Decarbonization at COP28: "Companies need to trigger the demand"
Decarbonization at COP28: "Companies need to trigger the demand"
It was the first time the European Union had a day dedicated to transportation during COP, the United Nations' annual climate change conference. On December 6 in Dubai, the public and private sectors came together to discuss the solutions to decarbonize transportation and, more importantly, road freight. Einride drove the conversations forward by hosting two panels – one of them held in partnership with Barclays – in the Swedish pavilion, Business Sweden’s area inside COP28’s Blue Zone.
“Transportation is the only sector where emissions are growing in absolute terms. Although accounting for less than 2% of vehicles on the road in the EU, heavy-duty vehicles are responsible for almost one-fourth of CO2 emissions”, said Pierpaolo Settembri, Head of the Coordination and Planning unit (DG Move), European Commission, during an opening keynote before “Financing the transformation of road freight”. The panel also had closing remarks by the Swedish Minister for Infrastructure, Andreas Carlson.
Hosted by Einride and Barclays, the discussion explored the opportunities available for investments in the transition to electric heavy-duty transportation and how financing is a key element in building the infrastructure needed to support decarbonization.
“As one of the first banks to commit to becoming net zero and setting an ambition to mobilize a trillion dollars for sustainable and transition finance, we’re quite thoughtful about where to focus our attention. We’re very focused on the tripling of renewables and looking to really tackle the hard-to-abate sectors”, explained Daniel Hanna, Global Head of Sustainable Finance at Barclays. Last year, Barclays Europe led the biggest asset-backed facility in heavy-duty electric transport to date when Einride announced it secured $500 million in financing.
RMI expert and Georgetown professor TJ Conway sees a positive landscape. “It’s not a matter of if the energy transition is going to happen in the sector, it’s a question of when. If you look at the economics, you see they are compelling”, said Conway, who works with stakeholders to help accelerate oil and gas firms’ decarbonization efforts.
The cost-competitiveness of the transition is Einride’s focus based on an ecosystem solution that leverages technology to enable the switch at scale, providing a service that includes software, trucks, charging and operational partners.
“What we’re solving is the headache of a lot of boards out there. Most of the board members are here [at COP28] and stating that they'll have to be CO2 neutral by 2035. A Fortune 500 company that spends 300 million euros in transport utilizes more than 800 different small carriers, all diesel-based. If they want to go electric, as the board has decided, they need a partner to make the whole transition happen based on their needs. And that’s where we come in”, said Robert Falck, CEO and Founder at Einride.
Einride’s autonomous electric vehicle was showcased throughout the climate conference and attracted the attention of participants walking around the Green Zone’s Technology and Innovation hub.
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A transition that can be scaled and is supported by real use cases was the topic of the panel “Global solutions to global challenges: large-scale electrification of global supply chains” with Nicolas Clerget, Heineken’s Director of Net Zero Carbon Strategy; Jari Kauppila, Head of the Secretary General’s office at ITF; David Libatique, Port of Los Angeles’ Deputy Executive Director of Stakeholder Engagement; and Robert Ziegler, Einride’s General Manager EMEA. The panel was preceded by a video showcasing the ambitious project that is part of an MOU signed by Einride and the UAE Ministry of Energy and Infrastructure to deploy the region's largest autonomous and electric fleet.
Nicolas Clerget shared Heineken’s experience with the transition to sustainable transportation. “When it came to the logistics approach, we couldn't find a lot of solutions. The costs of logistics weren’t so clear. When you are in my shoes, you look at agriculture or packaging and say, ‘I have the solution in front of me; I can act’. Logistics was lagging”, said the executive. “When Einride came into the picture, we did one of the fastest projects in our business. We started one year ago, and we will be live in January together in Germany.”
Based on the benefits companies get once they go electric, Ziegler called the switch a no-brainer, something reinforced by cities’ efforts to reduce traffic, noise pollution and greenhouse gas emissions with diesel bans and other initiatives. “Some of our grocery retail shippers are realizing that going electric means so much more. All of a sudden, they go into the city at night and stock stores. They can run three shifts instead of two, which means fewer trucks. It’s a no-brainer”, said Ziegler.
According to the panelists, demand is critical to accelerating the transition and keeping momentum. This is part of Heineken's commitment to supporting the industry and, as Clerget highlighted, “to send a signal to the logistics industry that there are solutions out there. We need to trigger that demand.”
A strong business case helps support the demand. “We’re already competitive. In the future, we’ll crush diesel. And if companies don’t make the change right now, they’ll be left with stranded assets. They’ll have huge fleets of diesel vehicles that no one wants in the future because electric is going to completely crush the industry in terms of cost. And yes, it is sustainable too”, explained Ziegler.
The cost of carbon
After intense negotiations during COP28, the conference and representatives from 190 countries reached a historic outcome. For the first time, the agreement called for a commitment to “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, to achieve net zero by 2050 in keeping with the science.”
The initiatives governments will develop to achieve this target are yet to be defined, but the panel discussions help show a way forward.
According to ITF’s Jari Kauppila, it’s up to governments to reduce uncertainty around decarbonization. “Let's put a good price on carbon with a clear message to the private sector that [electrification] is cost-competitive going forward. This is where we need to work. I hear a lot of aspirations and goals in COP, but the actions are still lagging. Innovation is coming from the private sector at the moment. But they need that signal from the government that this is the way forward”, said Kauppila.
Ziegler set the tone when it comes to phasing out carbon-based technologies: “The biggest competitor in our business is complacency. Making the change right now will save you from increased costs in the future. To invest in carbon-based technologies today is something driven by still-existing subsidies for carbon products. We need to do away with those so that we start seriously on the path of electrification.”
The effect subsidies have on society goes beyond the high greenhouse gas emissions and their contribution to climate change. They hamper people’s trust in decarbonization efforts.
For Libatique, communities are an essential stakeholder in the transition, and it’s time to rebuild their trust in the sustainability agenda after a series of missed or vague targets. “Get in the weeds and on the ground to rebuild trust, accountability and transparency. Bring the community in and make them a meaningful part of the conversation”, said the Port of LA executive.