energy in the fuel. kWh, kilowatt-hour, is the handiest energy unit to use in this context, because it works equally well across gases, liquids and electricity.

The carbon costs associated with the drilling, refining and transport of diesel bump it to 0.33kg/kWh, while grey hydrogen tops out around 0.28, for a solid if not spectacular advantage.

So-called ‘blue’ hydrogen is produced via SMR, but the CO2 is captured and sequestered on the spot. The technology to do this is still in its infancy, but some approaches are showing promise.

Meanwhile, fans of the green hydrogen approach can stop preening themselves for a moment. Not only are there energy losses of around 20% in a typical industrial electrolysis process (1kWh of electricity in gives 0.8kWh of hydrogen out) but where the electricity comes from is a key question.

Globally, 70% of electricity still comes from non-renewables (coal, natural gas etc). Australia, with its primarily coal-based network, is at 75%.

Electricity from coal has a carbon footprint of 1.0kg/kWh, while from natural gas it’s 0.42. Let’s leave Aussie out of the mix and assume a global average of 0.7kg/kWh. Factor in the renewables proportion and the efficiency loss with electrolysis and you’ll find that ‘green’ hydrogen averages out at 0.61kg/ kWh! Makes dirty ol’ diesel look positively like a bunch of roses, doesn’t it?

NZ is in the top rank of renewable electricity generation (hydro, wind and geothermal), and we like to pat ourselves on the back for our 85% of installed capacity. But occasionally lakes run low, and winds don’t blow, so our actual renewable generation for the past couple of decades has only occasionally bettered 80%, with coal and natural gas taking up the slack. Run the numbers and our green hydrogen comes out at 0.18kg/ kWh, not too shabby, but not as pure as some would proclaim. And then what about green hydrogen currently costing around twice as much as grey, and ever-rising electricity prices likely to widen the gap yet further?

One thing’s for sure, it’s a fast-moving, fast-changing world out there as we scramble to a carbon-neutral future. There are no solid certainties anymore. Today’s hot ticket could be floating in the gutter as tomorrow’s new technology bites.

Shades of grey, shades of grey...

Rabbit holes, rabbit holes... T&D

Ia Ara Aotearoa Transporting New Zealand wants RUCs spent on road construction and maintenance and not being used to support a wider climate change agenda.

By Brian Cowan

RUCs under review

The Ministry of Transport has sought discussion about a substantial review of the Road User Charges system. Brian Cowan looks at some of the proposals and feedback from industry leaders.

SUBMISSIONS HAVE RECENTLY CLOSED ON A DISCUSSION

document on Road User Charges (RUCs) launched by the Ministry of Transport in January... with varying responses from transport industry groups.

At close to 80 pages, the document is the most comprehensive review of the RUC system since its inception in 1978 and carries with it 89 questions the Ministry wants to put to stakeholders and other interested parties. Several of the issues that are canvassed are guaranteed to promote controversy, chief among them being the question: Should RUC continue to be levied on the basis of damage to the road network only, or should it be extended to include a wider range of harms, like pollution and traffic congestion?

That one in particular has triggered a firm response from Nick Leggett, CEO of Ia Ara Aotearoa Transporting New Zealand, who says the Ministry is barking up the wrong tree.

“In our submission on the RUC review we strongly oppose the idea of adding costs to a simple user-pays system to clip the ticket on unrelated externalities at the whim of the Government, especially when it is unclear where the extra funds sourced would go, other than into that great big bucket called ‘climate change’ – transparency and accountability seem to be out.

“The beauty of many of New Zealand’s taxes is their simplicity. RUC works well because vehicle owners pay for the road they use and those vehicles that create more pavement wear, pay accordingly.

“Transporting New Zealand supports the principle that funds paid by road users through RUC, fuel excise, and vehicle registration fees should be used predominantly to pay for road construction and maintenance and Police Commercial Vehicle Safety Team (CVST) enforcement.

Fully electric vehicles, including trucks, are currently exempt from Road User Charges.

“The clarity of the RUC system has been its strength, and although not perfect, it offers a level of transparency and rigour that has many benefits. Any dilution or reduction in its integrity will be detrimental to good policy making.

“There are already other taxes and levies in place for road transport externalities. For example, there is the Emissions Trading Scheme (ETS) to manage greenhouse gases, and the ACC levy for injuries related to road crashes.

“Using the RUC system to recover external costs risks collecting revenue over and above that due, and it follows that misallocation of resources will result.

“Misallocation of RUC revenue will ultimately lead to less money being spent on roads at a time we can least afford that.

“Disappointingly, in reading the review discussion document this appears to be an attempt by Government to find an unfair financial lever to support its climate change agenda, a position Transporting New Zealand strongly opposes,” Leggett says.

James Smith, COO of National Road Carriers, has a different perspective on the document, seeing it as a genuine whiteboard exercise on RUCs, and effectively the first time since 1978 that there has been a serious proposal to revisit the scheme and ask the fundamental question, what are RUCs all about?

However, he admits to a little disappointment at the muted response from the both the wider transport and his association’s members.

“Considering it’s an issue that’s so wide ranging and has an impact on the whole community, we were expecting a high level of interest, but that hasn’t been the case,” says Smith.

“We actually had to go looking to find people to join the discussion groups hosted by the Ministry. The Ministry has been open to engagement, but it looks as if the New Zealand psyche of apathy could be at the base of it all.

“That said, I guess the fact that the Covid pandemic has put everyone under immense time pressure has been a factor, as too the fact that many of changes being investigated are in the range of three to four years away.

“It’s easy to think, ‘We’ll worry about it then.’ But sometimes ‘then’ can be too late if the change takes the form of an amended regulation.

“Now that submissions have closed, I feel that the industry in general has let an opportunity pass. However, there is plenty more to come, and we are looking forward to the next stage in the process.”

James Smith says that a survey of the National Road Carriers membership on what were seen as two of the potentially most contentious issues raised by the document returned somewhat unexpected results.

Nick Leggett, Chief Executive Officer of Ia Ara Aotearoa Transporting New Zealand.

The discussion document questions whether RUCs continue to be levied on the basis of damage to the road network only, or extended to include a wider range of harms, like pollution and traffic congestion.

“To the question ‘Should e-RUC be made mandatory?’ just 65% of the respondents said ‘No’, far lower than we had thought. And even in that group quite a high proportion gave a qualified answer, along the lines of: ‘In general no, but there can be instances where it should be mandatory.’

“The other Yes/No question we sent out where we expected total unanimity was ‘Should RUC revenue be used for anything other than roading?’, but this too returned a mixed response. It wasn’t an overwhelming ‘No’, by any means.

“The main problem facing the Government in the area of RUCs is that within a fairly short space of time revenue from fuel excise will be no more – once fossil fuels are phased out. Even in the short term, the fact that conventional vehicles are now more fuelefficient has contributed to a decline in revenue.

“By 2030 the entire vehicle fleet will have to be shifted to a RUC-style system, which is the fundamental reason why this current document has been put out for discussion,” he adds.

Reading the lengthy document is a truly daunting exercise. It is made somewhat confusing by the inclusion of a lot of what could be termed ‘peripherals’ – things like display of labels, administrative responsibilities and the like – but the Ministry can’t be accused of not being thorough.

The issue of primary interest to the road transport sector (and the one addressed strongly by Transporting NZ in its submission) is that of externalities other than road damage – primarily greenhouse gas emissions, but including air or water pollution, noise pollution, accidents, or other harms such as congestion.

The paper acknowledges any such move would open a Pandora’s Box of complexity and would shift the essentially neutral nature of the current RUC and FED (fuel excise duty) charges partly into the realm of behaviour modification.

And should such charges be additional to a base rate, or offer discount elements for reduced harms, it asks. As an example, owners of full electric vehicles currently pay nothing towards road maintenance, despite in many instances being significantly heavier than their diesel- or petrol-fuelled equivalents.

That honeymoon period expires in March 2024 for light vehicles and the end of 2025 for heavy EVs. But given that it will take at least 30 years after that before fossil fuel use will effectively disappear, a coherent strategy to pay for infrastructure will be vital.

One of the potential anomalies commented on by the paper details a theoretical exemption in RUC to promote alternatives to fossil fuels and thereby reduce greenhouse gas emissions. The paper comments that the cost per tonne of carbon avoided (in terms of foregone RUC revenue) would be around two-thirds higher for a 55t HPMV combination than a small diesel truck, which would appear to be counterproductive. T&D