The world of transport continues its unprecedented rate of turbulence and change. New entrants, such as Uber, have valuations greater than century-old established companies such as General Motors. Consolidation in rail providers is seeing the growth of global mega players such as CRRC in China, and now, Alstom-Siemens Mobility. The world’s population is ageing as well as moving steadily to urban areas and creating a growing series of mega-cities and regions across the world each with tens of millions of people.
Throughout the last hundred years of transport policy, there have been a few constants. One is the rise, particularly since the Second World War and throughout the developed world, of the private car-based transport system — albeit, this is now being challenged by a resurgence in urban public transport and sharing modes. Also, and more fundamentally, as an enabler of this mode of transport has been the development and technological refinement of fossil fuel-based engine technology that could individually power these tens of millions of vehicles. These engines have largely been powered by diesel or gasoline (petrol) engines in the vast majority of markets. A few other fuels have played a minor part over the last century. Supporting this mode of transport has been the establishment of a global supply chain of industries including: oil exploration, extraction, transport, refinement, distribution, retailing; other component development, manufacturing and distribution including tires, glass, sub-vehicle components; vehicle design and manufacturing, retailing and servicing; as well as end of vehicle life disposal industries.
However, the world is, as we know, changing and changing rather fast. One of the disruptive influences now gaining traction is the replacement of the entire fossil fuel cycle with “zero emission” at point of use vehicle-based propulsion systems. This likely means electrification, but could also include other technologies, such as hydrogen power and fuel cells. The electricity for these networks would still need to be produced, in either widely distributed networks or central power plants, but the assumption is that this could be done much more cheaply and sustainably than through millions of individual gasoline/ diesel engines. The reduction of emissions from engines in cities would lead to substantial improvements in local, street level air quality, and thus, human health in our growing cities. Electrification also would support new driving systems such as autonomous technology and local power distribution systems based on wind, solar, biomass, and new battery storage technology.
The electric future is very appealing to many policymakers, while being hugely destabilizing to the extensive industries that have arisen to support the fossil fuel engine market. Nevertheless, while progress has been gradual over the last few years in most markets, Norway for example, with significant vehicle subsidies and extensive charging infrastructure has reached electric vehicles sales (plug in, hybrid and pure electric) of over 40% of new vehicle registrations. Note that Norway is not a car producer, but a significant clean as well as fossil energy producer. In most countries the number of zero-emission vehicle sales is still relatively low and well below 10% of the market.
A recent development is changing the dynamic in Europe. Governments as well as the European Union have generally been pushing the take-up by consumers and industry of electric vehicles for many years. This is via rebates, industrial trials and partnerships, technology development, and rollout of some supporting infrastructure such as charging points and preferential parking locations.
Yet, governments in Europe are seeing the electrification of vehicles as a route to an order of magnitude change in mobility technology, innovation as well as a method of fundamentally resolving much of the challenge of urban air quality. In particular, a political focus can be provided to demonstrate commitment to the mobility revolution and a better quality of life.
The interest in this move to electrification is supported by the ongoing effects of the public opinion shock of the VW Emission scandal from 2015 and the public confusion that rather than assisting sustainability through CO2 and other harmful gas reductions, the widespread use of diesel technology across Europe has not led to significant overall air quality reductions or at least at the predicted rate. This lack of faith in the use of diesel technology along with a significantly growing overall concern about the harmful health implications of urban air quality is becoming a major concern for Europeans.
On July 6, 2017, in Paris, Nicolas Hulot, the French Minister for a Sustainable Environment, announced the French government intends to ban petrol and diesel cars by 2040, and thus, become carbon neutral by 2050. This was part of the French state’s push to see the implementation of the Paris Climate Change deal, which was signed in December 2015. This is a very bold step for the new French government that took office following national elections in the spring of 2017. France is one of the world’s largest car manufacturers and home to PSA Group (Peugeot/Citroen/Opel), as well as Renault-Nissan. It also hosts a number of foreign manufacturers and an extensive car parts industry. While it is renowned for its high-speed TGV trains, Paris Metro, and the renaissance in light rail services in towns across the country, car travel is still a predominant mode of travel. A non-fossil fuel future, and hence likely all-electric one, will have widespread impacts on the shape of French towns and cities as well as numerous industrial and commercial organizations in the country and its trading partners. It is a bold vision that has the stated aim of being in place in 23 years.
Interestingly, France did not attempt to implement this policy via the European Union and get a continent-wide directive adopted. It can only be assumed that it was felt that the complexities of the views of the other members of the EU, and particularly Germany with its very large car industry, meant that this would be too complex a task at present.
Meanwhile, quite unexpectedly, the UK’s new government, following national elections in the spring of 2017, announced in late July that it also will take the initiative on this issue and enforce the use of “zero emission vehicles” also from 2040. Note that there is a slight definitional difference between the French and UK proposals in precisely what type of vehicles may be allowed, although, in both cases it would be assumed that the vast majority of the post 2040 fleet would be all-electric.
So, two of the largest vehicle markets in Europe have announced consistent timing for the, in effect, full electrification of their vehicle fleets in 2040. As the summer progressed, none of the other large markets, such as Spain, Italy, and particularly, Germany, has come forward with their own plans. In Germany, where national elections were held in late September 2017, plans may come forward as a result of the new government, but the challenge for a core pillar of the German economy — auto manufacturers — is immense. However, cities, such as Stuttgart in Germany, are planning bans on certain diesel-fueled vehicles. Also, it could be argued that the manufacturers feel that having invested billions of euros in cleaner diesel and petrol technologies, this solution can still address many of the air quality issues in Europe, notwithstanding the setback from the VW scandal.
The global car manufactures are quickly moving to realize the environmental, social, and political need to embrace zero-emission technology with regular announcements from most of the major players of how they will redesign and refocus their business on these challenges.
Other smaller countries have also yet to announce their definitive plans, but The Netherlands are considering legislation that would lead to a ban in 2025. Also, as mentioned earlier, Norway remains a leader in the actual adoption of zero-emission vehicles.
This is a classic example of the nation states in Europe seizing the local initiative on an environment challenge, but the reality is that the long term implementation of this fundamental change to the transport infrastructure on the continent will need to be arranged at the European Union level. The potential cross border disruption, of individual countries allowing / not allowing, supporting the sale of petrol/ diesel or not, or only allowing certain types of vehicles on their roads is the exactly the type of the situation that the EU was established to manage as part of the free movement of goods (and labor). The implications for trade and industrial policy are also significant. This is still some years off, though, as it is not clear that there is a consensus of how this initiative will be delivered and if 2040 is a realistic date.
There is an inevitability of some more coordinated approach in the coming few years across the continent. However, clearly France and the UK see an advantage in being first and second to declare their policy goals publically. Also, there is coalescence around a date of 2040 and it would seem illogical for each European market to choose radically different dates for the completion of this transition.
The trends to full electrification are increasing. In China, officials are considering how the end of fossil fuel sales will occur. India has already announced a ban for 2030.
The proposed European bans seem to apply across the passenger vehicle fleets, but it is unclear if they will be fully implemented on commercial vehicles, as well as passenger service vehicles. It would be hard to imagine public acceptance of the passenger vehicle fleet being zero emission, while publically supported, if not managed, transport continued to emit noxious street level fumes. The public transport industry must be considered at least in the UK and France on a similar, if not earlier, trajectory to move to zero emissions.
While these announcements and targets seem ambitious and innovative, the scale of the challenge is large. The targets propose re-inventing a whole supply, delivery, and maintenance industry in just over 20 years. From the role of (fossil) fuel stations, garages, the need for ubiquity in charging stations and the capability of the electric network — all will need to be reconsidered. The UK currently produces over two million vehicle engines per year in a key national industry. How will the unnecessary real estate in our cities be reused? What will be the best use of the redundant industrial infrastructure that supported the fossil fuel-based mobility industry for the last century? Will these industrial and societal disruptions dissuade governments from completing these stated transformations?
The move to zero-emission electric systems will also be moving in parallel with the rise in autonomous systems and the sharing economy and will generate, and perhaps, accelerate the fundamental trends in new mobility solutions.
The clock is now ticking on another substantial innovation in the mobility business in several European countries as well as other markets around the world. In the coming years the city, and countryside, will be a remarkably different place. The noise and pollution of the car, will be replaced with the silent hum of the, likely, electric motor. The roar of the perpetual stream of engines on busy roads will be replaced with the faint noise of tires on pavements. And, crucially, the urban air environment will be cleaner than we have ever seen in our lifetimes.
Giles K. Bailey is a director at Stratageeb Ltd., a London-based consultancy assisting businesses to think about their strategic vision and innovation.