Higher climate targets must go hand in hand with stronger incentives and infrastructure ramp-up

Message from ACEA’s Director General – September 2020

From the outset, I want to stress that the automobile industry supports the EU’s long-term goal of achieving climate neutrality by 2050, and that ACEA’s members are ready to play their part in making Europe the first climate-neutral continent. There is no question about that, I can assure you.

However, policy makers need to realise that they cannot put in place higher targets without introducing equally ambitious supportive policies for all vehicle types, otherwise we will sooner or later find out that these climate targets are not achievable in practice.

In order for zero-emission mobility to become an accessible and affordable option for all Europeans, we are going to need a supportive framework that includes a dense EU-wide network of charging points and re-fuelling stations (accompanied by binding deployment targets for member states) suitable for both passenger cars and commercial vehicles, coupled with incentive schemes that are also economically-sustainable.

For a long time, many have reduced the infrastructure challenge to a simple chicken or egg dilemma, arguing that more electric cars had to be on sale before investment in charging points would really take off. Yet, the latest ACEA data show that EU auto makers have delivered on their part of the deal. In the second quarter of this year, the market share of electrically-chargeable vehicles increased to 7.2% of total EU car sales, compared to 2.4% during the same period in 2019. To me, it is crystal clear that the chicken or egg discussion ends here.

Some 200 different battery electric cars and plug-in hybrids are available right now, so there is plenty of choice for all. Indeed, EU sales of electrically-chargeable cars have increased by 110% from 218,083 in 2017 to 458,915 last year. Investment in infrastructure, on the other hand, is drastically falling behind this growth. During the same period, the number of charging points for electric cars only grew by 58% for example.

It is thus disappointing to see that the Commission’s infrastructure ambitions still fall well below what is necessary to achieve the 2025 and 2030 CO2 targets for vehicles, let alone the level of infrastructure deployment required if the climate targets would be revised upwards. Indeed, the ambitious objectives laid out in the Commission’s new climate proposal two weeks ago will require massive additional investments in infrastructure, coming on top of the at least 2.8 million charging points needed for the existing car and van CO2 targets.

To deliver the infrastructure required to meet future climate goals, the Commission should bring forward the review of the EU Alternative Fuels Infrastructure Directive (AFID) with great urgency. The revised AFID should establish a much more ambitious approach to make sure that sufficient charging points and hydrogen re-fuelling stations are rolled out across the EU.

Looking back at seven years of AFID implementation we have to conclude that today’s voluntary approach, with national programmes setting ‘soft’ infrastructure targets, simply does not work. Some EU member states have been very active, while other countries have done nothing at all. That is why the AFID review has to revert to the original proposal, which included clear and binding targets for member states in order to guarantee adequate deployment.

From a political point of view, the revision of the AFID framework should send a clear message to national governments that they have a responsibility to help deliver the infrastructure network that is required to make alternatively-powered vehicles the preferred option for customers, which in turn is needed if Europe wants to live up to its climate ambitions.

Indeed, the higher the climate targets become, the higher and more critical the ambition level of the enabling factors must also be. European auto makers already offer many low- and zero-emission vehicles and they will continue to expand their portfolios. But if the average European still experiences range anxiety, he or she will simply go for the cheapest and most convenient option, which remains a combustion engine vehicle for the time being.

At the same time new propulsion technologies, such electrification, fuel cells and carbon-neutral fuels, are undeniably more expensive and will remain so in the foreseeable future. To encourage swifter fleet renewal in all vehicle segments, consistent incentive schemes for both users of passenger cars and the operators of commercial vehicles should be put in place. This is especially important given the looming economic fallout of the COVID-19 pandemic, which will leave both consumers and companies with less money to spend in the next few years.

Incentives will also help ensure that zero- and low-emission transport is viable for businesses, becoming the better option in spite of higher total costs of ownership. However, it is essential that incentive schemes are economically-sustainable in the long run and are not subject to the whims of different national administrations every few years. The premature phasing-out or removal of purchase incentives seriously impacts consumer confidence in alternative fuel vehicles, as we have seen in several countries already.

Now, when it comes to CO2 targets for new passenger cars and vans, the Commission should first of all ensure that the necessary enabling factors are actually delivered and strengthened, before going back to the drawing board to raise targets that were only set last year.

As ACEA we recognise the desire to be a global trailblazer when it comes to climate action, but Europe will first need to see an unprecedented regulatory shift to ensure all the right enabling factors are secured before the ambition levels can be increased again.

ACEA members are fully committed to deliver the ambitious 2025 and 2030 CO2 reduction targets introduced last year, but need legal certainty as they move forward. Policy makers need to realise that passenger cars have a development phase of four to five years, followed by a production cycle of up to seven years. In other words, the specifications of some of the cars that will be on sale in 2030 already have to be finalised pretty soon. The EU regulatory framework must therefore provide strong stability for the planning of investments in the medium and long term.

If that does not happen, uncertainty will continue to undermine our sector’s competitiveness, thereby greatly reducing the amount of money automobile manufacturers can invest in delivering mobility solutions for a carbon-neutral Europe by 2050.

Eric-Mark Huitema
Director General of ACEA