A green recovery for the automotive industry?
01 June 2020
1 June 2020
With plans for COVID-19 recovery funds to support a green transition inside and outside of Europe’s automotive industry, Autovista Group daily brief journalist Tom Geggus explores where the money would best be invested.
Last week, the European Commission revealed its €750 billion recovery plan to help pull EU economies out of a coronavirus (COVID-19) nosedive. The package, dubbed ′Next Generation EU’, will be made up of €500 billion in grants and €250 billion in loans. A revamped proposal for a €1.1 trillion 2021-2027 EU budget was also announced, which contains a promise that 25% of EU spending will be dedicated to climate policy.
A cornerstone of the sustainable recovery plan is that it works in conjunction with the European Green Deal. Speaking at a press conference, executive vice-president of the European Commision Frans Timmermans said that the package must ′do no harm‘ to climate ambitions. So the new investments look to support key technologies for a clean-energy transition. This will include renewable energy, clean hydrogen, batteries, carbon capture and sustainable infrastructure. Timmermans outlined the ability for funds to support the financing of one million electric-vehicle (EV) charging points, clean fleet renewals and sustainable transport infrastructure.
Cohesion policy will ensure crisis repair and create a resilient society based on the objectives of a green and digital transition.″” European Commission ðŸ‡ªðŸ‡º #UnitedAgainstCoronavirus (@EU_Commission) May 28, 2020
â–¶ï¸ Watch the press conference by @TimmermansEU, @NicolasSchmitEU and @ElisaFerreiraEC on a green and just recovery. https://t.co/CqUtBnBk43
However, the announcement did attract some criticism. Eric-Mark Huitema, director general of the European Automobile Manufacturers’ Association (ACEA), said it was disappointing that the proposed recovery package was not only quite brief, but vague on the instruments and financial means for the recovery of the automotive industry. He said the sector awaits clarity on how the announced green measures like fleet renewal schemes and deployment of alternative-fuel infrastructure will be implemented in practice.
The need for greater clarity was echoed by William Todts, executive director of Transport and Environment (T&E). ′There is a worrying lack of detail on what green investment actually means,’ he said. ′Spending big on shared and electric mobility is the right thing to do, but this plan leaves the door wide open for polluting engines and even aeroplanes to get stimulus money. That’s completely unacceptable.’
What does green mean?
To clarify how the transport industry could benefit from a green recovery, Autovista Group spoke with Julia Poliscanova, director of clean vehicles and e-mobility at T&E. She highlighted the importance of not simply using funds to restore the industry to its pre-COVID-19 state. ′We should use the money to save the industry and to transform at the same time’.
Considering potential short-term recovery plans, Poliscanova cautioned against scrappage schemes, pointing to similar initiatives in 2009, which she said simply brings forward car sales. If national governments were to spend money on scrappage schemes, ′they should only target emission-free cars, so electric vehicles in this case, as well as other wider sustainability options, such as electrifying public transport, e-bikes and so forth.’
Fleets look to be one of the most promising options for targeting the electric-car market in the short term. With demand from the likes of private fleets, taxi fleets and company cars being driven by the total cost of ownership, Poliscanova believes that if there were enough cars available on the market, they could electrify today.
When it comes to allocating of funds, Poliscanova identified charging infrastructure as a key area for investment. She said it represented an opportunity to create jobs quickly as a stimulus point for funds from across Europe, local bodies, businesses and citizens. T&E calculated that 1.3 million charge-points will need to be available across the EU by 2025 and nearly three million in 2030. This would require an investment of €1.8 billion by 2025 or 3% of the EU’s annual investment in road transport infrastructure. Supply chains too could benefit from a green transformation. This could include doubling up on European battery industries as well as their related supply chains, including recycling structures.
There is also space for hydrogen in the wider decarbonisation of transport. Shipping and aviation cannot do without hydrogen, with additional space for uptake within long haul transport. However, Poliscanova believes the fuel type is currently unable to compete against battery-electric vehicles (BEVs) in the automotive sector, due to cost and efficiency reasons. T&E calculated that in Europe, carmakers invested a record €60 billion in the production of EVs and batteries last year, 19 times more than in 2018. Poliscanova considers this pace of investment to be the litmus test of success.
If electric mobility is capable of harnessing this momentum, it will bring with it a new ecosystem comprised of an electrified European supply chain, localised battery production and charging infrastructure. ′It is not just car sales, it’s the whole new ecosystem that we have the momentum to build in Europe,’ said Poliscanova. She warned that if recovery funds are instead directed into short-term scrappage schemes that prop up conventional engines, there is a danger that momentum will be lost. ′Lose that momentum and it will take us a long time to then catch up again. Wasted time, wasted emissions, wasted opportunity’, she concluded.
An electrified comeback for the UK?
But what about green momentum outside of the EU? In the UK, plans have recently been announced to invest in electric infrastructure. In an effort to lower emissions, support economic recovery and ensure safer travel, billions will be channelled into EV charging infrastructure, roads, railways, cycle lanes and footpaths.
As part of a €500 million commitment to EV charging infrastructure, the Rapid Charging Fund was set up to ensure a network is ready to meet the long-term consumer demand for charge-points. The aim is to have at least six high-powered, open-access chargepoints (350kW capable) at motorway services in England by 2023.
These plans were welcomed wholeheartedly by EV-charging network, Ionity, which operates 350kW high-power-charging (HPC) stations across 24 countries in Europe (including the UK). The company recognises that HPC points at the right locations are a critical enabler for manufacturers and consumers to increase the uptake of EVs.
′The UK continues to be a hugely significant market for Ionity,’ said Pia Bretschneider, the company’s country manager for the UK. ′We welcome the UK Government’s initiative in putting HPC at the forefront of their thinking. This has been Ionity’s approach from day one.’
In a statement to Autovista Group, Ionity pointed out that it is important not to wait until 2023 to deliver electric infrastructure. ′Work on rolling out HPC needs to start now, utilising where possible existing capacity available in the grid,’ the statement said. With this in mind, Ionity has partnered with the Extra motorway service area (MSA) group to provide six 350kW high-power-chargers at a new site in Leeds, with more stations under construction at seven other MSAs in the coming months.
Ionity reinforced the importance of keeping charging facilities on the strategic road network (motorways and A roads) ′future-proof.’ While 50kW chargers were once considered ′state of the art’, this is no longer true the network said. While there continues to be a case for 50kW points at other types of locations, sites on long-distance routes benefit from the energy and reduced charging time that HPC stations offer.
As the market share of EVs continues to increase, Ionity expects charging efficiency to improve, reducing charging times. Therefore, the company pointed out that ′while the country will need lots more high powered chargers, there will not be a direct linear correlation between the numbers of charging stations and cars.’
Other locations outside of MSAs can also become established HPC hubs, as Ionity has established at sites in Milton Keynes and Perth. This could be landowners or site tenants providing a natural stopping place on a journey. ′HPC charging is unlikely to remain just in the realm of fuel stations and MSAs, taking some pressure away from a larger ramp-up of HPC chargers at fuel-filling stations and MSAs,’ Ionity said.
So, as funds are funnelled into a green recovery, whether that be the development of alternative drive-trains or electric infrastructure, the driving force behind these investments must look to support the momentum of change.