The Top 5 Issues in LCFVs This Week: Paris Agreement Ratification Likely

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

1. The impossible has now become the inevitable: With 20 more countries signing on yesterday, the Paris Agreement is likely to be ratified by the end of the year. The question now is, how to get to 1.5C (and beyond). “Deep decarbonization” is going to be required, including (and especially) for transport and that will involve electrification, hydrogen and biofuels, for many countries.
2. This week the U.S. Department of Transportation issued federal policy on highly autonomous vehicles (HAVs) walking a fine line between encouraging innovation and protecting the public interest.
3. The NGO Transport & Environment in Brussels showed this week that not only was it not just Volkswagen “cheating” on diesel emissions, it was the whole industry. As a matter of fact, Volkswagen’s emissions were the least of those the group researched. Meantime, these companies have been accused of essentially colluding with their respective governments to avoid enforcement.
4. There’s the aspiration and then there’s the reality. In India, gasoline demand is increasing as more people buy vehicles, especially motorcycles. Motorcycles are more affordable, serve as personal transport and avoid the stigma of public transport. So the funny thing is that while some of us in the west are ditching our vehicles for public transport, the opposite is happening in emerging economies like India.
5. CALSTART released a survey of Tier 1 automotive suppliers showing that 70% of them should not adjust the federal fuel economy program for the years 2022-2025. And 65% agreed with the decision to set new standards for 2025.

1. New York Times: Paris Climate Deal Passes Milestone as 20 More Nations Sign On

“What once seemed impossible now appears inevitable,” said UN Secretary General Ban Ki-moon, who will step down from his position at the end of the year. He was referring to the rocket-speed pace at which countries have ratified the Paris Agreement. Consider that most of the parties signed the Agreement only in April. On Wednesday, a number of countries ratified the Agreement including Brazil, Mexico, United Arab Emirates, Thailand, Belarus and Iceland.

The Agreement takes effect on the 30th day after the date on which at least 55 parties accounting in total for at least an estimated 55% of the total global GHG emissions have ratified their acceptance. As of today, 60 of the 197 parties to the Agreement have signed representing 47.76% of GHG emissions. The graphic below illustrates which countries have signed on. Germany, France, the EU, Canada, Australia and South Korea have promised to ratify the Agreement by the end of the year, according to the New York Times.

Among other provisions, the Agreement commits countries to keeping global temperatures “well below” 2°C above pre-industrial times and “endeavor to limit” them even more, to 1.5°C. Countries must submit plans, “Nationally Determined Contributions (NDCs)”, that show how they will achieve this and their contributions will be reviewed every five years.

So, it’s highly likely the Agreement will come into force by the end of the year. Then comes the task of implementation, and as I’ve highlighted before (August 12, July 1) that is not going to be easy.

The Agreement relies on “global peer pressure and public scrutiny” as reported by The Guardian this week. This means countries are legally bound to attend summit meetings and give progress reports on commitments and those that don’t will be publicly named (or shamed). At the next major UN climate change summit meeting in November in Morocco, the aim is to create an independent body to monitor and verify countries’ pollution levels and use the shame factor to push them to reduce their emissions.

The NDCs for many countries, their emissions reductions plans, are terribly unspecific in describing how they’re going to get them. I’ve been poking around in those plans and I will write about in a future post. However, and why this has anything to do with fuels and vehicles, is that some NDCs do include plans to transition to renewable energy and introduce electric vehicles, hydrogen fuel-cell vehicles and even biofuels as shown in the figure below.

I expect the activity in this area to increase post the Paris Agreement coming into effect and as countries start to dig into just how they are going to reach the targets. Think “deep decarbonization” across different sectors, especially transport.

2. GreenCar Congress: DOT issues Federal Policy for Safe Testing and Deployment of Highly Automated Vehicles (SAE levels 3-5)

This week the U.S. Department of Transportation issued federal policy for public comment on highly automated vehicles (HAVs) that can take vehicle can take full control of the driving task in at least some circumstances. Read more about it here.

3. Transport & Environment: Dieselgate: Who? What? How?

According to a new report from NGO Transport & Environment (T&E), emissions cheating by Volkswagen is just the tip of the iceberg (see report cover to prove it). Read more about it here.

4. FirstPost: India’s New Motorcycle Owners Drive Gasoline Boom, Number of Registered Vehicles Double Every 7 Years

I’ve written exhaustively about policies, trends and issues in electric and hydrogen fuel-cell vehicles at this point. This story from FirstPost in India caught my attention this week because it highlights the gap between aspiration and our current reality. And the reality is that in India, as in other parts of the world, people are buying conventional vehicles, especially motorcycles, at ever-increasing rates.

Motorcycle sales in India have been expanding at a compound growth rate of 7% per year since 2010/11 and hit a record 16.5 million in 2015/16, according to the Society of Indian Automobile Manufacturers. They represent the majority of registered vehicles as of 2013 at 133 million and accounted for 60% of gasoline sales.

By contrast, in 2013 there were 25 million cars, jeeps and taxis and 9 million goods vehicles.  Car sales have grown at a compound rate of just over 2% per year and reached 2.8 million in 2015/16. However, the number of registered vehicles on India’s roads has been doubling every seven years, according to the Ministry of Road Transport and Highways.

According to the Ministry of Petroleum and Natural Gas gasoline consumption hit a new record in August of 600,000 bpd, lower than countries such as the U.S. or China. However, the difference is that the growth is fast and sustained.

This quote from the report caught my attention:

Owning a personal vehicle rather than relying on public transport is an important status symbol for India’s fast-expanding middle class but many buyers opt for motorcycles due to cheaper purchase and operating costs.

I found the statement ironic. Millions in the developed world are now beginning to eschew personal transport altogether in favor of public transport, ride sharing and even walking.  Meantime, millions in the developing world have proudly climbed the economic ladder and now have a personal vehicle to show for it. I’m not sure they’re going to be willing to go back without a massive mindset change and major improvements in public transport.

5. CALSTART: Survey Shows Suppliers Support for Existing 2025 Federal Light-duty Vehicle Fuel Economy Regulation

Late last week, CALSTART released the results of a survey it commissioned Ricardo Energy & Environment to complete a poll of major automotive parts suppliers (Tier 1) to get their views about the federal fuel economy standards that have been proposed for the years 2022-2025. According to the survey:

• 70% of suppliers said policymakers should not adjust the program’s goals.
• 65% agreed with the decision to set new miles-per-gallon standards for 2025,
  with 30% saying they strongly agreed with the decision.
• Among those who agreed, all but one named regulatory certainty as critical for the
  industry and half said the standards spark innovation.
• 59% said that fuel economy standards help spur job growth.
• Suppliers identified a wide range of conventional and electric technology that could
  be used to meet the standards.
• Three quarters agreed that setting targets beyond 2025 is also important for long-term

CALSTART noted there were a number of areas where the responses from automotive suppliers were more mixed:

• Regarding the cost estimates, there was less agreement among respondents who were able to express an opinion. The majority of respondents felt unable to comment on costs in the majority of technology categories.
• There was no clear consensus on the importance of electrification of vehicles in order to meet the 2025 target. Although some survey respondents felt that there would be sufficient improvements in internal combustion engine technologies, light-weighting and hybridization technologies to meet the 2025 targets without additional electrification, other survey respondents indicated that a high level of EV penetration would be required to achieve the target.
• The effect that oil price has on the sales of fuel efficiency technologies garnered a mixed response from the survey respondents. About 45% indicated that low oil prices do not have a noticeable effect on these sales, whereas 45% indicated that low prices reduce the demand for, and sales of, fuel efficiency technologies.