Hello friends! Here’s my monthly take on five most interesting developments in fuels and vehicles trends. What I try to do each month is select stories, studies and other interesting items that you may not have seen elsewhere but that really represents an important issue or trend that I think you would want to know about. Or, I try to poke behind the hype to provide a deeper understanding of what’s happening. Items I selected this month include:
1. Green Car Reports: Report: Not Enough Battery Factories to Support EV’s Rise Past ICE Vehicles in 2030s – Battery-manufacturing capacity will have to grow dramatically for electric cars to surpass internal-combustion vehicles in the 2030s, according to a new report produced by Ultima Media, and sponsored by Swiss tech firm ABB. The report’s conclusion is based on two predictions: that electric cars are poised to overtake sales of internal-combustion vehicles by 2036, and that 80 battery factories will be in operation globally by that time, shown in the figure below.
That number of factories won’t be sufficient to meet battery demand from all of those new EVs, according to the report. An even greater increase in manufacturing capacity will be needed not only to meet demand, but to provide some headroom, as the theoretical maximum capacity of a factory is rarely achieved in real life, Green Car Reports notes.
The report’s authors advocated co-locating battery-pack assembly and vehicle assembly as a way to boost useful capacity. The report also pushes increased automation, which is to be expected, as robotics are one of the businesses of sponsor ABB. Green Car notes that, “Battery research also accounts for up to a third vehicle costs—with ABB’s pitch perhaps being that its robotics will allow for increased manufacturing productivity to balance that out.”
2. Maritime Executive: MAN Study: “We May Have to Discuss a Ban of Fossil Fuels” – According to a study compiled by MAN Energy Solutions and the Fraunhofer Institute for Systems and Innovation Research (ISI) – a fossil-fuel ban for new ship builds could be necessary in the latter half of the decade. The study examined four different scenarios: 1) achieving the IMO 2050 goal of cutting emissions in half by midcentury; 2) a market-driven continuation of business as usual, with a large-scale transition to LNG but limited further progress on emissions; 3) outright failure of IMO decarbonization objectives, with an increase in total emissions by 2050; and 4) a near-complete transition, cutting GHG emissions by 90 percent by 2050.
The study noted that LNG is not a “blind alley investment” and could serve as a near-term bridge to green alternatives, but it is not a “green” end point in itself. In terms of specific technologies, ISI predicts that aviation will outcompete shipping on price for limited supplies of sustainable biofuels. This leaves power-to-liquid fuels like green ammonia, green hydrogen, green methanol and green methane. The competitiveness of these fuels would hinge on global regulatory limits on cheap, widely available fossil fuels, as the “maritime energy transition does not stand a chance against low oil prices if there is no global regulatory framework.”
3. Utility Dive: All-Electric Car and Truck Sales by 2035 Would Save $2.7 Trillion, but Will Take Smart Policy to Drive Clean – Researchers at University of California, Berkeley, Energy Innovation and GridLab analyzed the latest battery and infrastructure costs and found that the transition to 100% electric car sales by 2030 and all-electric truck sales by 2035 (or all electric vehicle sales by 2030/2035), combined with a 90% clean electricity grid by 2035, could deliver $2.7 trillion in consumer savings through 2050, or an average of $1,000 per household every year, while also creating 2 million jobs in 2035, and reducing economy-wide emissions 45% by 2030. However, “these benefits will not be realized without smart policy to accelerate EV adoption and unlock advantages ranging from global competitiveness to improved public health.”
What does that mean? EV car and truck sales requirements for starters. Also needed: more charge points. “Rapid investments in public charging are needed, at the scale of $10 billion per year. This equates to installing approximately 300,000 public Level 2 and fast charging charge points per year over the next 30 years.” Compare that to the Biden plan: 500,000 charge points with $15 billion allocated under his infrastructure plan to fund them.
4. EnergyPost.EU: A Carbon Tax on Car Fuel? A Fossil Car Phase-Out Date Is More Effective – The European Commission is working on a carbon tax on car drivers as part of its climate plan review in June. In this op-ed William Todts of the NGO Transport & Environment warns that the Commission shouldn’t make the same mistake French President Macron made back in 2018 when “yellow vest” (gilets jaunes) protests against a fuel price hike made him back down. A very high carbon price, caused by letting the market decide the price, may have the same effect.
Instead, Todts offers an alternative in three parts. First, carbon tax revenue should be spent on things that provide “visible and widespread benefits.” Anything from a climate dividend handout to money deployed in public services. Second, raise the fuel tax gradually to steer people towards EVs as they become more affordable. Finally, pass laws to phase out cars and promote alternatives like public transport and even cycling. “It’s much more effective than using a tax to squeeze out fossil car usage. And it forces car manufacturers to ramp up their EV ambitions.” Todts notes that the manufacturers are fans of fuel taxes precisely because it shifts the pressure of electrification away from them and onto the consumer.
5. Axios: Climate Spending Is a Story of the Century – “A successful global effort to slash carbon emissions demands huge investments to finance the unprecedented transformation of energy systems and related infrastructure — and it’s a capital shift that’s already well underway.” This story reviews the private and public investment ramping up in the U.S., EU and elsewhere to fight climate change. “The fact that there is out there, globally, a $23 trillion market for clean energy products, for products that will reduce greenhouse gas emissions, is a massive opportunity for this country,” said U.S. Department of Energy Secretary of Energy Jennifer Granholm. What I see is more spending, more carrots, to reach transport energy decarbonization, and fewer sticks in the U.S. and EU, for example. A recent example is the sustainable aviation fuel (SAF) tax credit under discussion in the Made in America tax plan. The sticks will include policies such as tougher fuel economy standards and maintenance (or tinkering) with existing frameworks such as the Renewable Energy Directive (REDII) and the Renewable Fuels Standard (RFS2) programs.
Brazil Ministry of Mines and Energy: CNPE Approves Resolution that Creates the Fuel of the Future Program – The Brazilian government through the National Energy Policy Council (CNPE) approved a resolution last week to create a Fuels for the Future program to increase the use of sustainable and low-carbon fuels, as well as the application of national vehicle technology, with biofuels, with a view to further decarbonizing transportation. The types of issues the program will consider are second-generation ethanol, ethanol fuel cells, biomethane, green diesel (renewable diesel) and synthetic fuels.
Tammy Klein is a consultant and strategic advisor providing market and policy intelligence and analysis on transportation fuels to the auto and oil industries, governments, and NGOs. She writes and advises on petroleum fuels, biofuels, alternative fuels, automotive fuels, and fuels policy.