Author: Carolina Grangeia and Vijay Saini, reviewed by: Tu-My Tran
Cover photo: Siemens

Transportation plays a vital role in the economy and its transition to zero-emission holds great promise. To attempt a clean transition, there is a need for a targeted approach to every function served by vehicles. As a deep dive into our previous CityTalk blog post on decarbonizing transportation, this blog post focuses on realizing the potential of renewable energy to empower sustainable urban freight. 

Projections for the future of transport highlight that under the Current Ambition scenario, passenger activity’s carbon intensity is expected to decrease more rapidly than that of freight activities. This scenario reflects the potential impacts of existing commitments, including the Nationally Determined Contributions under the Paris Agreement. 

Post-pandemic, this surge in delivery services is expected to pose a 32% projected increase in delivery-related traffic emissions until 2030. Although freight vehicles contribute significantly to traffic-related emissions (and considering the current scenario), a global shift to electric vehicles (EVs) has been recognized as a key solution for reducing emissions in the transport sector, improving air quality and logistics efficiency.

Paradigm shift to EVs to decarbonize city logistics

According to IEA (2024), in 2023, global sales of electric vehicles (BEVs and PHEVs) reached almost 14 million, bringing their total number to 40 million. On the other hand, electrification of urban freight is in its early stages, but, with increasing demand (products and services) and declining technology costs, it is on the way to becoming more competitive. Also, the high utilization, fixed pick-up points and the predictability of routes and energy demand are foundations for better efficiency.

Governments and businesses are increasingly adopting EVs for urban freight. For example, in 2020, last-mile delivery trucks claimed an 11% market share in the 3.5 to 7 Tons gross weight range in European EV sales A similar trend is observed in India and its two- and three-wheeler (2/3W) sales, boosted by the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) subsidy scheme. According to a 2022 report by WBDS, e-commerce in India is expected to contribute 3.5% of GDP by 2030, driving economic growth and creating jobs. Similarly, the acceleration of e-commerce, paired with corporate ESG practices (Environmental, Social and Governance) and urban policies to limit emissions are pushing commitments of many companies such as Amazon, Walmart and IKEA to support EVs.

Notably, the shift to EVs is also driven by the prospects of economic advantage of lower total cost of ownership (TCO) for EVs over internal combustion engine (ICE) vehicles. Still, it may vary regionally, depending on factors such as incentives, the type of vehicle, fuel sources or electricity prices. 

Of course, the obstacles exist. The remnant dependency on fossil fuel sources, the lack of charging infrastructure, limited range and extended charging times (for e-trucks and vans, for example), summed up with higher upfront costs and increased capital expenditure, place a financial strain on companies and users, but call the attention of public-private partnerships, public policies and purchase incentives. Also, difficulties in integrating EVs into existing fleets and working forces reinforce the need for capacity building.

Role of renewables in empowering EVs for sustainable urban freight

The effectiveness of electrifying transports depends on the energy mix powering EVs, making decarbonizing the electricity sector through renewable energy crucial. Notably, clean energy technologies such as solar PV (photovoltaics) and onshore wind are already cheaper than fossil fuel alternatives in many parts of the world (IEA, 2023), reducing costs of capital and incentivizing the implementation of renewable-powered chargers.

According to the World Energy Outlook 2023, the rise in EV sales is now having an impact on demand for oil in road transport. Globally, the share of electricity consumption from EVs relative to final electricity consumption is 0,5%. By 2035, this share could reach 6-8%, reaching nearly 2.200 TWh. Moreover, investments in clean energy have risen by 40% since 2020, reaching an estimated USD 1,8 trillion in 2023.

The challenges of sustaining the charging infrastructure, dealing with fluctuations in power quality or supply-demand imbalances alleviating grid congestion must be addressed. On the other hand, this could also be seen as an opportunity to expand and operate electrical grids with greater flexibility and renewables integration, such as:

• Renewable-Powered Public Charging Stations: Governments are installing public EV charging stations with on-site solar panels for decentralized electricity generation, increasing access to charging for last-mile deliveries and alleviating the demand on the grid. 
• Smart Charging strategies complemented by renewable energy systems: It aims to integrate renewables while mitigating peak demand, ultimately alleviating grid congestion. This strategy leverages the strengths of renewable energy sources to align with the charging patterns of EVs. This also means great potential to power other cities’ options, such as public e-bikes, light commercial vehicles, shared or corporate car fleets, and e-buses. Additionally, using artificial intelligence for optimization and developing high-power charging stations with effective management are key elements to advancing urban freight. In this sense, research on charging costs suggests that logistics operators could soon save money by charging EVs instead of filling trucks with diesel, if companies manage charging strategically (ICCT, 2019). 
• Innovative approaches: innovation in battery technologies (e.g. stationary storage batteries, use of different materials and sizes, recyclability and battery swapping options) and the use of other electric mobility typologies, such as e-micro mobility (e-bikes and e-scooters), drone deliveries, electric cargo bikes and fuel cell electric vehicles (FCEVs) are gaining traction. Also, advancements in Vehicle-to-Grid (V2G) allow EVs to contribute excess energy back into the grid, enhancing overall stability and resilience. These approaches can provide a foundation for urban freight to follow the path of electric vehicle integration.

The way ahead

Acknowledging the rise of e-commerce and integrating urban freight into energy and climate action plans at various levels is essential. To support such development, ICLEI has strategized Low Carbon Action Plans for Urban Freight (LCAP-UF) as part of our Ecologistics project. The LCAP-UF will provide authorities with a strategic plan to improve freight displacements and operations while prioritizing a low-carbon approach aimed at reducing greenhouse gas (GHG) emissions. This plan offers a strategic approach to reduce emissions in the freight sector.

Led by ICLEI, the EcoLogistics project in cities like Bogota, Kochi and Panaji are pioneering benchmarks in the pursuit of zero-emission urban freight systems. In India, the city of Panaji is striving to promote cooperative last-mile delivery using electric charging vehicles, while Kochi aims to showcase the potential of electric Low Commercial Vehicles (LCVs) by replacing fossil fuel-powered vehicles. This project aims to reduce diesel consumption and cut emissions significantly, leveraging digital tools for fleet control, battery tracking, and charge optimization. 

Another example comes from the city of Bogotá, Colombia. The project seeks to replace the fleet of last-mile logistics in collaboration with the city and freight operators. It includes adding cargo bikes, electric vans, and electric tricycles in designated low air quality zones. Addressing climate concerns and ensuring energy security requires cleaner transportation and energy systems, along with greening the electrical grid. Electrifying urban freight is made further feasible by commercial fleets incorporating fuel savings into purchasing decisions and planning infrastructure for specific operations. Additionally, governments, businesses and cities must collectively work. Decision-makers and companies are increasingly viewing EVs in urban freight as a cost-saving solution that supports sustainable operations, enhances customer satisfaction, and meets regional regulations and standards.