Making Renewables Mainstream: Transporting Humans Cleaner & Greener

In our last blog post, The Impending Need to Make Renewable Energy Mainstream, we explored solar and wind energy as alternatives to legacy fossil fuels. There is no dearth of data to support the fact that transportation is amongst the top industries contributing to fossil fuel usage – road transport alone accounts for 16% of global emissions. Data from UNECE and EPA suggests, CO2 emissions in the transport sector accounts for almost 23% of the total CO2 emissions worldwide and nearly 30% in the case of developed countries. As such, one of the key pillars for moving away from fossil fuels is to either shift to greener fuels for our vehicles – ethanol, hydrogen, electric etc. – or adopt alternative modes of transportation which do not depend on burning fuels at all. An example of the latter is Micromobility, which typically promotes the use of bicycles for shorter distances (one of our earlier blogs titled, Micromobility: Outlook in a Post-Covid World, delves deeper into the topic). The good news is that the tools needed to curb emissions from transport already exist.

Several countries have been taking initiatives in usage around both ethanol and hydrogen-based fuels. While India currently uses a 10% ethanol blend (aiming for 20% by 2025-26), the EU, US, and Brazil remain the top global users of ethanol blended fuels. Although vehicles running on Hydrogen (FCEVs) provide a longer range on single refueling, there are very few commercially available options now. Countries and governments are continually pushing for alternative, zero-emission fuels both at the policy level as well as in their investments. The EU is targeting 40GW of renewable hydrogen electrolyzer capacity by 2030, while India launched its National Hydrogen Mission in 2021 which ais to generate hydrogen from green power sources. Japan allocated $670mn in 2020 for hydrogen and fuel cell technologies, and targets 800k FCEVs and 900 hydrogen refueling stations by 2030. South Korea plans to have 200K FCEVs by 2025 while the US allocated $9.5bn for clean hydrogen development under the Infrastructure Investment and Jobs Act of 2021.

Although, Ethanol and Hydrogen can provide emission-free transport, both these options pose challenges including high implementation costs. Ethanol can only be used after engine calibrations, while FCEVs suffer from several infrastructural impediments – high carbon emissions during hydrogen production from natural gas, low energy content per unit volume, compression and transportation of hydrogen, and inadequate refueling infrastructure.

Electric Mobility (EVs) is rapidly turning into one of the most important catalysts of this paradigm shift in the way the world’s transport works. In 2020-21 alone, 6.6mn EVs were sold worldwide – nearly 9% of the global auto market. If anything, this points to the large scale and almost homogenous adoption of EVs globally. For passenger vehicles, China (3.4mn), Europe (2.3mn) and North America (0.7mn) lead by the total number of EVs sold, while Norway (75%), Iceland (45%) and Sweden (32%) are leaders in the share of EVs in their total markets. In mass transit options, China leads the way with more than 378K electric buses, followed by Europe at 8,500+ and USA at 3,500+ electric buses. Mirroring government initiatives, the private sector too has been playing a pivotal role in global EV adoption. UPS ordered a fleet of 10K electric vehicles in 2020, while Indian company Ola’s e-scooter plant aims to produce 10 million electric scooters every year. Companies like Daimler (eCascadia and eM2 trucks), Tesla and others are also investing heavily in electric truck technology, not to mention Tesla’s stupendous growth story built on EVs. By 2025, China and Europe are expected to account for ~80% of the global EV market.

Governments have also responded to decarbonize road transport with a host of regulatory instruments which promote use of EVs, like the EU’s CO2 emissions regulation for cars and vans, China’s New Energy Vehicles (NEV) mandate, Canada’s $1.2bn low carbon and zero emissions fund, and California’s Zero-Emission Vehicle (ZEV). Fiscal incentives through purchase subsidies and registration tax rebates further help reduce the price differential with conventional vehicles and promote adoption. Such consistent push towards the adoption of EVs has already shown significant impact. A 2022 report by the International Energy Agency shows that in 2021, on a well-to-wheel basis, EVS enabled a net reduction of 40 million tons of carbon dioxide-equivalent (Mt CO2-eq) – almost as much as the entire energy sector emissions of Finland. The report also points out, that by 2030, EVs can bring about a net reduction of 180-240 Mt CO2-eq emissions, giving a huge boost to the efforts towards global net-zero targets.

A 2021 analysis by Reuters showed automakers worldwide are poised to spend more than half a trillion dollars on EVs and batteries till 2030. To top this, political and regulatory pressure is mounting to ban sales of fossil-fueled vehicles, including gasoline-electric hybrids. And countries from Sweden to Singapore have committed to this end by 2030, while the US wants to have 40% – 50% of auto sales to be EVs by 2030. However, without significant additional incentives coupled with increased spending on charging infrastructure and grid capacity, consumer demand for EVs might fall short of projected aggressive targets. Supply concentration for EVs also remains significantly high, with China alone accounting for more than 50% of all lithium, cobalt, and graphite processing and refining capacity. It also produces 75% of all lithium-ion batteries along with 70% of cathodes and 85% of anodes, which are essential components of EV batteries. Also, so long as the electricity used to charge EVs is produced from fossil fuels, the shift away from them will perhaps remain paradoxical. Likewise, proper disposal mechanisms need to be developed for the millions of batteries the industry will eventually consume. Aggregated dumping at landfill sites will defeat the very purpose of adopting them in the first place. There isn’t a single solution for all these issues, and it is imperative that each nation develops solutions that work best in their dynamics. Committing to the targets of a global summit is not going to be enough, executing initiatives on the ground with continuous improvements is what will make a difference. The world needs to come together and act as one large unit with an unfailing persistence towards the shared goal of saving the environment from a catastrophe.

Author: Shivam Agarwal,

Assistant Consultant, Strategy Consulting

Image courtesy: Michael Marais on Unsplash