The growing urgency to counteract climate change has driven a significant transformation across diverse sectors. The transportation industry, in particular, has notably shifted towards sustainability. This shift stems from the general public’s expression and desire for a better world. Moreover, the Task Force on Climate-related Financial Disclosures (TCFD) recommendations played a crucial role in our collective journey to a Net-zero future.
The Transportation Sector’s Response
The TCFD’s recommendations have spurred companies in the transportation sector to not only evaluate the financial risks posed by climate change but also reconfigure their strategies towards mitigating their carbon footprints. Previously a significant contributor to greenhouse gas (GHG) emissions, this sector has made significant strides towards sustainability, primarily by adopting well-known low-carbon technologies and beyond.
Electric Vehicles (EVs)
Since 2015, electric vehicles emitting fewer greenhouse gases than conventional vehicles have gained popularity. Global auto manufacturers, such as Ford, Volkswagen, and Tesla, spurred by investor pressure and market demand, have set ambitious EV production targets. Furthermore, investments in charging infrastructure and battery technologies have surged, promoting further EV adoption. Therefore, many industry experts expect electric vehicles to account for a significant percentage of new car sales in the next decade.
Hydrogen Fuel Cells
Hydrogen fuel cell vehicles (FCVs) are gaining traction in transportation as another low-carbon technology. FCVs produce electricity from hydrogen, emitting only water as a byproduct. While the hydrogen infrastructure is less established than the EV infrastructure, many transportation companies invest heavily in FCVs. This technology is prevalent for larger vehicles like trucks and buses because FCVs offer quick refuelling and long-range, giving them a distinct edge.
GM Motors has prepared to launch commercial hydrogen fuel cell deployment. They are set to kick off a year and a half after their initial announcement. In January 2022, General Motors revealed its work on the Hydrotec hydrogen fuel cell technology for commercial vehicle applications. Since then, they have developed the project and are now equipping heavy-duty commercial vehicles, like trucks, with this technology.
Biofuels and Synthetic Fuels
Biofuels and synthetic fuels, derived from renewable resources, are also rising as essential low-carbon technologies. Existing internal combustion engines can use these fuels, positioning them as an appealing interim solution as the infrastructure for EVs and FCVs evolves.
While hydrogen fuel cells are gaining attention, with major companies delving into their potential, the debate around biofuels and synthetic fuels continues. Germany and Italy, both pivotal players in the automotive industry, are advocating for the inclusion of biofuels and e-fuels in the EU’s forthcoming law to ban combustion engines by 2035. These nations are inquisitive about the sustainability of these alternative fuels, as the law aims for a 100% reduction in CO2 emissions.
Highlighting this shift towards alternatives, Eni, a global energy giant, has rolled out “HVOlution” in over 50 of its diesel stations in Italy since last February. This innovative fuel from hydrotreated vegetable oil utilizes waste, residue oils, and animal fats. Echoing the need for diverse sustainable solutions, Germany’s transport minister, Volker Wissing, and his Italian counterpart, Gilberto Pichetto Fratin, stress that electric cars shouldn’t be the only route to achieving climate goals.
Facilitating Financial Support
The transparency promoted by TCFD disclosure guidelines has played a significant role in increasing investor confidence. Financial institutions are more inclined to invest in companies that actively contribute to the transition towards a low-carbon economy, as it reduces the risks associated with climate change. Moreover, the regulatory environment is changing to favour such companies, providing further financial incentives.
The transportation sector’s transition to low-carbon technologies is only just beginning. As the realities of climate change become increasingly unavoidable and the TCFD’s recommendations gain wider acceptance, companies are expected to continue increasing their investments in sustainable technologies.
While there are challenges to overcome – notably, the need for further development and scaling of renewable energy sources and charging infrastructure – the shift towards low-carbon transportation is accelerating at an unprecedented pace. The role of the TCFD in stimulating this transition is a clear example of how aligning financial systems with climate realities can drive substantial change.
In conclusion, the TCFD recommendations have significantly pushed towards adopting low-carbon technologies in the transportation sector. The rising tide of sustainable transportation is no longer a distant vision of the future but an evolving reality transforming the face of global mobility.