3 min read 31 Oct 22
Between 1990 and 2020, transportation accounted for the highest share of total greenhouse gas emissions in the US (27%1 ). Over the same period, transportation was the sole fuel-combustion sector in the EU to show an increase2 in GHG emissions while the energy, manufacturing and construction, agriculture and waste management industries all showed a decline. As of 2016, the UK’s transport sector overtook energy3, historically the country’s highest-emitting sector.
Across all three markets, road transport is identified as the most significant source of emissions and in particular, passenger cars. But while an increased demand for travel between 1990 and 2020 largely explains the transportation sector’s share of GHG emissions, “overall, transport has hardly improved its fuel efficiency. Almost all fuel used in transport consists of petroleum products and there has only been a marginal shift towards renewables, so there has not been a significant favourable shift in the fuel mix as seen for the other sectors4,” according to Eurostat.
The impetus to accelerate the transition to zero emission vehicles is a key component of reaching net zero – and one that has not been lost on governments. In November 2020, the UK government announced that there will be no sales of new petrol and diesel cars and vans beyond 2030. The following year, 190,000 battery-powered electric vehicles were sold, exceeding the total of the previous five years combined.
Meanwhile, the EU’s “Fit for 55” package sets CO2 reduction targets at 55% for cars and 50% for vans by 2030. Additionally, by 2035 all new cars and vans sold in the EU will be zero-emission vehicles. Last year, electric cars accounted for 17% of sales in Europe, according to the IEA5.
The role of electric vehicles in decarbonising the road transportation sector is clear. While the recent rate of adoption makes for positive reading, ensuring the continued take-up of electric vehicles within a limited timeframe is dependent on having the necessary fast charging network infrastructure to help consign internal combustion engines to a chapter in history.
“We believe fast charging is a massive opportunity because the rollout of electric vehicles will not happen without the necessary capex requirement to allow long distance journeys,” says Christophe Bordes, Transaction Managing Director at Infracapital. “Recharging an electric vehicle at home is extremely slow — 15km equivalent per hour of charge. A regular home socket can charge at a power of 3.5kW compared to up to 150kW on a fast charger, and sometimes even higher on a super-fast charger. If you don’t have any fast chargers, people will be reluctant to switch to electric vehicles.”
Encouraged by government policy, the Nordic electric vehicle market is the most advanced in the world. As new car sales rose to a record of just over 176,000 in Norway last year, 65% were fully electric, which presents an opportunity to meet the charging needs of zero emissions vehicles.
“The challenge comes with the rollout of the infrastructure because even Norway doesn’t have enough chargers as of today,” says Bordes. “At the end of the year, Norway will reach 20% of the fleet being electric vehicles. On top of that, each month 80% of new registrations are electric vehicles, meaning that internal combustion engine vehicles in Norway will be phased out in the not so distant future.”
While the need for a fast charging network is clear, investors must also anticipate being able to procure from carbon free power. To support the transition to a lower carbon economy, Infracapital acquired Recharge, the leading charge point operator in the Nordics with more than 4,600 connectors in 800 locations. Ensuring the supply of electricity to power the vehicles is CO2 emissions free, is vital.
“At Recharge, 100% of our power is purchased from CO2-free electricity,” says Bordes. “We have a powerful review contract with a power supply company and we make sure that it’s CO2-free. This may prove more challenging in other countries in the short-term, especially those still heavily reliant on coal such as Poland. It’s quite early for them but it’s a way to speed up the power generation transition to renewable energies, which might be faster than expected.”
The race to decarbonise is a relay requiring industries, governments and investors to work closely in order to operate within our planetary boundaries. “In that respect I would say that governments have already pushed hard for this energy transition and both the carbon free power generation side and electric vehicle charging should speed this phenomenon up,” concludes Bordes.
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