As the world wraps up another UN climate conference with COP 28 in Dubai this week, there has been plenty of coverage on contradictions with the fossil fuel industry’s involvement in the conference, new pledges to reduce emissions from different countries along with pledges of funding for climate initiatives, and the usual “calls for action.” However, innovative solutions from companies and industries that are already taking up the calls to action and delivering significant emissions reductions are often overlooked in the reporting.
Of the many companies presenting solutions and highlighting efforts to reduce emissions at COP 28, one, in particular, stood out to the CEO Weekly editors because of both its real emissions reduction achievements and because of how it’s such a brilliant and easy-to-implement idea that can be up and running relatively quickly.
This came from a group called the Full Truck Alliance (FTA), which operates a vast logistics operation within China, extending to over 340 cities and a network of nearly 3.8 million active drivers, exceeding the delivery volumes of many nations.
Here’s how the carbon account system works: the truck drivers use a phone app to optimize delivery routes and avoid empty or half-filled load hauls. Previously drivers would often wait for days to fill a truck with goods or just leave early with an empty or half-filled load, resulting in huge inefficiencies across the board, costing drivers, their companies, and recipients extra time, while also burning a needless amount of extra fuel.
To alleviate this situation, FTA devised a scheme to incentivize drivers in their network to set up a “carbon account” and begin using the app to track how much carbon emissions they reduced. While the carbon account system is voluntary, FTA has partnered with China Everbright Bank to provide participating drivers various incentives, such as more favorable loan rates for hitting carbon reduction milestones.
“The carbon account system has been an experiment not only in reducing emissions but also in how to best incentivize voluntary behavior,” noted one of the architects of this system, Dr. Chen Zhaohui, Chief Scientist at FTA.
China emits around 12 billion tons of carbon emissions each year, and of this, the country’s road freight is responsible for over 600 million tons of carbon emissions. Diesel is the primary fuel used in over 90% of road freight trucks.
Trucking will be a crucial sector to solve if the country is to reach its goal of carbon neutrality by 2060. This will eventually require the full phase-out of fossil fuels in shipping. However, there are limited options for adopting more clean energy sources of trucking fuel, and there’s currently an adoption rate of clean energy solutions in heavy trucks at around only 3%. Still, as Dr. Chen notes, “there are many practical things we can instead do in the meantime to reduce emissions.”
China’s trucking sector is plagued with inefficiencies, with a major issue being a full load factor of less than 60%. This means vehicles are effectively loaded with goods for only 60% of the mileage, leaving 40% empty.
Previously there was a lack of comprehensive digitization and information exchange connecting drivers, shippers, and other logistics networks, leaving significant untapped potential within information silos that could be harnessed for savings.
The carbon account platform proposes a comprehensive methodology to measure the carbon emissions of drivers in the entire freight lifecycle, accumulating the results of their carbon reduction efforts through a carbon credit system. The platform believes in taking action by providing monetary rewards to drivers for their carbon reduction achievements, such as carbon assets gained after reducing emissions.
The carbon account system filled in these gaps to slash inefficiencies. Initial goals for the digital platform’s technology-driven carbon reduction plan aim to increase the load factor mentioned earlier from less than 60% to 80%, achieving an 80% full-load rate and reducing the empty driving ratio to below 20%.
FTA rolled out the pilot of the carbon account system in June this year, officially opening carbon accounts for over 3,000 truck drivers nationwide. Early results were encouraging. In just one month, the 3,000 drivers cut diesel consumption by 150,000 liters, equivalent to a 400-ton reduction in CO2. They also experienced a 10-20% increase in completed orders and revenue, with a concurrent drop in fuel use and costs by over 20%. By the end of 2023, FTA expects over a million truck drivers to apply for carbon accounts.
These figures show that system-centric technology can improve efficiency and reduce emissions more quickly and affordably than upgrading physical infrastructure and equipment. FTA also shows huge room for improvement, even in industries where big clean energy breakthroughs are still a long way off. There is much to celebrate, learn from, and be inspired by in the Full Truck Alliance system-based approach.