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Rethinking how fuel impacts total cost of ownership

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Today’s fleet owners and managers understand the importance of looking beyond purchase price and considering the total cost of ownership (TCO) of their equipment. Costs of residual value, insurance, maintenance, repairs and parts, among others, factor into the true expense of owning a vehicle.

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Fuel has always been a big part of that equation, but typically the concern has centered around fuel costs. That’s missing the bigger picture, kind of like focusing on purchase price instead of TCO. Fuel itself can affect vehicle maintenance and performance, thus affecting TCO.

Considering the environmental impact

Sustainability hasn’t traditionally been part of total cost of ownership. It should be, however, because clean air regulations are on the rise. Also, many private and public sector organizations are adopting sustainability plans, so whether a fleet has its own organizational goals or needs to help a customer meet theirs, the emissions coming from a piece of equipment should be factored into TCO.

When looking for lower carbon fuel, there is a growing number of options. One of the best ways to measure the environmental friendliness of a fuel is to look at lifecycle emissions — that is, what goes into the full life of the fuel, from production to delivery to end use.

A good source for this information is the California Air Resources Board (CARB), which oversees one of the most progressive clean air programs in the world, the Low Carbon Fuel Standard. CARB assigns carbon intensity (CI) scores to fuels, taking into account the total amount of greenhouse gasses emitted for the production and use of a fuel. Here are the scores for various fuels, with lower numbers representing a more environmentally friendly fuel:

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  • Biodiesel: 27.0
  • Renewable diesel: 34.6
  • Compressed natural gas from fossil fuels: 79.2
  • Electricity from the state grid: 93.8
  • Petroleum diesel: 100.5

With data like this, fleets can showcase their lower emissions to potential customers when bidding on jobs. As emphasis on sustainability grows, customers are increasingly interested in fleets who can help them meet lower carbon goals or policies.

A CI score may be a more indirect contributor to TCO than traditional items, but if the fuel that goes into your fleet can help you win jobs, then you can take that into consideration when calculating TCO.

Don’t forget performance

Fuel can directly affect maintenance. Some alternative fuels require added components that require service and repairs, or even all new engines or vehicles. Some fuels can also affect existing components.

As an example, let’s discuss the fuel I know best. Biodiesel can positively affect maintenance, parts and downtime, which are key components of TCO. These examples illustrate how biodiesel supports:

  1. Fewer diesel particulate filter (DPF) issues: Regenerations used to clear DPF clogging can hurt fuel economy and cause downtime. Biodiesel’s cleaner burn produces less particulate matter, which can help reduce DPF clogging, regeneration and wear.
  2. Added lubricity: Fuel pumps and injectors need adequate lubrication or the metal parts can rub together, creating excess heat, wear and damage. ULSD lacks the necessary lubricity, and additives are frequently used to bring it to spec, adding cost and complexity for fleets. A biodiesel blend as low as B2 (that’s 2% biodiesel, 98% ULSD) has been shown to give diesel vehicles more lubricity than required by ASTM D975.2
  3. Higher Cetane: The higher the Cetane number, the shorter the ignition time. Shorter ignition allows more time for complete combustion, which helps engines operate more effectively. The biodiesel ASTM specification for Cetane is a minimum of 47, while conventional diesel’s is 40.

Resale value is yet another important part of TCO. A truck that is better maintained will experience less wear and tear and could therefore be more valuable when it comes time to sell it.

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If you want to learn more about the role fuel plays in total cost of ownership and how biodiesel can help, I’d be happy to chat.

Steve Klein is senior manager of marketing at Renewable Energy Group, a biodiesel and renewable diesel producer. He can be reached at [email protected].

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