Technology is not the enemy, but rather fossil fuels – Newsletter Editorial December 2021

A successful transformation starts with knowing the stakes. A new study, commissioned by CLEPA, provides compelling insights

Reaching climate neutrality in the EU by 2050 requires ambitious greenhouse gas emission reductions. This means an unprecedented transformation for the automotive industry and its supply chain, and one that will have a major impact not only on employment, but also on consumer choice, the affordability of individual mobility, and EU competitiveness. The face of the industry will change as a result of the transition to electric powertrains, requiring the restructuring of production sites and the workforce.

CLEPA fully supports the objectives of the Green Deal. In fact, automotive suppliers design and manufacture all of the components and systems that are needed to achieve the ambitious goals for road transport, to make mobility safe, smart and sustainable. Automotive supply companies invest heavily in new technologies and are key innovators. But we also want to ensure a transformation that leaves nobody behind. It is therefore imperative to understand the impact of this transformation for the livelihood of hundreds of thousands of people working hard to deliver the technological solutions for sustainable mobility, as well as for the competitiveness of an industry of such importance for Europe, in order to make the best-informed policy decisions. It is important that we have this dialogue early on, instead of after the facts.

A few key numbers: The auto sector is directly responsible for more than 8.6% of the overall manufacturing employment in Europe, with more than 60% of workers employed by automotive suppliers. Of those 1.7 million direct jobs600,000 or roughly one thirddepend on internal combustion engine technology. Electrification of the powertrain impacts these workers directly, as fewer parts are needed in an electric vehicle and the manufacturing processes are more automated.

Policy decisions that mandate only one technology choice, directly impact consumers, businesses and EU competitiveness in a very real and disruptive way

To obtain a much needed European-wide assessment of the impact on jobs and value creation in automotive powertrain manufacturing, CLEPA commissioned a one-of-a-kind study evaluating the impact of three different pathways to reach Green Deal objectives, with a focus on automotive suppliers in the EU, and in seven key automotive markets, until 2040. The results send a stark signal: an EV-only approach, with a ban on combustion engine technology, which is basically the approach taken in the European Commission’s ‘Fit-for-55’ package, puts over half a million jobs at risk, with the future economic & social fabric hinging largely on the assumption of a full battery production chain in Europe. By contrast, a mixed-technology scenario, combining rapid electrification with other sustainable low and net-carbon options, would mitigate the employment loss and make the transformation more manageable. Without compromising on climate goals.

In other words, policy decisions that mandate only one technology choice, directly impact consumers, businesses and EU competitiveness in a very real and disruptive way. The study finds that new jobs will be created in the EV powertrain business as well, around 226,000, but the net loss of employment outpaces this number. In addition, the new jobs created are not compensated one to one. Indeed, they will require different skill sets, arise in different locations or at a different moment in time. The same is true for new jobs created elsewhere by the energy transition.

This is not an argument to downplay the opportunities of the green transition. We are, however, concerned about the challenges of the transformation being debunked. We’ve been told that “jobs are last century’s argument”, or that we’re “defending technology that is outdated”. We beg to differ. Our mutual objective is to reduce emissions and to reach climate-neutral mobility.

There is no such thing as ‘maintaining the status quo’ in the automotive industry. In fact, in the short-term, pure ICE vehicles will become the exception, as electrification is finding its way to all corners of a vehicle. The road to a world of pure EVs, however, is much longer still, and will depend on many factors outside the remit of the auto industry, such as the availability of charging infrastructure, of sustainable raw materials, of green energy and of affordability.

The road to a world of pure EVs is much longer still, and will depend on many factors outside the remit of the auto industry

A central point in our vision is that technology is not the enemy in this transformation, but rather fossil fuels. Just as not all EVs run on renewable energy, not all ICEs need to run on fossil fuels. We fully support—and are actively involved—in building up a competitive EV technology & battery value chain in Europe. But we are also realistic about the uncertainties surrounding this effort, especially as it pertains to timing and sourcing of critical material. In addition to batteries, sustainable renewable fuels should be deployed in road transport as a complementing measure. Just as we’ve seen the policy framework created to scale up battery production, we need a regulatory framework that incentivises the scale up of these fuels as well.

It’s encouraging to see that, despite fierce opposition from environmental NGOs, the recognition for the role that sustainable renewable fuels have to play is growing, with several Member states and Members of the European Parliament making exactly this case. The contribution of these fuels should be recognised in the CO2 fleet target regulation. It would provide a safety-net for where direct electrification is not (yet) feasible and address the unsolved problem of carbon emissions from the existing vehicle fleet. It would also reduce the pressure for investing in new charging infrastructure and further use of government subsidies. The focus should be put on leveraging available infrastructure and ensuring a sufficient supply of green energy and green fuels.

Automotive suppliers are responsible for most of the employment in the automotive industry. The sector is deeply intertwined with regional economies, composed of global leaders as well as many innovative SMEs. It is critical we manage the social and economic impact of the transformation well.

We are arguing that industry and society have sufficient time to manage the social aspects of this transition. We are asking that all technology solutions play their part in reducing emissions, which will also help to sustain our competitiveness in the global market and maintain employment in Europe. We want to keep leadership around the world with EU climate policy and this only works if it makes economic sense and where there is a business case.

A badly managed transition could severely undermine the ability of the European Green Deal to succeed

From a global perspective, different approaches are being pursued to decarbonise road transport. While there is broad support for EVs, no major global car market including the USA, China or Japan are opting for technology bansthere is the realisation that transport needs are too diverse for just one solution.

To reduce CO2 emissions effectively and efficiently, in Europe and globally, we will need both accelerated electrification and advanced clean combustion technology, in all shapes that hybrids come in, and in the form of hydrogen combustion, too. We have the competence in Europe, we have a competitive advantage with these technologies, and we would be doing ourselves a disservice not to leverage this in the future.

A planned and thoughtful transition consisting of a mixed technology approach keeps options open to adjust to new developments, be they technological breakthroughs, geopolitical events, or availability of resources. Technology openness gives industry the needed time to transition, while mitigating the social disruption often coupled with abrupt change.

There are more options than just tailpipe-zero emissions, which doesn’t represent the full carbon footprint of a vehicle. A badly managed transition could severely undermine the ability of the European Green Deal to succeed and could cause long-term damage to our economies and societies​. Together, we surely can do better than that.

This being the last editorial of the year, I take the opportunity to wish you a healthy and safe 2022, and look forward to continue working together on making mobility smarter, safer and sustainable.

With best wishes,

Sigrid de Vries

CLEPA’s Secretary General


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