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NEW MOBILITY WORLD @IAA 2019Frankfurt/Main, September 10–15, 2019
Clean and Sustainable Mobility

Reducing CO2 Emissions – Challenges and Opportunities

By Editorial Team on October 16, 2018

The commercial vehicle industry faces a number of pressing challenges in the years to come. The move to electrification, digitalisation and other new technologies in transport is arriving with high speed. Reducing road transport CO2 emissions is a huge task for the commercial vehicle industry, transport and logistics operators, policymakers and other stakeholders. It offers opportunities and challenges at the same time. Recently, the European Commission announced its plans for a CO2 regulation for both light commercial vehicles and heavy-duty vehicles.

But what should a supportive regulatory framework for these new regulations look like? During the NMW FORUM this year, a political dialogue ensued that addressed this question and promoted a balanced approach that will both promote economic competitiveness and protect the environment.

Bernhard Mattes, VDA President

“Trucks are custom built for specific requirements, therefore the regulations should be different from the requirements made for cars”

Bernhard Mattes, the President of the VDA, introduced the panel by applauding how international the entire IAA had become: it now had about 60% foreign exhibitors who were driving the industry into tomorrow and ensuring that the fair itself was becoming more digital. According to Mattes, “the last mile has become a strategically important task for the entire sector”, with innovations taking place all along the supply chain. 

Therefore, although the standards by EU Commission are welcomed, they need to be in consideration of trucks not simply being “big cars” and what an important factor Total Cost of Ownership is in the industry.  Mattes argued, that the ambition levels for  2025 and 2030 were beyond what is technically feasible, as a 7% reduction by 2025 would not sufficiently take into consideration the time needed for new developments and adaptations.  16% by 2030 is a more realistic number at 2% per year. 

EC’s Proposal

Nikolaus Steininger of the European Commission presented the various targets, incentives and benefits (see slide below for details). 

Perspectives on CO2 Emissions

A diverse panel was called on to discuss the details of the EC’s proposal.  Christian Labrot, the President of the International Road Transport Union (IRU) argued that although much talk was made of electrification, this is not a viable road to take for trucks. The proposal has to be based on what is available on the market as the approach to reducing CO2 emissions has to be realistic. For this, not only is the right infrastructure around all the new tech needed, but cost-efficiency should be at the centre of the debate. Most transport operators are SMEs (80%) and they have to be able to invest in this, there has to be an incentive given, and the legislation around changing standards needs to be predictable and reliable. 

Frank Iwer, the Head of Political and Strategic Planning of the Board of Management of IG Metall, in turn, questioned the effect of electrification on the employees of the transport sector at large, as currently 2.3M IG Metall members who also work in the automotive and metal industry live in towns and need to use cars to get from A to B. IG Metall is thus willing to work with environmental concerns, but also has to secure jobs. The argument was clear-cut: job security and environmental safety need to be bound together. 

Furthermore, regulations are needed with clear activities in the right direction. But direction must be balanced between social aspects and the effect on the GDP and the environment. Iwer touted the EC’s proposal as ambitious and noted some technical problems: energy grids, charging infrastructure, prizing of batteries and raw materials all need to be discussed. IG Metall’s proposal would thus come in at -30% than what was proposed by the commission, as the discussion needs to go beyond percentages to include political frameworks and regulations, which is currently not in the focus of the discussion in Germany.

Dr Manfred Schuckert of Daimler

Dr Manfred Schuckert of Automotive Regulatory Strategy at Daimler AG insisted on a broader variety of requirements, as the proposal suggested the same requirements for every vehicle group: 30% by 2030. Schuckert reflected that regulations and processes go hand-in-hand, with requirements reflecting current needs. In the past, Daimler has been reducing 1% of fuel requirements per year. Now the company would need to increase the speed threefold, resulting in the industry being stretched significantly. 

Lastly, Christian Hochfeld, the Executive Director of Agora Verkehrswende, referenced the hot summer as a barometer of things to come: there is no denying climate change, and although we might appreciate the heat, the results could be devastating. The current transport system in time of climate change doesn’t work anymore. Although the plans are ambitious, there simply is no alternative: all involved players have waited too long already. 

The three options for reduction are new CO2 standards focussed on electrification, physical instruments, and decarbonising fuels. There needs to be an increase in political involvement, as less ambitious requirements will have a negative  effect on the business side: it will result in a split between the European market, where the internal market is broken if we don’t have ambitious enough targets, and splitting the market will have a huge impact on portfolio planning and manufacturers. As Hochfeld emphasised, “we need these ambitious targets”, and the country needs to complement these with national measures. 

The European Commission’s Nikolaus Steininger

Rebuttal by the EC

Is the criticism by figureheads in the industry well-founded? The EC believes in a well-balanced proposal that it’s not overly ambitious. Making a regulatory proposal signifies the intention of changing something, and not sticking to putting business as usual in a regulatory framework. With climate change being what it is, there is an urgency and a need to achieve more. 

Therefore, the argument made by the industry to be unable to do more is a moot point. The impact on the industry was calculated by looking at two assumptions:

– Cost/benefit: Whatever we know today of CO2 reduction in vehicles is based on cost efficiency, far milages, and life-time milages

– Cost/benefit for operators: The proposed target puts in place benefits that can be achieved for CO2 emission and fuel consumption

The initial proposal was 32%, 30% is simply what is expected of the market. There is no requirement of electrification, and as it is unsure as to what extent the reductions will be possible, a regulatory clause is part of the proposal where corrections and revisions can be made based on the results by 2022. The EC does not assume that any substantial electrification will be necessary to achieve these targets. As it is driven by the Total Cost of Ownership, the initially proposed percentages where much higher. 

The EC also focussed on the need of the proposal to be integrated in existing vehicle development cycles, which it did by proposing a realistic target for 2025 by using simple changes (engine modifications, low rolling tyres, changed aerodynamics). Steininger added that not every manufacturer has to follow the same path but can deviate to employ hybridisation or electrification or even bringing in more advanced technology. However, the target for 2025 can be achieved by using the existing technologies. 

Final Summary

Schuckert of Daimler argued that there is still a lack of differentiation between a single vehicle and a fleet, as for single vehicles the needed changes to reduce the emissions are easily adopted. However, a moving fleet of 20.000 trucks with many different applications is a much harder target to change. For instance, if all A-class tyres would be changed one would see results, but then a customer would not be able to go to a forest since the tyres wouldn’t be effective for driving there. Therefore, a 10-15% reduction is more realistic.

By 2030 there is no way at all to reduce to the emissions level by 30% on a fleet (long haul, construction, delivery). For this to be achieved one either needs to invest in electrification or natural gas and a greater spreading of new technologies. Also, one needs to ask oneself what the customer can afford, and what  SMEs can then afford with an average profit margin of 1-2%. If the policymakers changes and advancements in tech result in double or triple the cost (as one can see in busses already), then Schuckert doubts whether customers will be able to pay for it.

Christian Labrot (IRU) and Frank Iwer (IG Metall)

Labrot added that if a significant reduction in emissions would be so easy, then the industry would already have done it as customers are increasingly insisting on it. The necessary changes cannot be forced until 2030, as this is merely one investment cycle for SMEs. Therefore, one should also look into driver training and modular assistants to save emissions over a short period of time. 

Although Iwer agreed that regulations are necessary, he warned that the discussion has become a discussion about percentage rates, not a discussion about the frameworks behind it. Echoing Schuckert and Labrot, he insisted on the time it takes to develop the needed tech and implement it, and the lack of a regulated framework is far more dangerous to support these changes. Looking at development cycles and investment cycles, most investments are made in Asia and elsewhere, whereas almost none are made in Germany, and no attention is paid to improving the frameworks that already exist. Thus the proposal should be seen as a starting point from which to work towards 2025, and then find more defined solutions. 

Hochfeld disagrees with his peers, citing that there needs to be a motivation by a legal force or because people need to adapt to the change, predicting that at the end it will be a mix of regulation and industrial policy. Additionally, a greater focus needs to be on the internal goals of the country: Germany’s goal is to have 30-35% EVs in 2030. If one looks at the markets in China, they currently have an astonishing 61 manufacturers who make EVs, with a total of 70-80 manufacturers going into the EV business. There are already 150000 EV busses in China. Where is Germany in all this? Lagging behind. 

Christian Hochfeld of Agora Verkehrswende

Electrification needs to be sped up, with even the most competitive companies needing disruptive management. German politicians have grown too comfortable with hearing about investments in OEMs, but mainly investments are leaving Germany and abandoning the local workforce. The motivation needs to come from industrial policy, and it needs to benefit the customer. Reducing the speed for decarbonisation and electrification will have a negative impact on industrial policy, and we will all lose on the climate and economic side: Businesses need to be pushed by politics, companies and customers

Last words

Labrot emphasises that the segmentation of the transport business has not taken into account, and reminded the audience that ultimately the transport industry is answering a demand: The individual also needs to be conscious of their influence on emissions, with the transport industry being a victim of its own success. Iver insisted on the need for a strong policy concept, with the need to deal with changing the whole mobility sector. For instance, the regional election in Bavaria cannot be blocking the solution of a whole country.

Schuckert added that a reduction is possible, but that the time frame of 11 years is more than what the industry can afford or manage. Therefore, a new timeline is needed, as well as subsidies for buses and trucks. Ultimately, all agreed that the subject is one that needs more intense discussion, which we will hopefully continue on stage at the NMW 19 in Frankfurt next year. 

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