Prognos and T&E plot clear path to road decarbonisation

In the first analysis of its kind, Prognos, commissioned by Transport & Environment Deutschland, shows the only way to decarbonise road transport fairly, and on time to meet Germany’s ambitious 2030 climate target, is to deploy a progressive policy mix, that ensures the majority of new cars are electric by 2025, and that reduces demand for petrol and diesel cars.

This is preferable, the study illustrates, to relying solely on an oft-touted carbon price which would punish low-income drivers, or relying on solutions like e-fuels which cannot be deployed on time and at the scale needed.

To reach Germany’s climate target of a 65% CO2 reduction by 2030, the transport sector will have to cut its emissions by half in just under nine years.

Jekaterina Boening, senior policy manager at T&E Deutschland, said: “What we’ve seen from the coalition talks so far is a lack of urgency and concrete proposals. There is a very real risk that Germany will fail to meet its climate target, even with a green party in government. If the right measures are not implemented now, the government will have to rely on a high carbon price which would punish low-income families.”

Over 60% of new registrations will need to be electric by 2025 and 92% by 2030, according to the study. To reach this fairly, electric vehicles (EVs) will need to be affordable. 

The study points to two main ways to achieve this. First, ambitious emissions standards for new cars at the European level will be crucial to ensure carmakers produce electric vehicles at scale today. Second, Germany should prioritise the electrification of company cars which represent 63% of new registrations in the country. The study shows that as company cars are changed more regularly, electrifying them accelerates the uptake of EVs by putting millions of affordable second-hand EVs onto the market.

Stef Cornelis, director for T&E Deutschland, said: “The coalition negotiations should focus on the measures that bring the most CO2 savings and do so in a socially fair way. That means prioritising affordable electric cars for ordinary people. Higher car emissions standards and increasing company car taxation for diesel and petrol cars would increase production, reduce prices and create an affordable second-hand market for electric cars.” 

But affordable EVs alone will not be enough to decarbonise Germany’s road transport on time. The new government will also need to introduce other measures such as a vehicle registration tax for fossil fuel vehicles, zero-emission zones in urban areas, and invest significantly in rail and public transport to reduce demand for petrol and diesel cars.

Some politicians have suggested relying solely on a carbon price to decarbonise road transport. But this would require a carbon price of €450 per tonne of CO2, which would be unbearable for low-income Germans. Suppose a driver bought their car today but cannot afford to replace it within the next 10 years, they would face rapidly rising petrol prices of 2,05€ in 2025 and up to 2,50€ in 2030. 

A recently published paper drafted by the coalition suggests that e-fuels can be used to decarbonise cars. The study shows, however, that there would only be enough e-fuels capacity to power 4% of today’s car fleet. E-fuels are four times less efficient than battery electric cars which means with 40 TWh of renewable electricity, you can either power two million e-fuel cars or 8.4 million electric cars.