Alastair has over 10 years’ experience leading research activities in scaled, high-growth industrial and technology markets. At Interact Analysis he is responsible for electric trucks and buses, autonomous trucks and off-highway electrification.
COVID-19 has taught us all an important lesson about the environment. Nature recovers quickly. As human populations across the globe endured lockdown, with widespread factory closures and cities emptied of vehicles, so nature made a comeback, with wild boar wandering the streets of Haifa, Israel, dolphins swimming in the Bosphorous near Istanbul, and Pumas roaming the empty streets of Santiago, Chili. But as people looked out of their windows in major cities from Los Angeles to Delhi, they will have been struck the most by the clean air and the clear blue skies. NO2 emissions have dropped between 30 and 60% in many European cities including Barcelona, Paris and Rome, according to the European Environmental Agency.
The question now is: Do we go back to the way we were, with pollution returning to sometimes intolerable levels in big conurbations, or do we learn from our coronavirus experience that there is a better, cleaner way forward for humanity? Some of the signs are encouraging. The first months of 2020 saw an unprecedented increase in EV sales. Western Europe saw the market share for electric passenger cars rocket from a mere 3% a few months before, to a current 10%. Electric buses and delivery vehicles – the subject of this insight – are also predicted to be growth areas, with the popularity of vehicle electrification now being spurred on by the knowledge that NO2 pollution of the urban atmosphere inflames the lungs and makes us more susceptible to serious illness caused by viral infection.
ELECTRIC BUSES – Short-term downturn, but Optimism for the Future
In the short-term, the electric bus market – like the market for all public transport vehicles – is likely to experience a major down-turn, as people avoid public transit. Transport experts in Germany are anticipating a reduction in the use of public transport of up to 50% by 2023.
But over the long-term, where transport and urban pollution are concerned, COVID-19 should be seen as an opportunity for the sector, not a set-back. Anti-viral measures, such as deep cleaning and the provision of disinfectant dispensers in vehicles are already being introduced in global bus fleets. More long-term measures to increase passenger take-up will likely impact on bus design which will have to take into account social-distancing – more personal space for example, no more cramming in of passengers, one-way entry and exit, digital ticketing to reduce physical contact points, and clean-air ventilation. This will need to be backed up by government policies regarding flexible work and school times to avoid rush-hour congestion, and also regarding stimulus packages and funding for a transport system that will almost inevitably run at a loss for a considerable period of time.
This is doubly important for electric buses which, although their total life-cycle costs are nearing the costs of diesel buses, have higher upfront costs. High-scale government funding is already happening in China, where, for example, the Shenzhen government provided generous subsidies to help Shenzhen become the first city in the world to electrify its entire bus fleet. The golden opportunity for the electric bus initiative is for it to present itself as a zero-emission mode of travel, caring for the health of passengers and citizens as a whole, as we have already seen in Paris where 93% of passengers agree that electrification of bus fleets shows that an operator cares about its customers.
THE ELECTRIC LAST-MILE DELIVERY VAN SECTOR – A Key Beneficiary from COVID-19
Though city streets across the world have been emptied of cars during the pandemic, large numbers of delivery vans have been seen, as people in lockdown have resorted in droves to online-shopping. The boom in e-commerce has been exponential, with big online retailers such as Amazon taking on thousands more warehouse operatives and delivery drivers. On top of that, high-street retailers large and small have resorted to online sales with either delivery or click-and-collect. Where online-shopping is concerned, COVID-19 will almost certainly be habit-forming over the long-term. Many of those people who were new to e-commerce will stick with it. Increased numbers of delivery vans are likely to remain on our streets.
The ongoing trend for the establishment of micro-fulfilment centres near the customer, makes electrification of delivery vehicles a logical next step. This makes sense practically. Electrified vehicles are ideal for daily return-to-base runs of, say 150 kilometres, where they can recharge back at base. We could see a proliferation of these vehicles on the streets, offering a more efficient last-mile delivery service. In a world where climate change and pollution considerations are becoming major drivers of policy, it is inevitable that government at the national and local-level will put pressure on the sector to electrify. A recent analysis in Belgium concluding that vans and trucks generate up to 25% of Co2 emissions and 50% of NO2 emissions justifies this pressure.
The falling TCO of electric vans is making them a serious economic proposition. The TCO or Total Cost of Ownership is a calculation of the overall cost of a machine, which takes into account factors such as initial outlay, life-cycle, cost of repairs, cost of fuel and resaleable value. Improved fuel cell technology and the reducing cost of batteries is the main driver behind this reduced TCO, bringing it at least into line with the TCO of diesel vehicles, if not lower.
There are regional variations, and challenges, however. For example, it would take a light-duty electric vehicle 10 years to achieve TCO parity with a similar sized diesel vehicle in the USA, but only 3 years in Norway. This is because the cost of diesel is so low in the USA.
LOW-EMISSION ZONES – After COVID-19, will Developing Countries follow Europe’s lead?
Globally, the overwhelming majority of low emission zones are in Europe. However, there is wide variation, with some cities opting for near total bans on diesel and petrol vehicles, and others enforcing low requirements. Europe has the most low-emission zones, with some having been in place since before 2000. London and Paris probably have the most ambitious plans and schemes – looking to ban all or significantly reduce the numbers of polluting vehicles.
The countries with the worst air pollution (particulate matter scores) in cities are China and India. Other emerging economies also perform badly. This is due to a proliferation of fossil-fuel burning industries and recent increased prosperity enabling widespread vehicle ownership. These countries lag behind regions like Western Europe but are likely to catch up in time. China has already made huge progress where emissions from its coal-fired power plants are concerned. A recent analysis of emissions found that between 2014 and 2017, China’s annual power plant emissions of sulphur dioxide, nitrogen oxide and particulate matter dropped by 65%, 60% and 72% each year respectively.
But there are still huge challenges. A recent study cited by the South China Morning Post found that over 2 weeks during the lockdown, carbon emissions fell by 100m tons. There were clear blue skies over cities such as Beijing. Now, it is being reported by the Helsinki-based Centre for research on Energy and Clean Air (CREA) that air pollution in China has shot above pre-coronavirus levels, due mainly to the reopening of various industrial facilities. The study reports that overall, the number of people travelling around China is still below last year’s levels, but the shift from public transport to private cars in urban areas due to worries about infection risk has worsened air pollution. The question is, what happens over the medium- to long-term?
China is a global leader in renewable energy generation, though the motivation here may be energy security as well as clean energy. In 2018 it initiated a clean diesel plan after recognising that measures had to be taken in a dozen air pollution-prone provinces and municipal cities. The problem of air pollution has been recognised in developing economies such as China. Will COVID-19 be a set-back, or a stimulator to further environmental action, including low-emission zones?
WITH EVERY CRISIS COMES NEW OPPORTUNITIES – COVID-19 offers us the chance to recalibrate our relationship with nature for the long-term via a green manufacturing renaissance
If there is one lesson that COVID-19 has taught us, it’s that fast action brings positive results. We have witnessed this on two levels. Decisive action by governments (though not all governments, sadly) has contained the virus and saved lives, and many of the measures in place have dramatically reduced pollution in cities and allowed the environment to recover. COVID-19 and the climate crisis seem to have been in some way intertwined and have given us a clear message. The way forward for our world is to re-boot green manufacturing on a global scale. The baton has been taken up by 13 European climate and environment ministers who circulated an open letter in April stressing that the plans drawn up in the European Green Deal must be central to efforts in rebuilding European economies. Rebuilding national economies must include long-term goals and sustainable infrastructure.
It is obvious that if the EV market grows radically, then those countries that support and nurture EV manufacturers will end up with a solid new industrial base that offers large numbers of good, well paid jobs. And, if arguments for localisation of production of essential goods gather steam, then those countries without fossil fuel reserves (i.e. most countries) will find that the only affordable way to produce energy locally will be to embrace renewables, which will drive a boom in production of solar cells and wind turbines.
Also in April, the World Economic Forum (WEF) reported that 500 top business leaders, government representatives and scholars met at the Forum’s China Business Roundtable to discuss how to establish a stable recovery from the pandemic. Could China’s philosophy of an Ecological Civilization, which was enshrined in the 2018 Chinese constitution be the way forward for the world? China is already a world leader in the manufacture of sustainable energy equipment.
This much is clear. We have an opportunity now to re-set our relationship with nature and harmonize environmental and commercial interests.