McKinsey: World Could Cut Auto Emissions in Half by 2030

The number of cars on the roads worldwide will explode between now and 2030, nearly doubling from 730 million to more than 1.3 billion.

Talk about a carbon emissions nightmare in the making. But does it have to be?

According to a recent McKinsey report, if we invest now in the right technology and transportation habits, the world could actually halt the rise in CO2 emissions from passenger cars by 2020 and, by 2030, see emission levels that are 47 percent (2.2 gigatons) lower than they would be under business as usual, even with the jump in the total number of vehicles.

A large portion of the cuts could be achieved from proven solutions that are available today, namely

  • replacing old gas-guzzlers with more fuel-efficient vehicles;
  • improving road and traffic infrastructure;
  • and stimulating greater use of public transport and eco-friendly driving habits.

 

In the report Roads Toward A Low-Carbon Future: Reducing CO2 Emissions From Passenger Vehicles In The Global Road Transportation System, the authors evaluated 25 discreet abatement measures across five regions -- North America, Europe (including Russia), Japan and China -- calculating their costs and capacity for cutting emissions.

They also analyzed three scenarios for the global auto sector, each representing a different approach for assembling a low-carbon fleet. They are:

  • Predominantly hybrid and electric vehicles, relying on the availablity of low-carbon electricity (49 percent reduction in carbon emissions by 2030 relative to no action)
  • Primarily internal combustion engine, or ICE, vehicles optimized for high fuel-efficiency (42 percent reduction)
  • Mixture of hybrid, electric and optimized ICE vehicles (47 percent reduction)

 

You can find the summaries of all three on pages 5 through 8 of the report. The researchers concentrated on the third one, the mixed-technology scenario, because

"it envisions a moderately paced transition away from ICEs and depends less on improvements to the carbon intensity of the energy supply."

The results?

Under the mixed-technology scenario, a combo of second-gen biofuels, traffic flow, shifts to public transportation and eco-driving measures (driving at a steady speed and accelerating and decelerating gradually) could account for more than 50 percent of abatement potential by 2020.

The rest of that -- slightly below 50 percent -- could come from technical improvements to the fuel efficiency of cars.

By 2030, efficiency improvements could account for a whopping 72 percent of the CO2 reduction potential.

What about costs?

We're not talking peanuts here.

If the industry pursues a range of technologies (internal combustion, hybrid gasoline-electric and fully electric), then an "outstandingly large" annual incremental investment of over $230 billion in 2030 would be required, McKinsey says.

That amount would represent some 14 percent of total expected industry spending on passenger vehicles that year. Per vehicle, we're looking at $2,550 over the average car today.

Implementing such fuel efficiency measures in the passenger vehicle sector would require greater "capital intensity" than just about any other sector -- nine times that of the power sector, three times that of the building sector.

But (and this is a big but): The investments would yield major, much-needed savings for a sputtering auto sector in two decades' time.

Abatement of CO2 emissions in the automotive sector offers a positive net economic benefit of some 27 euros (~$36) per-tonne CO2e in 2030, substantially more per tonne than abatement in most sectors, including electric power, iron and steel, chemicals and agriculture.

The industry, its shills and certain governments will no doubt balk at the up-front costs. But, federal carbon regulation is coming to America, and the entire global economy. And as McKinsey correctly points it, "Without fundamental reform, the industry will not have an attractive long-term future."

Simple: Pay now, or (far more) later.

And keep in mind, those huge amounts also imply "a massive business opportunity" for "creative, forward-looking organizations." 

Companies that are able to commercialise relevant technologies will face rapid growth in demand, if and when carbon emissions are priced and emission-reduction targets are enacted.

The key here is immediacy.

If society wants to reduce CO2 emissions to levels that would have a high probability of achieving global abatement thresholds as set out by the IPCC, time is of the essence. Action in the automotive sector is needed to prevent many more additional years' worth of CO2 emissions growth and—more importantly—to prevent a high-carbon infrastructure from being locked in for years to come.

A fuel-inefficient vehicle bought today will likely stay in the global automotive fleet for an average of 15 years.

In fact, delaying implementation of all levers by 10 years, from 2010 to 2020, would reduce the 2030 abatement potential in the mixed-technology scenario by 38 percent (~800 Mt), with the cumulative lost abatement opportunity reaching 15 Gt. To put this in perspective, 15 Gt is greater than total annual emissions across all economic sectors in North America.

The alternative, of course, is the do-nothing scenario -- an emissions explosion waiting to happen. With no action, global warming gases from passenger cars would skyrocket by more than 54 percent by 2030, reports McKinsey.

Right now, passenger cars account for just seven percent of annual global warming emissions. This report is a convincing case for nipping this sector's growing carbon footprint in the bud.

Except for that one pesky factor known as politics: The analysis reflects "theoretical economic and resource factors, not political realities."

Ahh, political realities, the world's greatest threat to the widespread adoption of essential climate solutions.

 

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