What have car manufacturers ever done for the green economy? The answer, according to a BusinessGreen Sustainability Hub event in London last week on how the transportation sector had delivered both "green and growth," is a lot.
Over the past 10 years, the auto industry has delivered one of the most compelling green business success stories in history, as average emissions have fallen by a quarter, ambitious green regulations have been complied with ahead of schedule, and next-generation zero-emission vehicles have hit the roads. Emissions have been slashed, billions of pounds in fuel costs have been saved and the emergence of attractive green cars has played a key role in the industry's enjoying record sales success.
Meanwhile, auto giants such as Nissan, Ford, BMW and Jaguar Land Rover are investing billions in developing the kind of electric, hydrogen or biofuel vehicles that can cut emissions to almost zero, while also investigating how they one day can adapt their business models to a world where "peak car" may have been reached in industrialized markets.
The industry still faces many environmental challenges, such as how to cut emissions as demand soars in emerging markets and how to tackle the air pollution crisis. But its investment in clean technology and consistent ability to cut new car emissions holds numerous lessons for the wider green economy as all industries wrestle with the decarbonization challenge.
But what precisely can the wider green economy learn from the auto industry's success? How can energy companies emulate car manufacturers and deliver steady reductions in emissions? Why are the policy successes enjoyed in the transport industry not being replicated in other spheres? These were the questions a panel of leading experts set out to address at last week's events. Here are their 10 key lessons for the green economy.
1. You need a 'Road to Damascus' moment
Kicking off the discussion, Joe Greenwell, chief executive of the Automotive Investment Organisation and a former boss at Jaguar Land Rover (JLR), which sponsored the event, recalled the meeting about 15 years ago when the company realized decarbonization would prove critical to the industry's long-term future. "I well remember a meeting with my last company when we recognized that this had moved from a regulatory issue to a competitiveness issue," he said. "In other words, if you wanted to stay in business, you needed to invest in low-CO2 technology, and frankly that is what everyone has done."
Virtually every major car manufacturer credibly can argue that its board-level execs are serious about decarbonization and have invested billions of dollars in clean tech development as a result. The question remains as to whether their counterparts in the energy or mining industries have reached the same conclusion.
However, as Greenpeace's executive director John Sauven observed, some leading energy companies seem aware decarbonization is non-negotiable. "The Telegraph [last week] in their business section said the 'end may be in sight for fossil fuels as science makes solar panels cheap,'" he said. "And you also see the CEO of RWE, which ... is a big, dirty, centralized power company, saying in an interview last week: 'My dream, my vision is that RWE will put solar panels on your roof, a battery in your shed, a heat pump in your cellar, and we will also manage this complex energy system for you. We want to be the holistic energy manager of the future.'"
Perhaps the auto industry is not alone in accepting carbon-intensive business as usual is no longer an option.
2. Public pressure can help you get there
Sauven opened his speech by recalling a previous experience with Jaguar Land Rover. "I was actually involved in shutting down one of their plants in Solihull in 2005," he admitted. "I spent a very uncomfortable day D-locked to their plant."
As Greenwell observed, it was a pretty "uncomfortable" day for him, too, as the media flocked to cover Greenpeace's protest against the Range Rover Sport and its inability to do more than 12 miles to the gallon in an urban environment.
Sauven said that since the protest he had visited JLR several times — "visiting by the front door" — to see the company's new hybrid vehicles and all-electric concept Range Rover. A combination of regulatory pressure, evolving consumer demand and public protests has jolted firms into accelerating the development of clean technologies and greener business models.
3. You need an 'innovation system'
Greenwell said one of the biggest drivers of the auto industry's success at cutting emissions has come from the creation of the Automotive Council and its ability to bring together manufacturers, officials, suppliers and other groups to help drive the transition. Andy Eastlake, managing director of the Low Carbon Vehicle Partnership, similarly highlighted how cooperation between government and industry has created an environment that aids investment in innovation and enables the kind of collaboration between researchers and businesses at which the U.K. traditionally has been pretty poor.
Paul Ekins, director of the UCL Institute of Sustainable Resources, hailed such groups as evidence of an "innovation system" that serves to accelerate the development of clean technologies. "We have been through a bit of a revolution in this country, which is wholly to be welcomed in my view," he argued. "It is very rare in industrial societies that innovation emerges as manna from heaven, as a result of disconnected research and development in universities of industry. Rather, you need to think in terms of an innovation system involving a partnership between industry, finance, the science base, the government and sometimes pushed by campaigning groups from civil society."
Academics have been making this case for years, but Ekins reckoned that it finally has started to get through to policy makers, at least as far as the auto industry is concerned. "Only government has the convening power to put these partnerships together," he said. "The government gets this in the automotive sector, and thankfully we hear less and less of the tired pronouncements about how governments should 'get out of innovation because any efforts on its part to pick winners will end up by picking losers.' That is not to say governments should try to pick winners — markets pick winners. But governments have a crucial role in stimulating, shaping and regulating markets to ensure that they work properly and they prepare businesses for future conditions."
This innovation system needs to be backed by serious R&D muscle. Stephen Crisp, director of global government affairs at Jaguar Land Rover, made the point that with a £2.75 billion-a-year (about $4.6 billion) product development and research budget, the company can make a credible claim for being the "U.K.'s largest green technology investor."
4. You need to get the balance right between incremental improvement and 'silver bullets'
There is no magic wand for delivering decarbonization and efforts to cut emissions need to focus on incremental improvements, as well as the game-changing innovations that can deliver zero-carbon or near-zero-carbon infrastructure.
Crisp warned of a constant need to try to get the balance right between these two research imperatives. "Among some media and politicians there is a sort of obsession with electric vehicles, and it is a global obsession," he said. "I can see why, because EVs appear very futuristic and game-changing. We are taking this very seriously — we have 340 hybrid engineers, which means we have the most in the U.K. auto industry, [so] this is not something we are saying isn't going to work. But I want to make the point that the real CO2 gains aren't made with silver bullets; they are made with small, constant, incremental changes."
These incremental changes occur in three areas: weight reduction; tackling parasitic loss from factors such as tire-roll and aerodynamics; and making drive trains more efficient. They might not be particularly exciting, but like energy-efficient light bulbs or condensing boilers, they should not be ignored in the rush to develop zero-emission technologies.
5. Clear, achievable targets can make a big difference
All the panelists agreed that one main factor behind the auto industry's emissions-reduction efforts was clear and concise targets for 2015 and 2020, set with enough warning to influence new vehicles' lengthy design cycles.
Green groups previously may have criticized the auto industry for trying to water down these targets, but once they were set, the sector's designers and engineers have proven adept at meeting them. Sauven recalled how VW Group had moved from complaining that EU targets requiring average emissions of below 95g/km by 2020 were unrealistic to declaring that it would meet all the new EU targets.
Crisp also praised the targets for taking a broadly technology-neutral, goal-oriented approach that allowed manufacturers to innovate while being mindful of the long development cycles and different product portfolios that auto makers face.
6. The EU can be a force for good ...
The EU, of course, imposed emissions targets on the auto industry, just as it also had led efforts to phase out lead in petrol. The ability of the world's largest market to establish environmental standards that protect citizens and drive innovation is an oft-overlooked component of the debate about the U.K.'s future within Europe.
7. ... as can an effective approach to policy and taxation
Targets alone will not deliver the decarbonization of an industry without the backing of a policy environment that aids the technology transition and helps to stimulate clean tech investment. For several years, that is precisely what the auto industry has had.
Chief secretary to the treasury Danny Alexander detailed how the government had used a host of levers to drive development of the low-carbon vehicle market, including tax breaks for low-emission vehicles and company car fleets; £900 million of Ultra Low Emission Vehicle (ULEV) funding through grants, R&D projects and spending on supporting infrastructure; and the creation of an attractive investment environment that helped convince Nissan and Ford to locate green car manufacturing lines in the U.K.
As Greenwell observed, the reason he came out of retirement was because of what he saw as a combination of "coherent policy, cross-party political consensus and what little money there is focused intensely on the areas where we have the opportunity to be world class."
8. But you need policy stability and consistent political messaging
In some respects, it really is that simple: Ambitious and consistent policy tends to get results. But as many panelists noted, consistency is the last thing offered to the wider green economy and the energy and building sectors in particular.
Speaking the same day that communities secretary Eric Pickles once again signaled he was keen to block wind farm development, Jennifer Webber, director of external affairs at RenewableUK, wondered aloud as to "how easy it would be to keep investing in hybrid cars if you had government ministers talking about potentially scrapping them or scrapping them in five years' time."
Dave Sowden, chief executive of the Sustainable Energy Association, similarly asked why the auto industry was given almost a decade to meet its emissions targets, yet the building industry was still waiting for details on zero-carbon homes standards it is expected to comply with by 2016. "The green transformation in the auto industry has happened because it has had strong leadership, strong policy development and engagement with all parts of the industry, and that has come from the highest levels of government," he said. "Not a niche specialism in the Department for Transport. ... It has come about because No. 10 and No. 11 Downing Street got transport policy, irrespective of political color. And I am afraid that at this stage they don't quite get energy policy."
Alexander bristled at this criticism, insisting the Energy Act and the government's wider commitment to decarbonization was providing clean energy investors with the certainty they needed, as evidenced by Siemens' recent decision to locate its new offshore wind turbine factory in Hull. It was time for green campaigners to "get behind" policies such as the Energy Act and the Renewable Heat Incentive that were delivering investment, he said.
But, as Ekins argued, Alexander "made a great fist of pretending it is all joined up, but anyone who has been following energy policy over the past two years will know it has been anything but joined up with more or less open warfare between different government departments each wanting to go in different directions."
"There are lots of examples of this, unfortunately," he continued. "The failure to put a decarbonization target in the Energy Act was one of the most egregious, because electric vehicles will not be low-carbon vehicles, let alone ultra-low emission, if we don't have ultra-low-carbon electricity to power them. We had the gas strategy being launched at the same time as the Energy Act was going through, which introduced almost terminal confusion into the market as to what the role of gas would be in the late 2020s and post-2030. Would it be a backup generating fuel for intermittent renewables or would it be a base-load generating fuel?
"Then we had the fiasco — and that is not too strong a word — of government policy on buildings and energy efficiency in buildings. Whether it is the miscalled 'conservatory tax,' whether it is failure to enforce building regulations that means new homes are not being built to existing standards, whether it is the complete failure to get the zero-carbon homes agenda together ... I would have to say that if the prime minister really wanted to reclaim his green credentials, he would have to replace the secretary of state at DCLG in his next Cabinet reshuffle, because he has done absolutely nothing for this agenda."
In short, you need policy stability and consistent political signals, and the green economy has had neither.
9. Make green products 'alluring'
One of the most important lessons the green car industry has offered is the importance of ditching a hairshirt environmental agenda in favor of clean technologies people actually want.
As James Cameron of Climate Change Capital argued, the auto industry had proven highly effective at making cleaner vehicles that were "alluring"; that were "not just greener, but better."
"One of the things that really is alluring about the transportation sector as a guide to the rest [of the green economy] is that it is perfectly possible to argue that the new stuff is better than the old stuff; that the technology has improved; that the use of the vehicle is better," he said. "You can apply this reasoning, this combination of science and technology, build quality and export markets attached to brands that we can establish because we are good at them, to lots of other sectors. You can certainly do it in the built environment — a green building can be experienced as a better building to live and work in. It feels like progress; it doesn't feel like punishment.
"That is the narrative I would like to see emerge. The transportation sector is helping us build a positive, optimistic narrative about how life gets better, having solved some of these complex problems relating to the environment, even whilst we carry a different label and we barely mention that it is to do with the environment."
10. Acknowledge that you are always 'on a journey'
The "journey" may have become the self-parodying catchphrase of reality TV contestants everywhere, but it is also a defining feature of any effective decarbonization strategy. JLR's Crisp, the Low Carbon Vehicle Partnership's Eastlake and the Automotive Investment Organisation's Greenwell all stressed that while the industry had made good progress in recent years, that is all it had done.
All decarbonization efforts falter as soon as a company or an industry rests on its laurels or starts to think it has done its fair share and no longer needs to accelerate its emission-reduction efforts.
The auto industry success contains plenty of lessons for the wider greener economy, but one of the most important lessons of all is that it knows it still has a long way to go before it becomes genuinely sustainable.
The original version of this story first appeared at BusinessGreen.com. BusinessGreen was a media partner for the Sustainability Hub event in Westminster, London, "Green and growth: We can have both — lessons for road transport and other sectors." Top image of car by supergenijalac via Shutterstock.