Summary
- Transportation sector in Europe is the largest contributor to GHG emissions
- Trucks and buses are responsible for a significant portion of the EU’s climate road transport emissions
- Legislation has been passed to mandate the increase in zero-emission vehicles sales by truck and bus makers
- Financial instruments, such as residual value guarantees, are essential to encourage investments in green vehicles
- Private and public sector collaboration is needed to transition towards a cleaner, more sustainable future in heavy-duty vehicles
Article
The European transport sector is a significant contributor to greenhouse gas emissions, with over 75% of these emissions coming from land transport due to the use of combustion engines. Trucks and buses, despite making up only 2% of road vehicles, are responsible for 27% of the EU’s climate road transport emissions. In financial terms, truckmakers are currently more carbon intensive than most other sectors, with high carbon emissions per million euros of revenue.
To address this issue, a new European law was approved last year to clean up CO2 emissions from heavy-duty vehicles (HDVs). This law mandates truck and bus manufacturers to sell an increasing share of zero-emission vehicles starting from 2025, leading to a near phase-out of diesel sales by 2040. These new HDV CO2 standards are expected to cut truckmakers’ emissions significantly by 2030. However, beyond legislation, financial instruments are also needed to support the transition.
According to a study published by T&E, €783 billion in investments are needed by 2040 to completely decarbonize the heavy-duty fleet by 2050. The largest share of these investments will come from manufacturers switching from diesel to electric trucks production. To achieve this ambitious goal, a combination of public and private funding will be necessary. Financial instruments like residual value guarantees will be essential to encourage investments in green vehicles and help transition to zero-emission trucks.
The private sector, including truckmakers and freight operators, must adapt their business strategies to align with the transition to zero-emission vehicles. Public banks like the European Investment Bank (EIB) can play a major role in providing innovative financial solutions to support the market shift towards zero-emission vehicles. Affordable loans and guarantees should be prioritized to enable small companies in the road haulage industry, which is mainly comprised of SMEs, to purchase zero-emission trucks and amortize the upfront costs.
The electrification of road freight presents both a challenge and an opportunity in tackling climate change. With the right combination of ambitious legislation, effective financial instruments, and collaborative efforts between the trucking industry and the investor community, the sector can transition towards a cleaner and more sustainable future. By investing in clean technologies and supporting the shift to zero-emission vehicles, the transport sector can play a significant role in reducing emissions and combating climate change.
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