- Pathway Report from Kearney shows that urgent action is needed to prevent the car industry from massively overshooting Intergovernmental Panel on Climate Change’s 1.5-degree limit
- Electrification is not enough: report recommends a 3-lever approach to set industry on the right path
- Collective action toreduce supply chain emissions and increase renewable energy in the grids are needed
GOTHENBURG, SWEDEN – February 8, 2023 | SOURCE | . Polestar (Nasdaq: PSNY) and Rivian (Nasdaq: RIVN) have collaborated on a ‘Pathway Report’ which concludes that the automotive industry is set to overshoot the Intergovernmental Panel on Climate Change (IPCC) 1.5-degree pathway by at least 75% by 2050.
The two EV makers initiated the report in response to the climate crisis. The report, which uses existing, open-source data to model the current trajectory for emissions stemming from the car industry, was carried out by global management consulting firm Kearney.
Passenger vehicles currently account for 15% of all greenhouse gas (GHG) emissions globally. The IPCC has stated that all GHG emissions need to be reduced by 43% by 2030 in order to stay on target. The report makes clear that the automotive industry is far off track and, alarmingly, will have spent its full CO2e budget by 2035 without urgent action.
Despite the outlook, the report suggests that the car industry still has a chance to get on track. By redirecting resources and focus, the industry can rapidly build the momentum required to remain in line with the Paris Agreement. The Pathway Report focuses on the current decade and outlines immediate, clear actions that car manufacturers can take between now and 2030 to get on track, including some actions which can go into effect immediately.
The report data presents a pathway based around three key levers. Lever 1 looks at the speed at which fossil fuel-powered cars need to be replaced by electric cars, but points out that this alone will not be enough. A lot more work will be required via levers 2 and 3:
- Increasing renewable energy in power grids
- Reducing greenhouse gas emissions in the manufacturing supply chain
Pulling one or two levers in isolation will be insufficient, and only reduce the overshoot. Collective action from automakers is needed on all three levers, in parallel, at a global level. Firstly, the industry must accelerate the transition to electric vehicles by investing in manufacturing capabilities, as well as implementing a firm end date for fossil fuel car sales globally. Second, it must build out renewable energy supply to global grids, enabling EV’s to reach their full potential through green charging. Thirdly, decarbonize the manufacturing supply chains for all vehicles through switching to low carbon materials, and investing in renewable energy solutions for supply chains.
Fredrika Klarén, Polestar Head of Sustainability, says: “Car companies may be on different paths when it comes to brand, design, and business strategies, and some won’t even admit that the road to the future is electric. I believe it is, and that the climate crisis is a shared responsibility – we must look beyond tailpipe emissions. This report clarifies the importance of acting now and acting together. There is a clear cost to inaction, but there is also a financial opportunity for innovators who find new answers to the challenges we face.”
Kearney’s report has also been shared with several of the world’s leading car makers, together with an invitation to a roundtable held at the end of January to discuss areas of collective action. The aim is to find a path towards unprecedented, relevant and collective climate action for the car industry.
Anisa Costa, Rivian’s Chief Sustainability Officer, adds: “The report’s findings are sobering. Our hope is that this report lays the groundwork for the automotive industry to collaborate in driving progress at the pace and scale we need – and ideally inspiring other industries to do the same. Together, I’m confident we can win the race against time.”
The Pathway Report clearly shows the cost of inaction and the strong case for sustainable development.The investment community is acting, with capital flows are shifting from traditional investment to sustainable investment, recognizing an increasing link between sustainable transformation and financial benefits. In 2021, global sustainability investments totalled $35.3 trillion USD, representing over a third of all assets in five of the world’s biggest markets.
Angela Hultberg, global sustainability director at Kearney, says: “We are proud to have been chosen as a trusted expert to develop this report. The result of our modelling clearly shows that the industry needs to accelerate the pace of becoming a low carbon industry. We looked at different scenarios, different data points, and the conclusion is that no matter how you model it, we are far too close for comfort. We sincerely hope this report will be a starting point for the industry to focus on areas where there is agreement and find specific initiatives. It will take collective action to solve some of the issues at hand, and we look forward to seeing what the manufacturers will do in the near future.”