Transforming transport: How the automotive industry is going green
Published on: June 13, 2024
Transport CO2 emissions grew at an annual average rate of 1.7 per cent from 1990 to 2022, faster than any other end-use sector except for the industrial sector (which also grew at around 1.7 per cent). To get on track with the Net-Zero Emissions (NZE) by 2050 scenario, CO2 emissions from the transport sector must fall by more than 3 per cent per year by 2030. Strong regulations and fiscal incentives, as well as considerable investment in infrastructure and new fuels to enable low- and zero-emission vehicle operations will be needed to achieve these CO2 reductions.
This includes the use of electric vehicles, power-to-X technologies, biofuels, and other eco-friendly fuels on land, sea and in the air.
“Vehicle manufacturers have what they call four hotspots in order to reduce their carbon footprint, namely steel, batteries, cast iron and aluminium. These four areas cover approximately 70-80 per cent of an OEM’s product’s CO2 footprint,” says Peter Bryntesson, CEO of the Scandinavian Automotive Supplier Association.
The automotive industry’s transition
The automotive industry is undergoing a far-reaching, large-scale and complex transition to fossil-free solutions. Electrification plays a crucial role in this transition, including the development and production of new batteries. However, setting up large battery plants poses significant demands on the local community, such as infrastructure, energy supply, permits, skills supply and access to housing in relevant cities and regions.
The industry is also forced to develop a lot in terms of circular business models. The vehicle industry in Europe is on average just 1 per cent circular according to the Scandinavian Automotive Supplier Association.
“I usually ask the question, how long does it take to disassemble a car? No one knows. A lot of research and development goes into how we build things. None is done about how we take them apart again,” Peter Bryntesson says.
The automotive industry has also been a strong contributor to the demand for green steel that has caused the steel industry to launch its far-reaching conversion plans. Subcontractors bear much of the pressure of these adjustments, as approximately 70 per cent of a vehicle is manufactured by the supplier industry, while vehicle manufacturers themselves contribute just 30 per cent.
To market their cars as “green,” automakers have placed large pre-orders for batteries and green steel from steel companies.
While sustainable materials like green steel come with a “green premium,” the impact on overall vehicle production costs is relatively small. Steel accounts for approximately 20 per cent of global steel consumption in the transport sector, but a 25 per cent increase in steel prices would only raise vehicle production costs by 1 per cent, according to BloombergNEF.
Overall, the green transition is not only driven by regulations and technological advancements, but also by customer demand. The automotive industry recognises the need for sustainable materials to meet market expectations and promote their vehicles as environmentally friendly. This demand, along with the support of capital investment, is accelerating the green industrial transition.
Renewable fuel solutions
Power-to-X technology is set to play a crucial role in climate change mitigation and the energy transition. This technology converts surplus renewable energy into storable fuels, such as hydrogen or methanol, which can be used to power various industries, including transportation. The concept behind Power-to-X is to convert electricity into another form and back to electricity when needed, essentially acting as an energy storage solution.
As the production of renewable energy continues to grow, the need for storage and flexibility becomes increasingly important. Power-to-X technology addresses this need by allowing clean electricity to be transformed into synthetic fuels. These fuels have the potential to replace oil as a raw material in the chemical industry.
Powering industries with eFuels
Electrofuels, also known as eFuels, are gaining ground as sustainable alternatives to fossil fuels. In essence, they are synthetic fuels based on hydrogen and carbon dioxide. They can be produced in either gas (e-hydrogen or e-methane) or liquid form (e-diesel or eMethanol). eFuels are typically produced using electricity generated from renewable sources like solar, wind or hydropower. eFuels offer a practical solution for industries and sectors that are struggling to electrify directly, such as shipping, aviation and certain industrial processes.
eFuels can also serve as a means of storing renewable energy. They allow for the conversion of surplus electricity generated during periods of high renewable-energy production into chemical energy, which can then be stored and used when renewable energy generation is low or unavailable.
Some eFuels, like eMethanol, are liquid at ambient temperature and pressure, making them easy to transport and store using existing infrastructure such as pipelines, trucks, ships and rail.
Challenges remain in the widespread adoption of e-fuels. The cost of e-fuels is heavily dependent on the price of hydrogen, which must be produced from renewable energy sources to qualify as e-fuel. Establishing a stable and cost-effective hydrogen production and supply infrastructure is crucial for enabling the proliferation of e-fuels.
Key factors in eFuel production
Sweco studies the suitability of different carbon dioxide utilisation routes for industrial clients on a case-by-case basis.
When it comes to the production of e-fuels, some of the key factors are:
- Consumption of the fuel at the target area and the demand forecast
- Existing infrastructure for distribution and storage of the fuel
- Client’s current product portfolio and business strategy
- Suitable investment subsidies
“The utilisation of carbon dioxide in the production of synthetic e-fuels while using green hydrogen is currently a highly active topic in the Nordics. It is also possible to utilise the carbon dioxide directly, for instance in the food industry or greenhouses,” says Thomas Norrena.
Europe’s largest eFuel plant
Sweco was responsible for the work with environmental permits for one of the world’s first full-scale facilities for the production of eMethanol, a completely fossil-free liquid fuel for heavy shipping and other heavy transport. The project in Örnsköldsvik, Sweden, is run by Liquid Wind.
The production is based on wind power electricity and carbon dioxide that is separated from the flue gases from Hörneborgsverket, a biofuel-fired cogeneration plant, which means that eMethanol is a carbon dioxide-neutral fuel. Full environmental permit was grated in August 2022.
The project was acquired from Liquid Wind by the Danish energy company Ørsted in late 2022 and is Europe’s largest project of its kind to have reached final investment decision (FID) in Europe. The plant in Örnsköldsvik is just the beginning, until 2030 Liquid Wind intends to build 10 plants in Scandinavia.
