Briefing - climate change and industrials - Just Auto
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Briefing – climate change and industrials

22 Jun 2021

In terms of the global economy, manufacturing processes in the industrials sector are among the most carbon-intensive and green competition is particularly evident in the automotive sector.  

Briefing – climate change and industrials

Leaders in industry reduce their dependence on fossil fuels by switching to renewable energy sources, either producing it themselves or purchasing it. Industrial approaches at the corporate level differ, according to the latest research from GlobalData.

Agrichemical giant Syngenta has stated that it will improve energy efficiency in its manufacturing processes, design and implement site-based energy-saving programs, and increase the share of renewables in its energy supply mix. Chemicals companies such as Tata Chemicals Europe and Borregaard are working on carbon capture and storage (CCS), while automotive and aerospace manufacturers are overhauling product lines in response to climate change, regulation, and consumer demand for less-polluting vehicles. Vehicle manufacturers that do not have plans to electrify their vehicles risk being left behind, and aerospace companies need to develop Sustainable Aircraft Fuels (SAF) and explore the possibility of hybrid hydrogen aircraft.

Green competition is particularly evident in the automotive sector. Volkswagen aims to become the leading maker of EVs, for which it will have to open new battery factories and set up charging infrastructure. According to Deutsche Bank, Volkswagen is quickly catching up with Tesla as the global leader in EVs and could surpass Tesla’s EV sales as soon as 2022.

Automotive

Leading automakers are making aggressive commitments to EVs, driven partly by regulation (mainly fuel economy standards) and partly by perceived reputational advantage. More than 14 countries and over 20 cities worldwide have proposed banning the sale of passenger vehicles (primarily cars and buses) powered by fossil fuels. For instance, the UK government is bringing forward its ban on the sale of new petrol and diesel-engine cars and vans from 2040 to 2030. Similarly, California will prohibit the sale of new gasoline-powered vehicles by 2035. Japan has said it will stop the sale of new gasoline-powered cars by the mid-2030s.

In the race for reputational advantage, Mercedes has pledged to cut GHGs from operations in half by 2030 and reduce tailpipe emissions from the cars it sells by 42% per vehicle kilometer, also by 2030. Volvo has vowed to cut the lifecycle carbon footprint of its cars 40% by 2025 and then to cut GHGs by 60% and tailpipe emissions by 52% per vehicle kilometer by 2030. General Motors recently announced it would phase out fossil-powered vehicles from its showrooms globally by 2035 and become carbon-neutral by 2040. Ford is investing more than $11.5bn in electric vehicles through 2022. Meanwhile, Volkswagen is aiming to become the leading maker of EVs. According to Deutsche Bank, Volkswagen is quickly catching up with Tesla as the global leader and could surpass Tesla as soon as 2022.

Carmakers are also working to improve EV infrastructure. For example, GM is working alongside EVgo to triple the size of the largest public fast-charging network in the US by adding more than 2,700 new fast chargers, to be powered by renewable energy, over the next five years.

Carmakers are more divided about hydrogen fuel cells, in which energy stored as hydrogen is converted to electricity by the fuel cell. GM has said it is no longer interested in selling a hydrogen-powered car and will instead focus on battery-electric vehicles. On the other hand, Toyota has announced that it is intensifying its efforts to develop hydrogen-powered vehicles by partnering with five Chinese companies – including Dongfeng Motor Corp and Guangzhou Automobile Group – to develop fuel cells. The consensus is that hydrogen power is more suited to larger commercial vehicles that can handle large, heavy fuel cells more easily.

Companies are also focusing on reducing carbon emissions from their own operations. Volkswagen’s Zwickau electric vehicle plant only uses electricity from renewable sources. It also has a highly efficient combined heat power (CHP) plant that, in the long term, will be operated with CO₂-neutral gas.

CompanyCountryClimate action
DaimlerGermanyDaimler’s Mercedes-Benz unit has committed to an SBTi target to reduce absolute Scope 1 and 2 GHG emissions 50% by 2030 from a 2018 base year, and Scope 3 emissions 42% per vehicle kilometer by 2030 from a 2018 base year. Mercedes-Benz is working to offer a CO2-neutral new car fleet in 20 years, relying on a mix of partial electrification using 48-volt technology, plug-in hybrids, and battery or fuel-cell-powered electric vehicles.
FaureciaFranceThe automotive parts manufacturer has committed to an SBTi target to reduce Scope 1 and 2 emissions 80% by 2025 from a 2019 base year and reduce Scope 3 emissions 46% by 2030 from a 2019 base year.
In 2019, Faurecia set up a dedicated CO2 neutrality team to develop and execute its GHG roadmap. The company has also partnered with Schneider Electric to optimize energy sourcing, which will involve installing on-site and off-site photovoltaic panels and wind turbines. Faurecia is using AI-enabled energy and emission monitoring and reduction software systems. Faurecia and Michelin created Symbio, a joint venture bringing together all their activities involving hydrogen fuel cell technologies, aiming to become a world leader in hydrogen mobility.
FordUSFord Motor Company has set an SBTi target to reduce absolute Scope 1 and Scope 2 GHG emissions by 76% by 2035 from a 2017 base year. Ford also commits to reduce Scope 3 use of sold products GHG emissions 50% per vehicle kilometer by 2035 from a 2019 base year. Ford intends to be carbon-neutral globally no later than 2050. Ford is investing more than $11.5bn in EVs through 2022 and has announced a plan to use 100% locally sourced renewable energy for all its manufacturing plants globally by 2035. Ford has approved Hydrotreated Vegetable Oil (HVO) to power its popular Transit vans. HVO is a renewable diesel fuel based on waste oils, including used cooking oil sourced from restaurants, takeaways, and home kitchens.
General MotorsUSThe multinational corporation commits with SBTi to reduce absolute Scope 1 and 2 GHG emissions 72% and Scope 3 GHG emissions from the use of sold products of light-duty vehicles 51% per vehicle kilometer by 2035 from a 2018 base year, in line with the 1.5 °C target. GM has also set a 2035 target date to phase out gasoline and diesel-powered vehicles from its showrooms globally. GM also aims to be carbon-neutral by 2040.
GM and EVgo (the US’s largest public fast-charging network) plan to add more than 2,700 new, renewable-powered fast chargers over the next five years. GM plans to source 100% renewable energy by 2040. GM is working with Detroit-based DTE Energy to source 500,000 megawatt-hours (MWh) of solar energy as part of DTE’s MIGreenPower program. This follows an initial purchase of 300,000 MWh of wind energy in February 2019.
VolkswagenGermanyVW has committed to an SBTi target to reduce Scope 1 and 2 GHG emissions 30% by 2030 from a 2018 base year and reduce Scope 3 emissions from the use of sold products (light-duty vehicles) 30% per vehicle kilometer over the same period. Throughout the group, the company has committed to becoming CO₂ neutral by 2050. The company aims to become the global market leader in e-mobility by investing €35bn ($42.7bn) by the end of 2025. Volkswagen is electrifying its product portfolio in all segments. By 2029, the Group plans to launch up to 75 pure e-models and sell 26 million e-cars. Volkswagen Group aims to reduce CO2 emissions from production processes by 30% and shift to 100% renewable electricity by 2030.
VolvoSwedenThe automaker has an SBTi target to reduce Scope 1 and 2 emissions 60% by 2030 from a 2019 base year and reduce Scope 3 by 52% per vehicle kilometer by 2030 from a 2019 base year, in line with the 1.5 °C target.
The company’s ambition is to sell 100% fossil-free Volvo Group vehicles from 2040, to be CO2 neutral by 2050. Volvo will continue to improve the efficiency of existing technology using renewable fuels derived from vegetable or organic origin. Volvo’s goal is to offer heavy-duty vehicles with fuel cells for demanding long-haul applications in series production in the second half of the decade. The company will replace fossil energy with renewable energy sources such as wind, solar, biomass, and biofuels.

Climate scientists overwhelmingly agree that the global economy must reach net-zero greenhouse gas (GHG) emissions by 2050 to ward off the catastrophic effects of climate change.

GlobalData’s research on climate change and its impact on business is one facet of a broader stream of research on sustainability and sustainable business practices.

GlobalData’s report, Climate Change – Thematic Research, contains analysis of the forces driving climate change action, and introduces GlobalData’s climate action feedback loop. This rewards and reinforces corporate climate action, prompting more of it.