Entering the final stages of the 2035 Car CO2 regulation’s scrutiny, the fuels industry proposes an alternative strategy to support and complement electrification. Modifying the vehicle regulations to instead “ban fossil emissions from 2035” would benefit many across EU society.
Europe’s vehicle strategy is defined by one regulation, CO2 in cars with a test protocol mostly designed in the 1980s. Tailpipe CO2 became the driver for the entire industrial and social strategy for road mobility and logistics, far beyond the climate objective. For all climate-neutral options this is a systemic change requiring new resources, value chains and jobs.
It is now becoming very clear that the world is short of the critical metals needed by electric vehicles, and enormous increases in mining to supply even just Europe’s needs will be required, resulting in higher car prices for the long term, smaller cars disappearing and new car sales shrinking. So the fleet turnover necessary for the electrification-only strategy will take longer.
For years we could have wealthier citizens driving electric vehicles (EVs) with the connected subsidies, and lower-income citizens driving internal combustion engine (ICE) vehicles, hybrid EVs or plug-in hybrid EVs feeling excluded, and paying much more in vehicle and energy taxes.
It doesn’t have to be this way.
Stopping fossil emissions from road transport needs every available technology option
Europe is about to make a major strategic decision for cars, based on a regulatory protocol, solely based on CO2 emissions in just a part of the whole system for vehicles and energy, ignoring all emissions outside of this narrow “tailpipe” window. Biogenic or captured carbon combusted is climate neutral by nature, by science, and also according to the Emissions Trading System (ETS) methodology. Denying this in vehicles CO2 regulation is a scientific anomaly that should be challenged, especially when social and economic risks are apparent.
Resource availability for systemic change must be a consideration
A systemic change means new resources. For decades, transport energy security has been secured on the basis that about 60 countries could supply oil. Of course, we are moving on from this as renewable fuels replace fossil fuels. Nevertheless, Europe’s full electrification strategy will depend heavily on metals — lithium, copper, cobalt and nickel — from a few, even as little as two, countries with substantial reserves. Many experts described a 20- to 35-fold increase in mining for these metals, introducing new risks outside of Europe’s control.
For years there have been assertions that EV costs will come down. This is untrue now and fundamental data suggests it is unlikely. Already, in response to the overwhelming push from the European Commission for a full electrification strategy (high carbon pricing for noncompliance penalties), car prices have gone up, carmakers are dropping smaller models and car sales have decreased substantially. The resources squeeze for battery materials could extend these trends and the full fleet turnover required for greenhouse gas success in the EV-only strategy could take years longer. This will mean excluding many less-wealthy citizens from buying EVs for years, as few Europeans buy a €40,000 car, which is typical of EV prices today. It will extend the average life of hybrid and ICE cars on the road, and with it, extend the demand for petroleum fuels. This is not what we intend. Simply put, it makes more sense for Europe’s transport energy to be available from European resources. Our proposal boosts exactly that.
No, we’re not talking about first generation biofuels, nor about damaging biodiversity. A study by Imperial College Consultants shows a potential for 80M/t of biomass-based advanced biofuels that, added to 70M/t of synthetic fuels, makes 150Mt/year by 2050 (compared with 350M/t for all fuels today). Enough to power all of EU aviation, much of maritime and some land-based transport to complement electrification.
Why cars and trucks?
We will supply road and aviation together, as we do now. This will accelerate investments and the building of ecosystems more widely, while also speeding up the reduction of technology costs.
Do these fuels cost more compared to electricity?
Yes, the first production will likely be more expensive than fossil fuels but there are two key drivers to understand.
EV users typically pay little fuel/vehicle tax, but biofuels pay taxes in a similar way to fossil fuels. If advanced biofuels have low or no tax, they can be competitive today with the taxed regular fuels.
There are high capital costs for building the production plants, but these are actually the total system-change costs for those vehicles supplied with these fuels. After capital is repaid, typically in 10 years, the operating costs of producing these fuels are much lower.
So the initial cost of renewable fuels production is not comparable with the marginal cost of renewable electricity. For comparison, the whole system change cost of electrification should include new mines, gigafactories, power generation, charging and recycling.
Ensuring new hybrid ICE vehicles from 2035 only run on renewable fuels sounds difficult. How will it work in practice?
We respect the caution of lawmakers but are confident that we can deliver the necessary guarantees for regulators and customers.
Every liter of sustainable biofuels is already accounted for alongside fuels taxation. With this as foundation, fuels cards and vehicle technology will enable us to build a robust system. We invite lawmakers to set the necessary standards.
Social inclusion for transport decarbonization needs technology inclusion
Hybrid ICE cars will offer lower purchase costs than EVs for years to come. Excluding renewable fuels technologies means excluding affordable cars, and the lower-income citizens who buy them, an unfortunate invitation to social discontent.
We, therefore, tell lawmakers:
Vehicle CO2 regulation must recognize new vehicles operated on up to 100 percent renewable fuels — and the final implementation of this clause of the regulation is conditional on those certification systems being defined before the final implementation.
To the car and truck industry:
The responsibility for the delivery of these fuels should rest only with the fuels industry.
Support for an ICE ban should not be a test of how committed we are to climate action and leadership. Instead, it should be about a commitment to include all fossil-free climate-neutral technologies, thus recognizing biogenic and captured carbon synthetic fuels in vehicle CO2 regulations. Because including more routes means including more European citizens, more investment, more jobs, fewer dependencies and also a greater chance of success in our climate goals.