Auto industry has a lot of work to do to meet climate goals, report says

Building more EVs is a start, but the automotive industry needs to rapidly decarbonize its supply chains if it wants to stand any chance of meeting the 1.5˚C climate goal, according to a new study conducted by the consulting company Kearny on behalf of EV startups Polestar and Rivian. “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,” said Fredrika Klarén, Polestar’s head of sustainability.

Around the world, electric vehicle adoption is accelerating. EV sales in 2021 were already strong enough to cause the International Energy Agency to declare them a rare bright spot in terms of decarbonization, and 2022 saw sales accelerate by 55 percent year-on-year. Battery EVs accounted for almost 10 percent of all new light passenger vehicle sales last year, with nearly 7.7 million deliveries.

As automakers replace old internal combustion engine models with new BEV versions, the companies’ corporate carbon footprints should shrink. As we explored last year, it only takes about two years for a BEV to beat a gasoline-burning car in terms of carbon footprint, as the BEV’s vastly better efficiency overrides the fact that it’s more energy-intensive to build.

Over time, that efficiency will increase as more of the grid’s electricity comes from renewable sources. That’s good, as 61 percent of a car’s lifetime carbon emissions currently come from burning hydrocarbon fuel.

But it won’t be enough to stop the industry from overshooting its share of the global “carbon budget.” IAE estimates say we need to emit fewer than 500 gigatons of CO₂ by 2050 to keep the warming increase to 1.5˚C. Assuming the auto industry remains about 15 percent of global emissions, “this would equate to approximately 75 to 80 Gt of total emissions left for the industry,” according to the report. And if nothing else changes, the industry will have spent that carbon budget by 2035, leading to a massive overshoot by 2050.

“The result of our modeling 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,” said Angela Hultberg, global sustainability director at Kearney. “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.”

Continuing the status quo would see a 75 percent overshoot by 2050, the report finds, and switching to BEV fleets will only reduce that to a 50 percent overshoot by that date. Even a wholesale transition to carbon-free electricity by 2033—for charging all those BEVs—leaves a 2050 carbon overshoot of 25 percent, the study finds.

The remaining cuts need to come from what’s known as “scope 3,” defined as “the result of activities from assets not owned or controlled by the reporting organization but that the organization indirectly affects in its value chain.”