Refrigerated trailers California’s next emissions target; Ndustrial gets ready

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HOUSTON — While the focus in California regulations might be on the Clean Fleets rule that will start to kick in at the end of the year, a smaller part of the state's overall emissions regulations of trucking is spurring some new entrepreneurial activity.

What is driving an Ndustrial initiative launched in the past year is a set of new rules regarding trailer refrigeration units (TRUs), according to Jason Massey, the company's founder and CEO, who spoke about Ndustrial's "value proposition" at the CERAWeek by S&P Global conference in Houston this week.

A TRU is exactly what it sounds like: a trailer that has a refrigeration unit to keep its contents, mostly foodstuffs, cold.

Ndustrial is not a new company; it began life in 2011 as Sustainable Industrial Solutions. Its primary activity is energy metering and management that is "highly focused on production sites," Massey said, citing a wide range of activities, such as tire recycling facilities, various manufacturers and bitcoin mining, which is heavily energy intensive.

The new requirements going into effect in California have several rules. Refrigerants with less warming potential will be needed to be used. There are new particulate matter standards that must be met. TRUs of a certain size must register with the state and there are new requirements for reporting various data points, with Massey calling the reporting requirements "pretty significant."

In a rule that has parallels to the retirement requirements of the state's Clean Fleets rule, TRU owners operating in California starting next year are required to turn over at least 15% of their fleets every year to zero-emission vehicle technology. By 2029, all TRUs must be ZEV technology.

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The penalties for not reporting data are "in the hundreds of thousands of dollars," Massey said.

Massey likened what Ndustrial is offering to shore power, a term found in the maritime world in which a berthed ship draws its power from the area's electricity grid rather than burning marine fuel. In the case of the TRUs, Ndustrial is offering a product that at its most basic is "installing a drop cord on a loading dock," he said.

That cord would be plugged into infrastructure on a TRU, allowing the trailer to operate on that shore power and eliminating the need to run a petroleum-powered refrigeration unit to keep the unit cold.

Massey said the product offering to electrify TRUs with shore power does not directly impact the conversion requirement. But he added that it does help a company's baseline emissions activity and then impacts its scope 3 emissions, which companies utilizing the refrigerated units would need to consider in their own emissions reporting requirements.

He added that this product offering does not yet have a name. But the company's energy management product is called Nsight.

The installation is not particularly expensive on its face, about $13,000 to $14,000 per loading dock. Installation of the equipment on the truck comes in at "a few hundred dollars." And though the product has only been offered recently, Massey said Ndustrial has deployed it at 170 sites in just seven months.

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Massey said that while California is leading the way in regulating emissions from TRUs, at least 12 other states have either adopted such regulations or are on the road to doing so.

"It's a real interesting spot in the marketplace," Massey said in an interview with FreightWaves after his presentation at CERAWeek. "Generally people aren't talking holistically. Yes, they know the carrier needs to be upgraded, and California is driving that, but that relationship between the building and the hauler is very loose."

A move toward electrifying the TRUs while they are parked at a facility had "been coming in conversations with our customers," Massey said, but when the regulatory structures were put into place, "people started to take it more seriously."

Ndustrial two years ago received a $6 million investment from VC company Clean Energy Ventures. But another investor is Lineage Logistics, the cold storage giant that Massey said is also one of Ndustrial's largest customers for its TRU technology. Prior to that investment, Ndustrial's funding had been "bootstrapped," he said.

Particularly for emissions initiatives in California, there is always a question: Who gets the credits?

The fuel markets in the Golden State have the Low Carbon Fuel Standard (LCFS) as a key component of economic decisions. The LCFS sets up a trading system of credits for companies that need to meet certain emissions targets. They can get to those targets by cutting their own emissions. Or if they can't get there, they can buy the LCFS credits on the open market.

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Credits recently are trading near $60 per metric ton but they’ve been as high as close to $200, where they are capped. Ten years ago, in the early days of the LCFS, the price was measured in pennies.

Massey said the question then is what happens to the LCFS credits generated by taking a refrigerated trailer that had been kept cold by burning diesel and switching it to being refrigerated by that shore power.

If the power is provided by the refrigerated warehouse or docking facility for free to the TRU, an argument could be made that it should receive the LCFS credits. If the TRU owner is charged, the case is reversed: The trailer owner could argue that it should receive the LCFS credits.

Or there could be compromise. "We suspect that it will be closer to a 50/50-type arrangement," Massey said.

Emissions from refrigerated warehouses can be a particular issue in rural markets where "supply chains and logistics are robust but the air quality is pretty bad," Massey said, citing emissions from diesel-powered TRUs as a reason. "You can see the haze at the cold storage sites." The push there is not on CO2 emissions but more on a "microenvironmental level."

"Outside of the regulatory framework, you are seeing local co-ops really drive electrification," Massey said.

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Conversion in those areas also can get a boost under the federal Diesel Emissions Reduction Act, which Massey said provides funding for clean air projects and may include services like NDustrial's.

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Refrigerated trailers California’s next emissions target; Ndustrial gets ready