With 2.2 million heavy commercial trucks in the
national parc, Brazil is facing international pressure to bring
more eco-friendly vehicles to the roads. But the infrastructure and
cost hurdles are massive.

In Brazil, intermodal transport is limited, with average truck
trips spanning more than 2,000 kilometers. Combine that with a
commercial truck fleet averaging 12 years of age, and a lack of
affordable options to replace with new vehicles, and Brazil is
facing a truck-emissions timebomb. Brazil has a truck parc of 2.2
million units, and the movements to modernize the fleet by
agribusiness, e-commerce and construction have contributed to
reducing the fleet average age.

However, while the emission restrictions for new trucks have
limitations in terms of particulate matter and NOx, there isn’t any
other control during the truck life cycle, except for a few
segments of truck application. Brazil created its control emission
program in the 1980s, named Proconve. Since then, the program has
gradually tightened Brazil’s emission standards. Introduced in
January 2023, the most current Proconve 8 standard is similar to
Euro VI, and proposes significant reductions within the next
decade.

But that is not enough. One proposed solution is to electrify
the fleet, but infrastructure and affordability concerns may
hamstring that effort.

The stimulus for electric vehicles from the Brazilian government
is limited, and only large companies with environmentally friendly
policies have adopted electric trucks. The forecast take-up of
electric or alternative propulsion trucks is meager in the
medium-term – with less than 1% of vehicles powered by alternative
propulsion, as demonstrated in S&P Global Mobility’s latest
commercial powertrain forecast.

Brazil’s road-intensive, diesel-dependent infrastructure has
limited the use of electric trucks to short trips and urban
deliveries. Standing in the way of further development are an
underdeveloped recharging infrastructure, high vehicle prices
(electric trucks are nearly four times the diesel truck price),
long charging times, and the poorly constructed highway network –
only 12% of roads are paved in Brazil.

Consequently, while the total production volume of electric and
natural gas medium- and heavy-duty trucks in Brazil will increase
during the decade – from 850 units in 2022 to 1,450 in 2030 – it
will hardly be enough to make a dent in the 2.2-million-unit truck
parc.

Therefore, the electrification of Brazil’s trucking industry
will make only small steps in the current decade. Before a higher
ramp-up can be envisaged, hurdles such as infrastructure, lack of
subsidies, and acceptance of the innovative technology by the
decision makers will need to be overcome. Without a more receptive
operating environment South America will continue to lag other
regions in electrification and the reduction of its emissions
footprint.

Until that time, much of Brazil’s efforts lie in limiting the
environmental impact of the existing commercial truck parc. The
carbon market is one opportunity for the government to create
incentives and boost the financing of ecological projects.

In parallel, OEMs have offered alternative propulsion vehicles
to their clients, but infrastructure again remains a challenge.
Natural gas has been a popular solution, but its limited
distribution network is a huge obstacle to its expansion.

With increasing emission restrictions, the discussion as to
which is the best alternative fuel has resurfaced. In 2018,
Brazil’s energy minister introduced measures to change the energy
mix in favor of natural gas for industries including
transportation. Since then, investments in infrastructure and
natural gas exploration have increased. Furthermore, a couple of
OEMs have introduced their eco-friendly products with natural gas
or green diesel (non-fossil diesel) powertrains.

Looking medium term, the situation is far from static. In terms
of bringing more eco-friendly vehicles to Brazil’s roads, the use
of alternative eFuels has proven to be the optimal solution. The
most popular options are:

• Green diesel
  • Hydrotreated Vegetable Oil – HVO
  • Blended R5 diesel (95% diesel, 5% bio diesel)
  • Biodiesel
• Natural gas
  • Compressed Natural Gas (CNG)/Liquefied Natural Gas (LNG)
  • Methane
  • Biomethane

  On the natural gas side, the low operational cost compared to
  traditional diesel (10% lower maintenance cost) is a great selling
  point, but its limited availability (it’s mainly available in the
  South-East region [states of Rio de Janeiro, Sao Paolo, Minas
  Gerais]) – is less so.

  New projects appear in the north/northeast region but are still
  small. Methane or biomethane have emerged as a solution by and for
  agroindustry. Agribusiness is the largest driver of heavy-duty
  truck demand in Brazil and Argentina. The agro-industry’s strong
  earnings have allowed investments in other segments of the
  agroindustry: from agro-tech (start-ups focused on solution to
  fields) to new means of transport (increasing the use of rail and
  water transport).

  By contrast, the diesel distribution and technology have been
  well demonstrated, which makes a compelling case for green
  diesel.

  Indeed, the solution for climate-friendly transport will go
  beyond fuel. The more rational use of transport with integration
  between modals reduces the costs of operation and improves the
  well-being of society. Structural change in transport must be the
  priority together with emissions control. The government might
  create incentives to boost initiatives for integration. Some
  measures already have been seen, like BR do Mar – the incentive to
  Brazilian coast cabotage – or the mark to change the country’s
  energy matrix which will boost the use of natural gas for industry
  and transport.

  Brazil’s road to clean transportation will happen in two stages:
  First will come a move from diesel to green diesel/ natural gas.
  Second, there is the hoped-for shift to electric. But many
  developments must fall into place first.

  
  The future of EVs and alternative propulsion in the commercial
  market

  
  Medium- and Heavy-Commercial Vehicle Engine Production
  Forecast

  
  Hydrogen: In it for the long haul

  
  MHCV Alternative Propulsion Forecast Module

  
  Commercial vehicle insights, trends and marketing

  
  The inevitable transformation of the bus industry in South
  America

This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.

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• Source: http://www.spglobal.com/mobility/en/research-analysis/can-brazils-commercial-truck-fleet-turn-electric.html