Commercial Vehicles November 2021

You May Have Missed One Of The Most Important Deals At COP

Jamie Fox
Jamie Fox

Jamie has over 15 years experience in market intelligence covering components for commercial vehicles including electric vehicles. He holds a BSc in Physics and Astronomy and an MSc in Nanoscale Science and Technology. Jamie is based in Chile.

While “coal, cars, cash and trees” did capture a lot of the attention at COP 26 in Glasgow, another announcement may yet prove significant. A goal of 30% of medium and heavy vehicles to be zero emission by 2030 and 100% by 2040 was announced. This is important because the total emissions from medium and heavy vehicles are similar to that of cars, even though they get less attention.

30% by 2030 may not sound ambitious at first glance. But many models of medium and heavy-duty zero emissions vehicles are not even yet at volume production. We don’t yet even know for sure whether hydrogen or battery electric or something else will prevail, what exactly the design of powertrains will look like, or how the trucks will most commonly be charged/ fuelled.

In my opinion, this is not one of those soft targets where governments proudly announce that they will work extremely hard to achieve what most of the OEMs are already planning to do, and what market forces, technology and capitalism already look set to inevitably achieve anyway.

The word “goal” (rather than say “promise” or “law”) should be noted. However, anyone who has been closely following climate targets for the last few years will have noted a trend. As the world is steadily waking up from its previous climate denial, targets are usually added or moved forward rather than pushed back.

Which Countries Signed?

In past COPs, deals were often made between most or all of the about 200 nations present and no deal was signed unless everyone agreed. This predictably led to chaotic negotiations that ended with weak or no agreements at all, most notoriously at Copenhagen in 2009.

I think one of the best things at this COP was the change in how this was done. Now we are seeing agreements being made between those that are willing to sign. Those left out of agreements may see more pressure build up over time and may sign later at a more opportune moment such as a different point in an electoral cycle, after a change of political leadership, after a climate change related disaster or large protest in their country, or simply after further reflection. With more patience, this may lead eventually to more progress than trying to get everyone to agree to the same ambitious thing on the same day and considering it a failure if this is not miraculously achieved.

However, this is easier to do when the original agreements contain the majority of the world’s population (or GDP, or emissions) and just leave out only a few laggards. And this agreement, perhaps because it is moderately ambitious, has clearly fallen short of that. The list of countries that signed is Austria, Canada, Chile, Denmark, Finland, Luxembourg, Netherlands, New Zealand, Norway, Scotland, Switzerland, Turkey, United Kingdom, Uruguay and Wales. Firstly that’s quite a small list of countries. Secondly it does not include any of the world’s four largest economies: the United States, China, Japan or Germany. Outside of Europe, we are talking about very few vehicles affected.

More Signatures Required

For this initiative to be really counted as a major success at a global level, it will need to attract more signatures. Despite that, I’m going to go out on a limb here and say that this is the start of something. I tentatively predict that we will later see other countries and OEMs making similar plans, and that this will capture just enough momentum to shift the global market to the point where even laggards are eventually forced to follow the same track through market forces, citizen pressure or eventually even reducing supply of diesel vehicles.

It is always difficult to predict how quickly public sentiment or political attitudes will change. However, my initial conversations with OEMs and industry stakeholders, together with my awareness of both the required technology for these vehicles from our research reports on components, and the slowly broadening movement for climate action, seem to me to be coalescing in that direction. If neither the US or China has signed up to this deal by the end of 2022, I’d be happy to revisit my position somewhat on both this specific agreement and the general market direction.

But for the time being, I see exciting times ahead for electric trucks!

To continue the conversation about the electric vehicle market, get in touch with Jamie Fox: jamie.fox@interactanalysis.com

 

 

 

 

Posted in: Commercial Vehicles.