EU Policies on Zero Emission Vehicles and Electromobility

Extracted from InsightTech podcast episode, Thomas and Statzon discuss various aspects of EU policy, particularly focusing on electro mobility and its implications for EU policy. 

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EU Policies on Zero Emission Vehicles

In this episode, we will cover the following topics: 

• Effectiveness of incentives for electric vehicles 
• Regional differences in electric vehicle adoption 
• Impact of corporate fleets on electric vehicle uptake 
• Challenges and solutions in charging infrastructure deployment 
• Regulatory measures to incentivize renewable energy use in transportation sector 

Thomas Neumann, Policy Manager  

Thomas Neumann was a policy manager at Avere, the European Association for Electro Mobility. As a policy manager at Avere, Thomas's primary responsibilities revolved around leading policy initiatives, monitoring developments in Brussels, and advocating for favorable policies. In this role, Thomas had been with Avere for over two years. Now, Thomas works for the European Parliament. 

Statzon: What are the primary responsibilities that come with your role as a policy manager? 

Thomas: I keep a close eye on policy changes and trends in Brussels related to mobility. Collaborating with my colleagues, I lead internal working groups to analyze these policies. As a representative of Avere's diverse membership, including national associations, industry members like car manufacturers and charging infrastructure producers, as well as end-users such as drivers and enterprise fleets, I advocate for favorable policies. This involves communicating our members' perspectives to European decision-makers and advocating for policies that support electro mobility. Avere, established in the late seventies, is the European Association for Electromobility. Its recent rapid growth reflects the increasing importance of e-mobility. 

Statzon: Who are the members you advocate for, essentially representing the entire ecosystem you support?  

Thomas: Essentially, our membership is divided into two main pillars: traditional national associations and direct industry members. The national associations initially formed the backbone, representing various sectors, mostly industry related. On the other hand, we have direct members, which include companies active in electro mobility, such as car manufacturers, charging infrastructure producers, and those representing users, like the Norwegian Media Association with its growing number of drivers.

We also indirectly represent users in our internal working groups, ensuring their perspectives are included. Our direct industry members range from global players like Tesla to smaller SMEs, covering both vehicle manufacturers and supporting value chain businesses, like battery producers. Infrastructure members include charging point operators, mobility service providers, and manufacturers. Additionally, we have research institutes among our membership. Overall, we encompass the entire electro mobility ecosystem, including users from various sectors such as enterprises, Uber, institutional ride-hailing, and car rental services 

Statzon: What are the most significant changes and areas of growth in your field since the 1970s, and particularly in recent years? Specifically, what are the hottest key focus areas you are currently working on? 

Thomas: That's a broad question because there have been numerous significant proposals over the past months. Let's start with the focus on vehicles. One crucial aspect is the emission standards, particularly for light-duty vehicles like passenger cars. There's now a reinforced trajectory requiring manufacturers to gradually reduce emissions, with a de facto ban on selling zero-emission cars by 2035. So every new car in 2035 will have to be electric or hydrogen. We don't particularly believe in hydrogen, but any zero-emission solution. As a general rule, internal combustion cars cannot be sold after 2035. 
 
We're also seeing similar efforts for heavy-duty vehicles, with proposed emissions reductions and ongoing discussions. So, for trucks and buses, the Commission has proposed again the emissions trajectory, with the headline target being a 90% reduction of the new truck fleet by 2040. Currently, this is under discussion, it's a bit earlier stage; the kind of ones are finished, but the heavy-duty ones are still in an early stage and will go through the institutions in the coming months. 

Another key area is the Alternative Fuels Infrastructure Regulation, which aims to establish a comprehensive charging network across Europe. This includes ensuring convenient charging along main motorways, standardizing payment methods, and providing clear consumer information to make charging easy and transparent. 

Additionally, there are other notable proposals such as the Energy Performance of Buildings Directive, crucial for private charging infrastructure, and the Battery Regulation, ensuring sustainable and competitive battery production in Europe. We're also looking at initiatives like the Critical Raw Materials Act to secure essential materials for the EU's transition, the Industry Act incentivizing clean manufacturing, and the Renewable Energy Directive to green the energy grid. 

Overall, there's a holistic approach under the Commission's Green Deal, aiming to activate various levers to decarbonize the EU economy, with a particular focus on transport.  

2035 Deadline for ICE Car Sales: Perspectives and Consideration 

The EU requires that from 2035, all new cars and vans sold in the EU must produce zero CO2 emissions, aiming to make zero-emission vehicles the norm by 2050.

Statzon: What are your thoughts on extending the 2035 deadline for internal combustion engine car sales, considering that some people would like to? 

Thomas: 2035 is almost too late from our perspective. This deadline is based on the fact that cars sold in the EU typically remain on the road for about 15 years, sometimes even longer if exported. The EU has set itself a legally binding target to achieve climate neutrality by 2050, in line with the Paris Agreement. 

If we backtrack from 2050, considering the 15-year lifespan of cars, it's essential to stop selling polluting cars by 2035. This ensures that by 2050, these cars are off the road, preventing continued pollution. 

In Brussels, there's a major discussion, mainly driven by the German government, about eFuels. These fuels, theoretically carbon-neutral, are claimed to save combustion engines. However, they pose significant challenges, especially regarding energy efficiency. Producing eFuels is highly energy-intensive, requiring far more renewable energy compared to battery electric propulsion. Given the scarcity of renewable energy and the high costs of eFuels, they're not a viable mass-market solution. 

In essence, electro mobility emerges as the most viable solution for affordable, pollution-free passenger transport, aligning with the 2050 climate goals. 

Statzon: Do you believe that by 2050, all road transportation will be at least decarbonized if not fully electric? 

Thomas: So, there is currently a noticeable backlash against the European Commission's green agenda, including previously agreed-upon measures. Certain forces in Brussels, such as lobby groups and conservative parliamentary groups, are pushing back. Nevertheless, addressing climate change is imperative. We witness its consequences every summer, from the spring floods in Germany a few years ago to the recent severe heatwave in Spain, adversely affecting farmers. There is truly no alternative to taking action. Therefore, while our response today is a definite yes, it's not solely a matter of belief; rather, we must effectively manage this transition 

Statzon: How does the distribution of electric car adoption vary across Europe, particularly between regions like the west and east, and north and south? 

Thomas: There are regional differences, which is quite normal. Lead markets will always exist. These differences are related to income. Currently, electric vehicles still have a higher upfront cost, but they are cheaper to run over their lifecycle because electricity is cheaper than fuel. However, you need a certain amount of household income to afford a new electric vehicle. This means that households with higher incomes are more likely to afford them initially. 

For first-time users, especially in the first few years, electric vehicles can be a bigger financial hit. So markets where people tend to be wealthier tend to develop first. That being said, we've already discussed the 15-year lifecycle of a vehicle within the EU. Vehicles sold in wealthier markets will eventually be passed down to less wealthy markets. The quicker we get uptake in wealthier markets, the quicker this will also spread to other markets. 

There are important levers, like corporate fleets, which can drive electric vehicle adoption. The majority of cars sold in Europe are leased by corporations for a few years, and these vehicles have a significant impact on decarbonization. Mandating that companies purchase electric or zero-emission vehicles for their fleets can stimulate the second-hand market, making electric vehicles more affordable for private consumers, especially in Eastern European countries. 

While these measures can help reduce the gap in electric vehicle adoption between regions, some differences may persist, which is normal. However, the goal of achieving full electrification by 2035 ensures that even regions with slower adoption rates will catch up over time. 

Statzon: Do you think the incentives offered by most European countries for fully electric vehicles are effective, given the ongoing debate on their efficacy? 

Thomas: Incentives are definitely helpful because they narrow the gap between electric vehicles and combustion cars, particularly addressing the upfront purchase price concern, especially for private consumers who may not always consider the entire lifespan cost. Purchase subsidies can expedite this transition, especially as the cost of batteries and EVs continues to decline. However, subsidies should be proportional and time-limited until the uptake becomes self-sustaining, focusing on closing the TCO gap where it still exists. 

Non-monetary incentives, such as allowing EVs use bus lanes as seen in Norway, effectively encourage people to switch and can scale the market, especially in the current stage. However, they should be phased out over time. 

Statzon: Are there regulations aimed at bridging the gap in charging infrastructure between Western and Eastern European countries, given that half of the charging infrastructure is concentrated in just two countries, the Netherlands and Germany, which make up only 10% of the EU landmass? 

Thomas: There is a regulation known as the alternative fuels infrastructure regulation, which sets binding targets for charging infrastructure in every member state. It does so in two ways. The first one is capacity-based targets, which means that in every member state, for each registered battery electric vehicle, there has to be an additional total charging capacity of 1.3 kilowatts, and 0.8 kilowatts per hybrid electric vehicle. Then we have distance-based targets, which mandate charging opportunities every 60 kilometers along key highways in Europe. These regulations aim to address the chicken and egg dilemma by ensuring that the uptake of charging infrastructure aligns with the deployment of electric vehicles, reducing range anxiety, and promoting the growth of charging infrastructure hand in hand with the increasing number of electric vehicles.  

Additionally, while the number of charging points is commonly used as a metric, it overlooks the prevalence of private charging points, which significantly contribute to the charging infrastructure. Furthermore, the metric of charging points alone does not account for the differences in capacity and speed among charging stations. Therefore, the effectiveness of charging infrastructure should be measured by its total capacity rather than just the number of charging points. Despite the current gap between Eastern and Western Europe, the regulation aims to bridge this divide as the market for electric vehicles continues to develop and demand for charging infrastructure increases. 

Statzon: How does the capacity and infrastructure of the electric grid influence the feasibility of home charging for electric vehicles? 

Thomas: The grid is a key enabler and can also pose a significant obstacle in some countries. A country with a stable electricity grid will implement this transformation more quickly. It's important to start planning ahead, especially for heavy-duty vehicles like trucks, to determine where high-power connections are needed and lay down the cables accordingly. This proactive approach can speed up the deployment of charging infrastructure, as waiting for permits for grid connections can slow it down. Additionally, smart charging and vehicle-to-grid technologies can help alleviate grid strain by optimizing charging times based on grid conditions, maximizing renewable energy usage, and preventing grid overload scenarios by distributing charging load effectively. 

Statzon: Are you considering implementing credit card payment for public charging, as you mentioned it's on your agenda? 

Thomas: Yes, the main regulation governing this is the Alternative Fuels Infrastructure Regulation, which mandates that users must be able to pay ad hoc for their charging using widely available payment instruments in the Union. This means that users traveling abroad or outside their home region should have the option to conveniently pay without the need for network sign-ups or RFID cards. For fast chargers over 50 kilowatts, a physical credit card reader will be required, while slower chargers under 50 kilowatts may use alternative solutions such as dynamic QR codes. The goal is to ensure payment convenience for users while balancing the cost of installing credit card readers. We support this approach, especially the differentiation between slow and fast charging, as mandating card payment everywhere could have negatively impacted the business case for low charging. Additionally, the Payment Service Directive, which is about to be revised, addresses technical aspects like the need for physical pin pads for credit card transactions. Overall, users in Europe can expect ad hoc payment options for charging. 

Statzon: Can you elaborate on the suggestion to broaden fuel credit trading to cover private charging, and how do you think this would impact the market in the European Union? 

Thomas: The Renewable Energy Directive, especially for infrastructure members, has been significant as it provides a new revenue source for infrastructure rollout. The institutions have reached an agreement, and though it could have been better, many of our suggestions have been considered.  

Essentially, the directive incentivizes or establishes a framework for renewable energy rollout across the union, which is crucial for maximizing the potential of zero-emission vehicles like electric cars.  

Additionally, it includes fuel-neutral credit trading mechanisms that obligate fuel suppliers to reduce emissions. These mechanisms allow fuel suppliers to meet their obligations by purchasing renewable electricity credits, which are allocated to charging point operators or electricity providers. The extension to private charging was one of our requests, and member states will have the opportunity to implement it. This extension ensures that revenue sources are available not only for public charging points but also for private ones. The directive also addresses the issue of appropriate multipliers to ensure that renewable electricity credits adequately reward the use of electric vehicles. Overall, the directive sets up a market-based mechanism wherein fuel suppliers contribute to funding charging infrastructure. 

Our focus should solely be on Battery Electric Vehicles (BEVs) rather than hybrids. Hybrids, often subsidized by governments and accompanied by fuel cards, can be less fuel-efficient, as they typically rely on combustion engines for long distances. Therefore, the solution lies in purely focusing on battery electric vehicles, as hybrids come with a high purchase price, increased maintenance costs, and lack proven environmental benefits.

“Yes, we believe in it, but it's not just about belief; we have to manage this transition .” 

- Thomas Neumann