25 April 2022
This blogpost series by the European Liberal Forum engages with policymakers, industry experts and academics to contribute to a better understanding of how to shape the “Road to net-zero” in the context of the EU sustainable transition.
By: Sigrid de Vries, Secretary General of CLEPA – The European Association of Automotive Suppliers
CLEPA, the voice of the European automotive supply industry, is committed to climate neutrality in 2050 and is at the forefront of the transformation, providing the advanced systems and components needed to reach ambitious climate targets. But since the launch of the Fit for 55 package last July, suppliers have put an important question mark behind the ‘EV-only’ approach taken in the CO2 standards proposal. The narrow view underlying this draft legislation directly impacts consumers, businesses, and EU competitiveness in a very real and disruptive way. Why limit our competitiveness, our choice, our expertise & innovation by picking winners, when we can achieve our climate objectives while providing options, maintaining jobs, and preserving our leadership role in the global market?
Regarding emissions from cars and light duty vehicles, the current policy proposal sets a 100% CO2 reduction by 2035. The target is based on measuring emissions exclusively at “tailpipe level” (emissions generated by the individual vehicle), this means a de facto ban on the internal combustion engine. The result is that a new car will have an electric battery whether it fits the need or not, is affordable or not, or whether it has the infrastructure and green energy to charge or not. As we know, “in-use” emissions are not fully representative of a vehicle’s carbon footprint. A life cycle or well-to-wheel approach to measuring a car’s emissions takes a more holistic path by looking at emissions from energy production and transport, including how electricity is generated. Just like not all EVs run on renewable energy, not all ICEs need to run on fossil fuels. Focusing on tailpipe gives us a false sense of security on emissions. A more holistic approach, on the other hand, allows for all carbon-neutral solutions to compete on a level-playing field, and lets the market decide what the best use case is. The bottom line is, it provides options for consumers and society, without compromising on climate objectives.
Technology neutrality means exactly this, building resilience, safeguarding value, and delivering growth. It keeps options open to adjust to new developments, be they technological breakthroughs, geopolitical events, or availability of resources. This principle should be embraced as a cornerstone of EU policy, and not just in words but foremost in deeds. This is especially true for the transport sector, where the needs of consumers and businesses are highly diverse, geographical and infrastructure conditions differ widely. Europe risks choking a cutting-edge industrial asset by forcing disruption rather than an accelerated yet well-managed transformation.
Moreover, as our recent study shows, an electrification-only approach risks over 500,000 jobs until 2040 in the powertrain segment alone. Opportunities will of course be created, but there is still a net loss of 275,000 jobs. Further, the bulk of the job losses would happen within a mere five-year period, between 2030 and 2035, making the transition very difficult to manage.
EV-only also risks affordable mobility and creates new import dependencies in raw materials and battery cells. This is not an argument against electrification, it is an argument for diversification. As innovation powerhouses and solutions providers, automotive suppliers are already actively investing in ensuring the success of electric mobility. It is precisely from this expert vantage point that we understand that current and future market needs go beyond just e-mobility. A technology mix helps keep options open, prices down and lessens dependencies on any one technology, energy, fuel, or region.
Only a few short weeks ago, our world changed drastically. The Ukraine crisis has exposed further vulnerabilities in the global supply chain caused by import dependencies. Diversification of energy and material supply is key and should be a fundamental principle for policymaking. Europe can afford neither isolationism nor betting on singular options.
As our last Pulse Check (a survey conducted twice a year among our members) reveals, the lack of semiconductors continues to limit production, taking away revenues that could be invested elsewhere. There is a widespread challenge finding suitable talent, as well as a tremendous need to manage the transition in terms of employment impact. Energy and raw material prices have shot up without warning, putting pressure not only on businesses but also on households, who find themselves with higher bills and more expensive consumer goods.
We are shifting paradigms from years of relative stability to a situation of high volatility, inflation, supply chain disruptions and new business models. Striking a balance between immediate needs and long-term planning is becoming increasingly difficult.
The unpredictability we find ourselves in is all the more reason to move full speed ahead towards the certainty of climate neutrality. But this requires a full commitment to innovation, a flexible regulatory framework that facilitates investment, anticipates change, and allows for the full scale of technological progress.
The policy choices that will be made in the coming months are to be crucial in defining the future of mobility, and above all, whether it will truly be a revolution within everyone’s reach. Doubling down on technology openness, diversification and partnerships is now more essential than ever to sustain the mobility ecosystem, making it inclusive and fit for purpose, now and in the future.
Sigrid de Vries has held various positions in public affairs, industry and media over the past 25 years. Sigrid started her career as a financial journalist for the Amsterdam Stock Exchange and Het Financieele Dagblad (FD), the Dutch financial daily, and became the paper’s EU correspondent in Brussels in 1998. In 2006, she became director of communications at ACEA, the European automobile manufacturers association in Brussels. She subsequently led the European communications and institutional relations efforts of the commercial and industrial vehicle manufacturer CNH Industrial, as VP and part of the EMEA management board in Turin and Brussels, before taking the lead at CECE in 2014. She became Secretary General of CLEPA in 2017.
DISCLAIMER: Published by the European Liberal Forum. The opinions expressed in this publication are those of the author(s) and do not necessarily represent those of the European Liberal Forum.