The Top 5 Issues in LCFVs This Week: The Autos Look to Turbocharging & High Octane

Happy Friday, friends! Here’s my weekly take on the five most interesting developments in low carbon fuels and vehicles trends:

1. Turbocharging is going to grow: 38% of vehicles will have turbocharged engines by 2020 having grown from just 8% in 2010. Good news for those advocating for high octane fuels?
2. Diesel engines in Europe are projected to account for just 9% of new car sales by 2030, down from 50% today because of tougher emissions standards.
3. FAO-OECD says ethanol and biodiesel will grow 11% and 34%, respectively, through 2025, but takes a dimmer view on the potential for advanced biofuels and cellulosic ethanol.
4. The Mayor of London unveiled a new plan to combat transport-related air pollution in London…what does it mean for stakeholders?
5. IRENA released a report this week that included renewable energy balances for 100 countries for solar, wind, geothermal, renewable waste and biofuels for the years 2013 and 2014.

1. USA Today: Forget Hybrids: Auto Industry Looks to Turbocharging

While there has been a lot of media attention (obsession?) and a very strong push from NGOs on policymakers globally to implement policies encouraging (and even requiring) electric vehicles (EVs) (see more on this below), the reality is that the internal combustion engine (ICE) will dominate the transport mix for years to come. But that doesn’t mean it won’t continue to be improved to meet stringent fuel economy standards that are being set around the world.

And in the U.S., the auto industry will increasingly rely on turbocharging technology to do it. The USA Today article notes that vehicles with turbocharged engines made up 8% of the market in 2010. Last year, they had almost tripled their market share with 22%. Looking ahead, they are expected to hit 38% by 2020, according to LMC Automotive. This should give those advocating for higher octane fuels something to cheer about.

2. Automotive News: Diesels Will Have Just 9% of Europe Market by 2030, Study Says

According to a study by AlixPartners, diesel engines are expected to account for 9% of new car sales in Europe by 2030, down from 50% today. The reason? Tougher emissions standards will push the auto industry toward EVs as battery costs decrease and range and performance increase. Meantime, diesel engines will get prohibitively more expensive because of the after-treatment systems that will be required to meet the tougher standards.

No doubt this will be helped by policies favoring electrification and disfavoring diesel, which is already starting to happen. For example, last week I highlighted a study that explored the potential for a “NOx Registration Tax” that would be levied on new vehicles with the rate proportional to real-world NOx emissions in the UK. A similar sort of policy is under discussion in India.

Separately, South Korea this week committed to new incentives to encourage both EV and hydrogen vehicle purchases, including discounting various taxes, toll fees, parking fees, and insurance rates would be discounted for EV owners and subsidies for purchases will be increased to 14 million won (US$10,385) per vehicle.

3. FAO-OECD: Agricultural Outlook 2016-2025

Released earlier this week, this 12th annual joint outlook provides market projections to 2025 (including assumptions and data) major agricultural commodities ― and biofuels. Read more about it here.

4. Mayor of London: Sadiq Khan Unveils Action Plan to Battle London’s Toxic Air

Why would I bother including this? It’s one mayor of one city’s (albeit one of the largest in the world) plan that has no connection to those of you reading this in Houston, Paris, Detroit, San Ramon, New Delhi or Singapore. Right? Wrong.

One of the key trends I’m following this year is the emergence (in some cases, re-emergence) of air quality as a major driver of transport policy and the steps that policymakers, local and national, are taking to combat that pollution. While some of you are focused on the challenge of meeting new fuel economy standards or the emergence of EVs or increasing marketshare for biofuels or commercializing your advanced biofuels technologies or refining and marketing fuels around the world, this trend warrants attention because it impacts demand for vehicles and fuels.

While some cities/countries have proposed to ban vehicles (or certain types of vehicles) altogether (see this post for more information), Mayor Khan’s plan doesn’t go that far (yet). Key proposals include the following:

• Implementing a £10 emissions surcharge on the most polluting vehicles entering central London from 2017. The charge would apply to all vehicles with pre-Euro 4 emission standards (broadly speaking those registered before 2005) and will cost an extra £10 per day on top of the existing congestion charge.
• Introducing the central London Ultra-Low Emission Zone (cars, motorcycles, vans, minibuses, buses, coaches and heavy goods vehicles (HGVs) will need to meet exhaust emission standards (ULEZ standards) or pay a daily charge to travel) one year earlier in 2019, and extending it from 2020 for motorcycles, cars and vans, to the North and South Circular; and for lorries, buses and coaches London-wide.
• Developing a detailed proposal for a national diesel scrappage scheme for Government to implement.

Concurrent with the new proposals, a consumer survey released this week from Dearman in the UK finding that:

• After learning that some areas of their city has levels of air pollution that are considered unsafe and breach EU law, 76% of those surveyed were concerned about high levels of air pollution in their area.
• 76% support the introduction of dedicated clean-zones to deal with the problem
• Only 17% would be less likely to buy from a company that introduces zero-emission vehicles, even if it makes them more expensive.

5. IRENA: Renewable Energy Statistics 2016

A few weeks ago, I highlighted another report from an international organization, REN21, which puts together an annual analysis of where the world stands and is headed on renewable energy (including for transport).  IRENA’s publication provides renewable energy balances for 100 countries for solar, wind, geothermal, renewable waste and biofuels for the years 2013 and 2014, a valuable resource for those of us working in the space. In addition, statistics on renewable energy investment are reported, along with capacity.