The Post-COVID-19 World: It Makes Economic Sense to Maintain CO2 Targets in the Automotive Sector

This article was originally published in our "Décryptage Mobilité" newsletter. To receive future articles by email as soon as they are published, Subscribe now. By Aurélien Schuller – Manager

We discussed this in a previous article in Décryptage Mobilité: Will COVID-19 undermine European regulations on CO2 emissions from cars? In fact, in a letter addressed to the European Commission, The European Automobile Manufacturers Association (ACEA) and the European Association of Automotive Suppliers (CLEPA) have called for a relaxation of CO2 regulations on new vehicles in light of the crisis. It should be noted that across the Atlantic, this has now been accomplished, as the Environmental Protection Agency has just announced a lower CO2 target corresponding to a 1.5% annual reduction in emissions from 2020 to 2025, compared to 5% per year under the previous standard established by the Obama administration [1].

But The French industry's position may differ from that of European organizations. In fact, in an interview with Marc Mortureux of AEF info on April 9, 2020 [2], the CEO of the Plateforme automobile (PFA, an organization representing the automotive industry in France) clarified France’s position: “ ACEA’s letter to the European Commission was very general and aimed to highlight the various issues related to the crisis; it did not call for a reevaluation of environmental goals. What is certain, moreover, is that neither Renault nor PSA—which are far from being the worst off in Europe—would argue for such a thing.” The explanation from the The position of French manufacturers is easy to explain, as it is driven by economic rationality. The Investments in the electrification of product lines have begun; given the current crisis, it would be detrimental to call them into question. This is how Marc Mortureux puts it: “We cannot imagine that the crisis would be an opportunity to call into question CO2 emissions targets or existing societal expectations. In recent years, the automotive industry has been compelled to make massive investments in support of the ecological transition. It would make no sense not to do everything possible to ensure these substantial investments bear fruit and to stay on track with emissions reduction targets.”

Questions and reflections are multiplying at the moment about what the economic model of the “world after” will look like, in particular regarding the prioritization of a “business as usual” economic recovery versus environmental and societal changes. If we keep in mind the speeches during the 2008 crisis, when environmental concerns were set aside in the name of economic rationality, it should be noted that What is happening today in the French automotive sector is a concrete example of how economic rationality has shifted sides. More generally, we can hope that the crisis we are going through will be an opportunity to evolve our economic model in order to better incorporate our dependencies on the biosphere in which the economy operates (and not the other way around). Even if this may be unpleasant, let us remember that the economy cannot escape the laws of physics and planetary limits, starting with the limit of “tolerable” climate change necessary to preserve a livable planet (from a human perspective). In the automotive sector, we can consider the following: a few suggestions for taking further steps toward more sustainable mobility :

• First of all, it may go without saying, but it’s always better to say it, Electric cars must be carbon-free from manufacturing through to use : The automakers’ plans to electrify their vehicle lineups only make sense if their power generation mixes become carbon-free at the same time;
• It is important toto buck the past trend toward ever-heavier, faster, and more powerful vehicles (SUVs are a prime example of this trend), because this makes them resource-intensive both in terms of manufacturing and use. It should be noted that one of the difficult hurdles to overcome will be to renegotiate the European regulations that give an advantage to manufacturers of heavier vehicles. From this perspective, French manufacturers have an advantage over their German counterparts;
• Beyond powertrain technologies, it is our need for mobility, which we must examine, and the lockdown situation is conducive to this. Of course, working from home isn’t an option for everyone, and in fact, it highlights inequalities between socio-professional groups and geographic regions. But for those who can do so, isn’t reducing commuting a worthwhile effort? This, of course, depends on companies creating a supportive environment for this shift and on organizational structures evolving to allow teams to continue working together while working remotely.

To end on a lighthearted note, let’s ask ourselves whether the current situation might not prompt us to consider the opposite of this—to say the least, bizarre—position defended by Le Centre Patronal (a Swiss employers’ organization that supports private-sector leaders and advocates on political issues, much like the MEDEF in France)? “We must prevent certain people from being tempted to get used to the current situation, or even to be seduced by its insidious appearances: far less traffic on the roads, a sky devoid of air traffic, less noise and hustle and bustle, a return to a simple life and local commerce, and the end of the consumer society.” [3]

Sources: [1] Autoactu.com [2] AEF [3] Information Service of the Centre Patronal, April 15, 2020