EVs set to go exponential as coal and methane come under fireNigel Topping, CEO of the We Mean Business coalition
Welcome to the November edition of the We Mean Business coalition Progress Report. This month we look at how electric vehicles (EVs) are accelerating towards a tipping point as we #DoTheExponentialMath. We examine the latest efforts on tackling unabated coal use in power and rogue methane emissions from the oil and gas sector.
Global EV sales, including plug-in hybrids, surged 63% to a record high in the third quarter, with annual sales expected to surpass the 1 million mark this year for the first time, according to Bloomberg New Energy Finance. This is important for two reasons. Firstly it shows the huge growth potential that’s poised to radically transform the auto industry and bring about the death of the internal combustion engine.
If growth rates are sustained at 63%, then the current 1.25% share that EVs hold of the overall light car market could surpass 60% by 2025, and 100% by the following year. It’s this exponential growth that could well surprise forecasters expecting EV sales to remain in the single digit percentage range of the overall market through to 2025.
Secondly, the third-quarter sales jump is important because more than half of all those EVs were sold in China. This is thanks to a mixture of determined political backing and the sheer scale of the country’s growing economy, which together are fast pushing China to the forefront of the EV market. Chinese EV maker BYD echoed that pitch for dominance this month, unveiling ambitious plans to grow its annual revenue by nearly 10 times to US$151 billion by 2025.
But Chinese automakers have competition for the expanding domestic market. Volkswagen and its Chinese partners have announced they will jointly invest nearly US$12 billion in developing EVs in China, with 25 extra EV models planned. Daimler plans to invest US$755 million in Chinese EVs, while GM and Nissan are hastily mulling their options for tapping into the growing market.
Other big developments in the EV space this month came in the form of very big trucks and busses. Most notably the Tesla semi electric truck, but also the electric school bus from Daimler. When on the road, these will further dispel the myth that electric vehicles can’t take the strain of heavy diesel vehicles. It’s something that the Chinese city of Shenzhen is well aware of as they’ve committed to making all of their busses electric by the end of 2017. Considering Shenzhen has a population greater than Tunisia, that’s a lot of clean busses.
Powering Past Coal
Since last month’s Progress Report, the rallying cry to set an end date for the unabated use of coal in the power sector has grown steadily louder and is showing no signs of stopping.
At the end of the first week of COP23 in Bonn, Michael Bloomberg took to the stage to lay down a challenge to German Chancellor Angela Merkel to formally set a date for Germany phasing out its coal-fired power. He said that to have any chance of limiting the global temperature rise to below 2°C, developed countries such as Germany will have to exit coal use for power within the next five years.
Bloomberg also announced funding of US$50 million this month to aid the global shift away from coal, in a bid to tackle air pollution and climate change. This is in addition to previously announced funding in excess of US$100 million to the Beyond Coal movement in the US.
Bloomberg’s intervention was quickly followed by the formal launch of the Powering Past Coal Alliance, led by the UK and Canada. This is a powerful signal – sent by more than 25 countries, states and regions – that coal’s time has passed, which the We Mean Business coalition is encouraging forward-looking companies to back. Find out how your company can get involved here.
B-Team leaders Sharan Burrow and Mary Robinson were quick to point out that the shift away from coal can only happen with a commitment from governments and businesses to work hand-in-hand with workers to ensure a just transition. The transition needs to secure decent, low-emission jobs, while upholding rights, protecting vulnerable workers and communities and leaving no one behind, they wrote.
The push to phase out coal comes as a new report shows around US$15bn has been divested away from coal assets in the past two years by insurance companies looking to distance themselves from the fossil fuel. Lloyd’s and Zurich are the latest insurers to join the likes of Allianz, Aviva and Axa in divesting. Norway’s largest private pension fund, Storebrand, has also announced divestment from 10 coal companies.
Meanwhile, even Rio Tinto, once a giant of the coal sector, is looking to sell its last remaining coal assets, while South32 has put its South African coal assets up for sale.
Cue the release of the International Energy Agency’s World Energy Outlook 2017 (WEO) – the annual report that has built up a solid track record of spectacularly underestimating the renewable revolution. The report concludes that coal’s boom years are over, with less than 400 GW of new capacity expected between 2017 and 2040, and most of that already under construction.
“Renewable sources of energy meet 40% of the increase in primary demand (to 2040) and their explosive growth in the power sector marks the end of the boom years for coal,” the agency said.
Tackling methane emissions
Much needed action from the oil and gas sector to tackle rogue methane emissions appears to be finally taking shape. Eight of the world’s largest energy groups – including the likes of ExxonMobil, Royal Dutch Shell, Total and BP – have signed up to a set of “guiding principles”.
Methane only accounts for around 16% of global greenhouse gases, while CO2 accounts for around three quarters. However, although methane is ‘shorter-lived’, it is over 80 times more potent than CO2 in terms of global warming over a 20-year horizon.
Tackling the problem of methane emissions also makes business sense. Analysis from the IEA found that around 40% to 50% of current methane emissions from the oil and gas sector worldwide could be avoided at no net cost.
This comes after the Oil and Gas Climate Initiative, which represents ten of the sector’s largest companies – including Saudi Aramco, Shell and BP – last month announced its goal to work towards net zero methane emissions from the gas value chain.
Business is stepping up
Finally, more and more leading companies have announced game-changing commitments to tackle climate change during November.
Microsoft committed to cut annual emissions equivalent to the city of Rome, four companies joined The Climate Group’s EV100, five joined RE100 and a further six companies announced the approval of their science-based targets. While Royal DSM and BMW made bold investments in renewable energy and Philips Lighting announced it has delivered one billion LED lights as part of its commitment to the ‘Global Lighting Challenge’.
To date over 640 companies around the world have made more than 1,090 strategic climate commitments via the We Mean Business coalition’s Take Action campaign.
- Find out how your company can Take Action >