Top 5: Low Carbon Fuels Will Be Needed to Decarbonize EU Transport

06.28.18 | Blog | By:

Hello friends! Here’s my monthly take on the five most interesting developments in future fuels and vehicles trends. Items I selected include:

  • A look at a recent Ricardo study that looks at the low carbon fuels and electrification of the light-duty vehicle (LDV) fleet in the EU. Both are needed to reach EU targets.
  • A new study shows that traffic doesn’t hurt economies as was previously thought, though traffic still needs to be addressed.
  • Meeting Paris climate targets is going to require a substantial reallocation of global investment. My guess is that will fall to governments, but also your companies. Are you ready?
  • Companies are finding their way when it comes to recycling and repurposing EV batteries. That’s a good thing because demand is expect to increase substantially as the fleet increases.
  • Mayors, including London Mayor Sadiq Khan, are calling for the UK’s internal combustion engine ban to be moved up by 10 years, to 2030. I doubt they will be the last to advocate such a position.

1. Ricardo Energy & Environment: Europe’s Clean Mobility Outlook: Scenarios for the EU light-Duty Vehicle Fleet, Associated Energy Needs and Emissions, 2020-2050 ― Commissioned by the trade group ePURE, and delivered by Ricardo, the study examines three different scenarios for the decarbonization of LDVs in the EU fleet from 2020 – 2050: low, medium and high deployment of electric vehicle powertrains, with similar regulatory target objectives for improving average new vehicle CO2 emissions. The impacts of these scenarios on energy consumption and GHG emissions were analyzed using SULTAN, a modeling tool developed by Ricardo for the European Commission.

According to Ricardo, the results suggest that increased use of low carbon fuels in scenarios with low deployment of EVs would achieve greater emissions reductions than scenarios with high-electrification alone. This indicates that low-carbon fuels could provide GHG reductions that would otherwise not be achieved, to help meet challenging long-term EU policy objectives. It suggests they could mitigate the potential uncertainty associated with EVs – such as the longer-term GHG intensity of electricity use or the availability of key resources needed for manufacture. The figure below summarizes the reduction in GHGs for LDVs comparing 2005 to 2030.

In short, the study seems to suggest that low carbon fuels and EV deployment could be complementary. The report notes: “The additional [carbon] savings generated by the increased use of low-carbon fuels, mean that even with low electrification rates, reductions achieved under a low-carbon fuels scenario are greater than a scenario with high electrification but no increased use of low-carbon fuels. This is true even if electricity decarbonises more rapidly than in the reference scenario.”

2. Wired: Traffic Doesn’t Hurt the Economy, But We Should Still Fix It ― This article details a just-released study that upends the traditional notion that traffic hurts cities’ economies. “By comparing historic traffic data against several economic markers, the authors found virtually no indication that gridlock stalled commerce. In fact, it looked like the economy had its own HOV lane. Region by region, GDP and jobs grew, even as traffic increased. This does not mean speed bumps should come standard on every new highway. Traffic still sucks, and things that suck should be fixed. What this study does is acknowledge that economically vibrant cities will always have congestion. So transportation planners should instead focus on ways to alleviate the misery rather than eliminate the existence of congestion.”

3. Science Daily: Meeting Paris Climate Targets Will Require a Substantial Reallocation of Global Investment ― A new analysis by an international team of scientists led by IIASA has showed that low carbon investments will need to markedly increase if the world is to achieve the Paris Agreement aim of keeping global warming well below 2°C. The study notes that current nationally determined contributions (NDCs) are not enough to provide sufficient impetus for the “pronounced change” in investment portfolios that are needed to transform the energy system.

So what is it going to take? “The low carbon and energy efficiency ‘investment gaps’ calculated by the researchers are striking. To meet countries’ NDCs, an additional US$130 billion of investment will be needed by 2030, while to achieve the 2°C target the gap is US$320 billion and for 1.5°C it is US$480 billion.” Some things you can expect going forward: (1) the type and amount of low carbon investments are going to come up at COP24; (2) Countries are going to get pushed to do more than what they have already committed in their NDCs (see case in point here); (3) Transport is going to be a big focus of that discussion; (4) the fossil fuels industry is going to get pushed more and harder to help fund this investment; (5) the foregoing is probably just the tip of the iceberg.

4. Bloomberg: Where 3 Million Electric Vehicle Batteries Will Go When They Retire ―”Finding ways to reuse [battery] technology is becoming more urgent as the global stockpile of EV batteries is forecast to exceed the equivalent of about 3.4 million packs by 2025, compared with about 55,000 this year,” this article notes. It discusses the various ways and applications that are being used and tested for new roles, also shown in the graphic below.

This year China will implement regulations make carmakers responsible for expired batteries and to keep them out of landfills. The EU already has regulations, and the U.S. will likely follow. According to Bloomberg New Energy Finance (BNEF), by 2030, there will be a 25-fold surge in battery demand for EVs, and automobiles have overtaken consumer electronics as the biggest users of lithium-ion batteries.

5. Reuters: London, other Cities Call or New Petrol and Diesel Car Ban to Start Earlier ― London Mayor Sadiq Khan along with other city officials around the UK have called or moving up the UK’s announced 2040 car ban by 10 years, to 2030. So what, you might say? Why is this “Top 5 worthy?” Because Khan is becoming a major GLOBAL voice for combating air pollution and climate change, particularly from transport. He’s a global influencer, especially for other global city mayors (even in the U.S.), and is  connected to The Real Urban Emissions (TRUE) Initiative (stay tuned for an upcoming podcast on this). He is vice chair of C40 ―which everyone reading this should know about and be following closely (if not already engaged proactively).

Also this month Khan launched the Children’s Health in London & Luton (CHILL) study this month. The study will monitor the lung health of more than 3,000 primary school children in polluted areas of London and Luton over a four-year period to test whether policies to improve air quality, such as London’s new Ultra Low Emission Zone (ULEZ) (highly touted by Khan), are associated with improved growth of children’s lungs and reduced chest symptoms.

Honorable Mentions:

The trilogue discussions in the EU have produced an agreement on the revised Renewable Energy Directive (REDII).  I’ll be writing on this for Future Fuel Outlook members in more detail. California, and the nine states following its ZEV program, have released an 80-point program to boost ZEV sales in their respective states. Meantime, Fortune 100 companies, including automakers and utilities, have joined labor groups, consumer advocates, environmental organizations and others to sign the Transportation Electrification Accord, a written set of principles meant to inspire and continue the conversation around electrified transportation.  Equinor and Shell (the Sky Scenario) released new outlooks, while BP released its annual statistical review. Finally, U.S. EPA released proposed 2019 Renewable Fuels Standard (RFS) volumes this week, and it’s about what you would expect: some happy folks, some unhappy folks and some that are just plain over it.