Examining the Biggest Polluters: Report Card of Transportation Industry

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The transportation sector is essential for economic growth, creating jobs, and connecting people to critical services. The industry is also growing rapidly and will retain this trend for a long time. Yet, what’s concerning about the growth of the transportation sector is that it is also one of the biggest polluters. The industry shares a significant chunk of the global emissions, responsible for climate change. And the emissions only seem to increase as the industry is set to expand further.

Though, there is a silver lining. There are several ways to control and curb these emissions from the transportation sector. Some of them – such as enhanced public transport options, active mobility, zero-emission vehicles, and green fuels – are already in use in many countries. Reportedly, non-fossil fuel-based vehicles are losing their hegemony in global transportation at a rapid pace as the new climate-friendly electric vehicles (EVs) have clocked to tremendous growth in the past decade. 

The year 2021 was the most significant year for the transportation industry as for the first time, EV sales doubled between 2020 and 2021, to around 6.6 million EVs, worldwide. This was still just about 9 per cent of the global auto market. The industry has a long way before it goes green. Moreover, the climate-smart transport options see uneven distribution, says the World Economic Forum. They tend to be concentrated in the developed world, as the low- and middle-income countries are seeing a rise in emissions.

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This report card of the global transportation industry – as one of the biggest polluters among major global industries – will brief about the development in the sector for emissions control, so far, and what the future holds for one of the most important industries of the global economy.

Share in Global Pollution

Each year hundreds of millions of vehicles pump huge amounts of greenhouse gas emissions into the atmosphere, driving the climate crisis. 

According to the World Bank, domestic and international transport contributes about 20 per cent of global GHG emissions. The sector is second only to the power sector. Hence, there is an urgent need to reduce the climate impact of transport. The pollution due to the sector is only going to grow; thanks to the growth of populations, economies, and the need for mobility. The overall GHG emissions from transport could increase by as much as 60 per cent by 2050.

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The breakdown of CO2 emissions in the transportation sector worldwide, by subsector, shows that the industry emitted approximately 7.3 billion metric tons of carbon dioxide (CO2) in 2020. Passenger cars were the most significant emitters accounting for about 40 per cent of global transportation emissions. Medium and heavy trucks (22%), shipping (11%), aviation (8%), buses and minibuses (7%), LCVs (5%), Two/three-wheelers (3%), and Rail (3%), followed.

Measures Taken to Reduce Carbon Footprint

Reducing the carbon footprint in the transportation sector forms the basis of emissions reduction plans of countries across the globe. GHG emissions from transport in low- and middle-income countries have more than doubled since 2000. It is likely to continue rising rapidly as motorization and the demand for increased mobility inflates. To curb emissions from the crucial sector, stakeholders are taking measures, such as the development of new renewable energy-based transportation technology. EV stands at the forefront of this change.

Private Measures

The global transportation industry is pushing for electric mobility at record rates. EV plans of the world’s biggest automakers are worth noting as these industrial giants will drive the policies and trends, for all the ones that follow, towards curbing emissions. 

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European Private Measures

European Automakers are striding toward net-zero carbon targets at a fast pace. Volkswagen Group is the biggest automobile manufacturer in the world. In the electric vehicle segment, the group nearly doubled its BEV deliveries year-on-year to 452,900 units – a 5.1 per cent share of its total deliveries in 2021. The European auto major aims to phase out ICE vehicles by 2026 as it also plans to spend €35 billion on battery EVs by 2025. Similarly, Daimler AG – which owns brands like Daimler, Mercedes-Benz, FUSO, Western Star, and Smart – has the most ambitious climate-neutral target year – 2039.

American Private Measures

The American automaker Ford Motor has only recently boosted its EV segment. Interestingly, the auto-major is aiming to achieve an annual capacity to build 600,000 EVs globally within a couple of years. Ford also planned $22 billion for EVs through 2025 as the American firm targets 76 per cent carbon reduction by as early as 2035, before going carbon neutral by 2050. Another American firm, GM plans to increase its North American production capacity to build 1 million electric vehicles, while spending $35 billion by 2025. Full-electric Tesla 

Asian Private Measures

The Asian Manufacturers are not lagging behind either. Japan’s Toyota is one of the biggest auto manufacturers with about 10.5 million vehicles sold in 2021, beating VW. The firm is also leading the market in hybrid vehicles. Cruising towards its goal of achieving carbon neutrality by 2050, Toyota vowed to sell 3.5 million battery EVs globally by 2030. The company has plans for a 2 trillion yen ($17.6 billion) investment in battery vehicle technology. In India, many mobility majors like Tata Motors, Mahindra, Ola Electric, Simple Energy, Omega Seiki, etc. have made key investment announcements to a tune of INR 48,000 crores (US$6.5 billion) in the year 2021. Ola Electric alone is currently worth INR 0.2 lakh crores ($US3 billion). 

Battery Manufacturers 

Global installations of EV batteries doubled in 2021 to 296.8 GWh as compared to the year 2020. Asian firms are the biggest EV battery producers in the world. CATL and BYD are the two Chinese firms that occupied a 41 per cent share of the world’s auto lithium-ion battery market in 2021. LGES and SK On from South Korea, and Panasonic of Japan are a few of the industrial leaders manufacturing and supplying EV batteries across the globe.

Government Measures

As the countries across the world, both developing as well as developed nations, are moving toward carbon neutrality, they are increasingly targeting their transportation sector to curb overall emissions.

Europe

European countries are committed to meeting their sustainable goals by expanding green vehicles and reducing carbon emissions in their transportation industry. Current regulations in Europe require a 37.5% emissions reduction from new cars, 31% from new vans, and 30% from new trucks by 2030 compared with the 2021 baseline. Further, the European Commission’s “Fit for 55” proposal aims to further tighten CO2 targets for new cars and vans by 50%–55% by 2030 and require all new cars to be zero-emission by 2035.

Netherlands, Sweden, Belgium, Luxembourg, and Denmark are the leaders of green transportation initiatives and infrastructure. The Netherlands has one of the greatest EV charger infrastructures with more than 90.000 charger locations, as the country targets 100 per cent of vehicle sales to be zero-emissions by 2030. 

The United States of America

Transportation is the largest source of US GHG emissions. Recently, the US Environmental Protection Agency restored its GHG emission standards for new cars and light trucks up to 2026. The agency is also formulating post-2026 standards that ought to help put the United States on the path toward the 50% electric vehicle target in 2030. 

China 

China is the biggest market for EVs in the world. A plan to peak CO2 emissions from transportation industry is one of the roadmaps by China to peak the nation’s carbon dioxide (CO2) emissions by 2030 and reach net-zero greenhouse gas (GHG) emissions by 2060. China has stringent 2025 fuel consumption requirements for passenger vehicles. Electric cars in China have reached cost parity with their conventional fuel counterparts in terms of the total cost of ownership.

China’s central subsidy program for new energy vehicles (NEVs) and dual-credit policy have helped it achieve a swift partial transformation to clean mobility. 

India

India committed to the EV30@30 initiative of reaching a 30 per cent sales share for EVs by 2030. This presents a huge investment opportunity of around 19.37 lakh crore ($US266 billion) between 2020 and 2030 in one of the biggest vehicle markets in the world. Government of India flagship initiatives FAME II, PLI for ACC batteries and automotive manufacturing have invested a total of INR 0.6 lakh crores ($US7.5 billion) in the EV space.