• New report from industry ahead of COP28 calls for urgent action to decarbonise nearly half a million Heavy Goods Vehicles (HGVs) to help the UK meet its net zero targets for transport and unlock a £100 billion investment opportunity.
• HGVs are among the UK’s most polluting vehicles and account for approximately a fifth of the UK’s transport emissions – equivalent to the carbon footprint of domestic and international air travel, buses and domestic shipping combined. Electrifying all HGVs would be the same as removing 12 million cars from the road.
• The Green Finance Institute (GFI) and supporting transport and finance organisations are calling for more private investment to accelerate the transition to Zero Emission Trucks (ZETs) and speed up the roll out of electric charging infrastructure through 10 innovative financial solutions.
• Half of all HGVs in the UK are owned by small businesses which face additional challenges in accessing finance.

London, Wednesday 29 November: Urgent action is needed to electrify half a million heavy-polluting HGVs in the UK, in order to meet net zero targets for transport – a new report from the Green Finance Institute (GFI) ahead of COP28 says today.

As world leaders prepare to gather at COP28 in the UAE for a Global Stocktake on progress against net zero targets,  the GFI, with the support of transport and finance organisations, is calling on government, industry and private investors to work together to unlock a £100 billion investment opportunity to decarbonise the sector.

The report, Delivering net zero: unlocking public and private capital for zero emission trucks, focuses on unlocking the barriers to financing decarbonisation of the HGV sector and highlights perceived technology risk, higher costs, and lack of charging infrastructure as some of the key barriers to decarbonising HGVs. It outlines 10 financial mechanisms that will support the decarbonisation of the freight sector and help the UK meet its net zero targets.

These mechanisms were developed with input from global finance, freight and logistics, and energy experts, along with leading thinkers from academia and non-profit organisations, as well as local and central government.

The UK’s HGV fleet accounts for just 1% of all vehicles on the road but almost 20% of total transport emissions – roughly equivalent to the carbon footprint of domestic and international air travel, buses and domestic shipping combined.

By installing infrastructure across the UK, including chargepoints in depots and also across the strategic road network, the country’s entire HGV fleet could be decarbonised – which is the equivalent of removing 12 million cars from the road (18.6 million tonnes of CO2).

The GFI report says that to make the transition, operators and landowners need to be provided with finance to acquire ZETs and install infrastructure. Greener electric trucks are already available,  which means access to finance would allow more than half of lighter HGVs in the UK – 280,000 – to be replaced now – the equivalent of taking over 3.5 million cars off the road today.

The GFI’s 10 financial solutions to support the freight sector include:

• Utilisation Linked Financing (ULF): ULF is a financial solution that can de-risk investment in charging infrastructure either through a loan or asset finance. ULF can be structured so that payments are linked to the usage of the chargepoint, with payments only commencing once the asset is revenue generating.
• Shared charging infrastructure agreements: These agreements could allow HGV fleet operators to pool resources so they can buy or invest in electric charging infrastructure at depots together, reducing the capital investment required by each party and sharing the infrastructure maintenance. This could be done through joint ventures or a Special Purpose Vehicle, which provides financial protection for riskier projects by ensuring its operations are kept separate from the main company, or through a contractual agreement that protects all parties.
• Residual Value (RV) Guarantee: RV is the estimated value of a truck at the end of its lease term. An RV Guarantee could improve the RVs of electric trucks as set by financiers, which would reduce finance costs for operators and enable more of them to make a business case for adopting ZETs. Provided by government or a third party, it could be a more effective way to encourage adoption than the existing grant schemes for ZETs.

Freight decarbonisation offers a significant investment opportunity, but a lack of demand for ZETs heightens risks for investors which reduces the incentive to provide finance. Currently, only 500 HGVs in the UK are ZETs – accounting for less than 0.1% of all HGVs on the road – and early adopters have mostly been large companies or local authorities.

The organisations bucking the trend and taking advantage of electric HGVs in their fleet includes Westminster City Council who are electrifying their refuse collection trucks;  supermarket Tesco who are deploying the UK’s first electric articulated HGVs – trucks with a tractor and trailer – as part of their heavy duty haulage fleet; Amazon who launched electric HGVs in their delivery fleet for the first time last year; and Cambridge based SME Welch Transport.

Around half of the trucks in the UK are owned by small businesses, many of which lack access to the additional finance needed to transition to more expensive Zero Emission Trucks (ZETs) or install the necessary infrastructure – like chargepoints.