The European transport sector is responsible for around one quarter of EU’s total greenhouse gas emissions and remains the only major European economic sector in which GHG emissions have increased. Congestion costs are rising and the air in many of our cities stays polluted. To cope with all our societal challenges, we need a more electrified, decarbonised, energy efficient, multimodal and clean transport sector and a just transition along the whole automotive value chain.
It is often said that in cleaning up the transport sector, politicians should only agree on the final targets for CO2 reduction and polluting emissions in a technology neutral way and leave it up to the market to figure out how these targets can be met. But, there are many arguments against a "policy by objectives" approach.
First, under "technology neutral" policies new technologies with enormous long-term potential might never develop. Look for instance at solar panels. Today, they are one of the cheapest ways to produce power. However, at start photovoltaic energy was more expensive than other ways to produce renewable power.
If countries like Germany and Spain had not supported PV so fiercely in a non-technology neutral way, solar technology wouldn’t have matured. The same goes for offshore wind and many other clean technologies. To get such technologies over the "valley of death", some of them need a larger R&D driven technology push and more demand creating market pull. However, once they crossed the valley between the development stage and market commercialisation, move forward on the "learning curve" and enjoy economies of scale, they often outperform existing technologies. Specific support for some highly potential technologies at early stages of development might therefor be justifiable. That, for instance, is the case with zero-emission electric cars that will play an indispensable role in the decarbonisation of the transport sector, at a total cost of ownership that over time will be lower than those of a traditional combustion engine.
Secondly, technological neutrality makes us blind for the macro-economic strategic impacts of our policy choices. Decarbonising transport is not only of utmost importance to deliver on our climate objectives. Each day the EU spends around one billion € on imported fossil fuels coming from geopolitically instable regions. By transitioning to cost effective renewable power and electric cars, Europe will spend more money on clean technology produced at home and sending less money to fossil fuel producers overseas. This will strengthen our competitiveness and create millions of new jobs.
However, these benefits will not emerge to the same extent in all possible policy scenarios. Scenarios that rely more on existing combustion engines on biofuels, cheaper produced outside Europe, can equally deliver greenhouse gas reductions. But they will still leak capital abroad. The same goes for electrification based on large batteries requiring enormous amounts of lithium and cobalt. We may not just exchange the role of foreign fossil fuels suppliers by foreign battery suppliers that keeps us equally dependent on imports.
Thirdly, technology neutrality does not allow us to take proper account of collateral benefits or collateral damages caused by certain technologies. Cars with internal combustion engines that are running on advanced biofuels might lead to the same greenhouse gas savings, but are still emitting polluting nitrogen oxides and particulates and keep on producing engine noise. On the contrary, electric cars have multiple benefits in all these fields and can help us to meet our climate goals and air quality standards at the same time.
Finally, running cars on "advanced biofuels" or electrofuels produced from surpluses of renewable power might lead to the same greenhouse gas reductions. However, since these fuels are depending on limited feedstock, using them for cars makes them no longer available for other applications. Taking into account the limited availability of some advanced biofuels, we must preserve them to decarbonise these modes of transport that are more difficult to electrify, like aviation, shipping and long distance heavy duty transport.
Therefore, as policy makers we must do more than just setting targets and lean back. We must foster policy scenarios that enable us to meet our climate objectives and air quality standards whilst creating or preserving high quality jobs at the same time. In order to create a European value chain, we need to invest more in research and development of solid state batteries, work on strong battery product requirements and a battery recycling program that keeps battery elements in a closed loop within the EU.
We need industrial and trade policies to enable Europe to set up its own sustainable battery production. A socially acceptable and just transition towards zero-emission mobility by mid-century requires targeted programmes at Union, national and regional levels for re-skilling, up-skilling and redeployment of workers, as well as education and job-seeking initiatives in close dialogue with the social partners, communities and regions.We’ll have to be bold and decisive in imposing these measures. Otherwise, European manufacturers will continue to sell polluting cars in Europe while developing and manufacturing the cars of the future elsewhere.
European automakers are investing seven times more in electrification in China than in Europe. If we are not creating a home market for these technologies, they will eventually be imported. This is the real risk to European jobs and competitiveness. European policy makers and industry may not stand at the wrong side of history. We may not kill industry with kindness.