Europe's right turn and competition from the US and China challenge the green transformation of the transport sector

June 10 2024
Although the past five years have been the greenest in the EU, there is still a long way to go before a CO2-neutral transport sector. But a shift to the right among the EU's politicians could challenge the green transition, and this risks costing European competitiveness vis-à-vis the US and China

For someone who is both passionate about ending climate change and speeding up the green transition, both personally and professionally, it is an enormously difficult balancing act between what actually needs to happen to limit global warming to 1,5, XNUMX degrees, and what is politically realistic to get support for. We are in a time where we look into the one heat record after another, month by month, year by year. More prominent climate scientists have repeatedly shouted vigilant and have recently written about the fact that we are heading towards the abyss and approaching a minimum of 2,5 degrees. The transport sector is undoubtedly the sector that has the highest CO2 emissions in the EU. Here, road transport constitutes 70 percent of the transport emissions. Most of us now know the solution to reducing the climate impact of road transport, namely electric vehicles.

So why is the green conversion of road transport not progressing much faster? With European Green Deal among other things, it was decided that the EU must reduce the climate burden by 55 percent by 2030 at the latest. From that came the legislative package fit for 55, where, among other things, a was adopted on road transport ban on the sale of new cars and vans with a combustion engine from 2035, just as there are now requirements for installation of publicly accessible charging stations throughout Europe for both cars and trucks from 2025. The latest is CO2 emission requirements for heavy vehicles has been adopted, which, among other things, requires a 90 percent CO2 reduction for new trucks and tourist buses in 2040.

What these laws have in common is that they pave the way for faster electrification of road transport throughout Europe. At the same time, the transition is supported with requirements for the recycling of, for example, lithium, cobalt and copper i The Battery Regulation, and there are now also requirements for the extraction, processing and sourcing of critical raw materials internally in the EU with regulation on critical raw materials to ensure diversification. All of the above is something that sets a faster, more ambitious green course for Europe. It is far from enough. But it shows what can be achieved with targeted regulation within a five-year period.

However, the future is significantly more uncertain. On the one hand, we look into one extreme right turn in Europe, which could potentially have a negative impact on the speed of the green transition over the next five years. On the other hand, Fit for 55 has helped form the fertile ground for several Danish and global companies to have invested massively in the green transition within the last few years, for example in electric trucks.

Many companies recognize the importance of keeping up with the transition if they are to continue to be relevant in the future. Therefore, several companies, such as MaerskDanfoss og DFDS set their own climate targets that are more ambitious than what is required by regulations. Future politicians are therefore not doing companies and investors a favor by pulling back on the climate ambitions in the EU, on the contrary. Companies need security about their green investments and better framework conditions across the EU that make it cheaper and easier to do what is necessary.

Turning down the climate ambitions in the EU is therefore the wrong thing to do. If Danish, as well as European companies, are to have a future, then the climate ambitions in the field of transport in Denmark and the EU must be stepped up, both for the sake of the climate and the companies' competitiveness.

Climate policy is not just a matter of speed for the green transition. Climate policy is also inextricably linked with industrial policy. Because even with a right turn in European politics, we are looking into a future with a growing market for electric vehicles and batteries. Electric vehicles and batteries will become cheaper within a few years, but until then there is a need for a political hand in relation to, for example, support schemes and better framework conditions that ensure faster expansion of the electricity grid and electrification. After all, it's also about EU competitiveness compared to, for example, the USA and China. Because if the EU cannot compete with the USA's 'Inflation Reduction Act' and the enormous development and production of electric vehicles from China, then the EU and its large transport industry are doomed before long.

Therefore, climate and transport policy is also about opportunities for technology development and jobs in the EU. For electric vehicles and batteries are – and will be – the key technology in green industrial policy. There is more at stake with the green transition than the climate. And therefore politicians in Denmark as well as in the EU should open their eyes to the fact that climate and transport policy is also industrial policy; industrial policy that benefits society as a whole.

This comment was brought to the Alting on 7 June 2024.

Contact

Daria Rivin

Senior advisor, Transport

(+45) 3318 1936
daria@rgo.dk

Jeppe Juul

Head of transport policy

(+45) 3318 1948
jeppe@rgo.dk