The freight and logistics sector contributed £127 billion to the UK economy in 2022 and is a critical element of UK supply chains. Road freight plays a key role, with around 89% of all goods in the UK being moved directly by road.

Heavy Goods Vehicles (HGVs) i.e. vehicles over 7.5 tonnes, covered 19.5 billion kilometres in the UK in 2022 and today, almost all of these vehicles are diesel powered. Consequently, HGVs represent a significant proportion of the UK’s road greenhouse gas (GHG) emissions and the sector must decarbonise if the UK is to meet its Net Zero targets.

Adopting these new technologies poses significant challenges to HGV operators, the needs of whom must be considered and addressed if the transition is to be successful. The challenge of making these changes in an industry where operating margins are slim is not insignificant. An estimated £100 billion of investment will be required, delivered through collaboration between the public and private sectors. There is limited time remaining, as many HGV operators in the UK have just one more cycle of replacing their fleet before the diesel truck end of sales dates, which means many are making decisions now that will impact the speed at which they are able to decarbonise in the future.

To help mobilise the capital required, the Green Finance Institute (GFI) brought together global experts from finance, freight and logistics, and energy sectors, with leading thinkers from academia and non-profit organisations as well as local and central government, to focus on unlocking the barriers to financing decarbonisation of the HGV sector.

The speed at which the sector can decarbonise will vary depending on the type of vehicle, the job it performs, and the duty cycle. The UK Government has committed to end the sale of new diesel non-zero-emission HGVs weighing 26 tonnes and under by 2035, with all new HGVs sold in the UK needing to be zero-emission at the exhaust from 2040. This is in addition to the pledge for 30% of all heavy duty vehicles sold in the UK (including coaches and buses) to be zero-emission by 2030.

The barriers facing operators are many and varied, so there is no silver bullet solution; a range of approaches will be needed. The financial solutions highlighted in this report, together with policy recommendations, have the potential to demonstrate how the required finance can be unlocked to accelerate the transition to zero-emission road freight and ensure the UK meets its Net Zero ambitions.