The Top 5 Issues in LCFVs This Week: Despite the Frenzy, Germany Isn’t Banning the ICE

10.13.16 | Blog | By:

Happy Thursday friends! Here’s my weekly take on the five most interesting developments in LCFV trends over the last week.

  1. Did they ban the internal combustion engine (ICE) or not? A resolution from Germany’s Bundesrat whipped some in the media and the Twitterverse into a frenzy this week. The fact that the resolution was not legally binding was not relevant. What is relevant: some countries have been and are considering such policies.
  2. A report from an investors group this week called for the auto industry to accelerate its readiness for a low-carbon world if it is to retain their support and prosper. That means more low- and zero-emission vehicles (ZEVs), among other measures.
  3. A working group in California under Governor Jerry Brown released its plan to put 1.5 million ZEVs on the road by 2025. And they’re not stopping at California: a number of initiatives under the plan involve outreach both nationally and internationally to influence ZEV policy and the market.
  4. Economies have needed less energy to grow in recent years, especially in China and other developing countries, but more vigorous policies are needed to achieve climate targets said IEA this week. Those policies include tougher fuel economy targets and more ZEVs.
  5. Biofrontiers project stakeholders put forward policy recommendations to the European Commission on how better to support the development of advanced biofuels and advanced alternative fuels in the EU. And part of that might mean an eventual phase out of those biofuels that don’t deliver on climate targets.

1. Forbes: German Transport Minister: ICE Ban By 2030 “Utter Nonsense”

The media and “Twitterverse” were both set aflame this week following a report in Germany’s Der Spiegel and Forbes that Germany’s Bundesrat, the federal council that represents the country’s 16 states, are advocating a ban on the ICE starting in 2030. The council passed a bipartisan resolution calling on the European Commission to take action, allowing only ZEVs would be allowed on the roads.

The resolution (translated into English) calls on the Commission to “evaluate the past tax and duty practices of the Member States on their effectiveness with regard to the promotion of emission-free mobility … so that only emission-free passenger cars are permitted at the latest from 2030 onwards.” On its own, the resolution has no binding effect. As most of you know this is regulated at the EU level.

However, that’s not how it was interpreted. Mainstream and specialty media outlets, especially those in favor of such a ban and progressive on issues such as electric vehicles, reported that Germany would ban the ICE by 2030. Forbes noted, “Nevertheless, headlines about an ICE ban in Germany raced around the globe, and the story still keeps ricocheting through Twitter.” Even Elon Musk cheered from his vantage point in the Twitterverse. However, the German Minister of Transport was quoted as saying in response to the coverage, “Utter nonsense…a complete end of the internal combustion engine from 2030 on would be totally unrealistic.” And, of course, he’s right.

What’s so special about this article and why would I include it? First, while this story was misreported such ICE ban proposals have been and are being considered; for example, in the Netherlands (it has not succeeded). Moreover, consider a recent comment from the Intergovernmental Panel on Climate Change (IPCC) that in order to meet Paris Agreement targets coal and the ICE would need to be banned. And that is going to fuel (no pun intended) the flames on this issue. My bet is that more countries will at least consider policies such as this in the coming years.

Second, this is a rather disturbing example of confirmation bias in action that is not particularly helpful when grappling with these kind of complex and profound environmental, policy, market and technology issues facing governments, the auto and energy industries, and other stakeholders. But I think we will see more of this down the road.

2. Institutional Investors Group on Climate Change: Investor Expectations of Automotive Companies 2016: Shifting Gears to Accelerate the Transition to Low Carbon Vehicles

This report, released this week from the Institutional Investors Group on Climate Change is “intended to enable investors to engage with the boards of automotive (and component supply) companies about their efforts to address climate change risk and place sustainability at the heart of the industry’s future.” The report notes:

“The expectations in the guide go much further than suggesting automotive companies should support compliance with the Paris Agreement. They also address engagement with suppliers, governments and industry peers to innovate for zero emissions vehicles and supporting infrastructure, efforts to close the gap between real world and emissions testing, the development of long-term decarbonization strategy and mobility services, investment in sustainable driving technologies and product pipelines, the use of meaningful targets and metrics to cut greenhouse gas emissions in manufacturing, fleet and supply chains.”

This is reflected in the graphic below.


Key findings in the report include:

  • Escalating risks arising from climate change mean the automotive industry is likely to undergo a significant transformation in the short to medium term.
  • The move towards a low carbon economy, climate change regulation, changing demand patterns and technological achievements will impose significant challenges on automotive companies.
  • To remain competitive and successful in the long run, automotive companies must develop more resilient business models that adapt to the challenges imposed by climate change and stricter environmental regulation.
  • A viable and sustainable business model for automotive companies should rely on the companies’ acceptance of the move towards a low carbon economy and the resulting need for more sustainable driving technologies: Automotive companies should become holistic mobility service providers.
  • The role of policymakers is also not to be underestimated: It will depend on the policy makers’ willingness to invest in the necessary infrastructure and advanced vehicle purchase and use incentives in order to successfully penetrate the market with advanced, sustainable vehicles.

There are five key expectations that investors have of automotive companies, according to the report:

  • Governance: Investors expect that a proper governance structure is in place which ensures that board and management responsibilities regarding climate change risks and opportunities are clearly defined.
  • Strategy implementation: Investors expect that automotive companies develop a long-term strategy which makes the business resilient to climate change and which incorporates key industry trends such as sustainable vehicles technology and digitalization.
  • Emissions management: Investors expect that a robust greenhouse gas emission reduction plan is in place for the fleet and assembly operations which is sufficient to close the gap between real world and laboratory testing conditions.
  • Public policy: Investors expect that automotive companies engage pro-actively with public policy makers in partnership with other stakeholders to accelerate the transition to a low-carbon economy in line with a 2°C scenario.
  • Transparency and disclosure: Investors expect that automotive companies disclose in annual reports and financial filings the company’s position regarding the questions set out in this document, and that they are transparent about fleet and manufacturing emission related to the company.

3. California Governor’s Interagency Working Group on Zero-Emission Vehicles: 2016 ZEV Action Plan

The state has a goal: put 1.5 million ZEVs on the road by 2025. How are they going to do it? By implementing actions under these broad goals:

  • Achieve mainstream consumer awareness of ZEV options and benefits
  • Make ZEVs an affordable and attractive option for drivers
  • Ensure convenient charging and fueling Infrastructure for greatly expanded use of ZEVs
  • Maximize economic and job opportunities from ZEV technologies
  • Bolster ZEV market growth outside of California
  • Lead by example integrating ZEVs in to state government

Achieving mainstream consumer awareness is the top priority under the plan. The report states:

“Despite the wide variety of light-duty ZEVs available today, most consumers have not considered these vehicles for purchase or lease. According to a recent study, only 19% of Californians have investigated ZEV ownership, test driven a ZEV, or actually own a ZEV. Only 17% of Californians surveyed are aware that the state offers rebates for vehicles.”

The portion of Californians who are aware that ZEVs exist and are available must increase significantly to achieve market transformation. In fact, achieving Governor Brown’s goal of 1.5 million ZEVs in California requires that 15%—or one out of six—of new car purchases must be ZEVs by 2025. To date, ZEVs have reached up to 3%—one out of approximately 30—of new car purchases. Between 2040 and 2050, nearly 100% of new passenger vehicles sold in California must be ZEVs in order to meet the state’s long-term climate goals.”

Different agencies in the state government will implement more than 25 specific actions to build consumer awareness, including:

  • Developing a broad, statewide consumer awareness campaign for light-duty ZEVs that aims to reach the public with a coordinated, simple message.
  • Increasing familiarity of ZEVs by promoting ZEV use in car sharing services, rental car opportunities, and carpool and vanpool programs.
  • Using DMV registration mailings to provide information to consumers about the benefits of ZEV ownership and incentives.
  • Considering adopting a regulation to transform transit fleets to zero-emission technology.
  • Establishing a sustainable freight think tank to provide foresight into the innovative future of freight transport and identify the transformative technologies, solutions, partnerships and critical steps for implementation.

Delivering high-speed rail across the state, which has been controversial, is another action item under this category. The timeframe for most of these actions is 2016-2018.

With respect to bolstering ZEV growth outside of California, the state has committed to:

  • Continue working with the U.S. states that signed a memorandum of understanding on ZEV programs in October 2013 and released an action plan in May 2014.
  • Build coalitions of jurisdictions working to promote and deploy ZEVs.
  • Share technical foundations and best practices.
  • Enable ZEV fleet expansion outside California, which includes inviting the U.S. Conference of Mayors to collaborate on a national municipal fleets ZEV goal.
  • Support ZEV deployment in medium-, heavy-duty and freight applications worldwide.

4. IEA: Energy Efficiency Market Report

Economies have needed less energy to grow in recent years, especially in China and other developing countries, but more vigorous policies are needed to achieve climate targets, said IEA in its Energy Efficiency Market Report released this week. This includes fuel economy, and IEA even put a good word in for electric vehicle policies. Read more about it here.

5. European Climate Foundation Biofrontiers: Responsible Innovation for Tomorrow’s Liquid Fuels

Yesterday the European Climate Foundation and its stakeholder partners put forward policy recommendations to the European Commission on how better to support the development  of advanced biofuels in the EU. Among other findings, the group has called for prioritizing support for advanced alternative fuels while those biofuels that do not deliver on climate targets should be phased out. Read more about it here. I’ll be talking to one of the key members of this project, Dr. Chris Malins of Cerulogy, about this, Biofrontiers and other questions on the future of biofuels, advanced biofuels and advanced alternative fuels in Europe in a forthcoming podcast. Look for it!

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