Decarbonization as a chance

Climate change will be the greatest challenge for humanity in the coming decades. With virtually unlimited burning of coal, oil and gas, climate change is steadily accelerating. More and more people are realizing how dramatic the situation is and want to take action.

Our generation – which is now at the levers of power and can drive change – has the responsibility to enable future generations to live on this planet in peace and social and economic security.

So far, our actions have not been consistent enough; there is much more that could be done to combat climate change. Many technical concepts are ready for use. Political action and the power to shape change are indispensable.

The goal must be to limit human-driven climate change while maintaining or improving the quality of life for all people globally.

16 percent of global CO2 emissions can be attributed to the transportation sector.

This mainly comes from burning nearly two-thirds of the world's oil consumption, but also from the manufacturing processes of cars, trucks and ships used for transportation.

In addition to passenger transportation – primarily individual transport – the transportation sector also includes freight transport, shipping and air traffic. The Volkswagen Group and its brands are a major market player.

We sell 10 million cars each year; with the acquisition of Navistar, we are the world's second-largest truck manufacturer; and 80 percent of ocean-going vessels run on engines from MAN Energy Solutions.

The transportation sector must be decarbonized quickly without harming the global economy. For us it is especially important that individual mobility, the ability to move around by car, will be preserved for people and remain affordable for many.?

Mobility is a basic human need. It is a fundamental right in a free society. The restrictions imposed by the pandemic in particular have shown how important this basic need is for all of us.

Our company has the responsibility to reduce CO2 emissions in all our fields of activity as quickly as possible. We are convinced that mankind can stop the anthropogenic climate change and achieve the 1.5 degree target.?

We are electrifying passenger cars and, step by step, commercial vehicles. And we are beginning to convert our marine diesel engines from MAN ES to liquefied natural gas. A precursor for the later use of synthetic fuels from wind and solar energy.?

We will reduce our total emissions from the passenger car and light commercial vehicle fleet by 30 percent by 2030 compared with 2018. A reduction of around 14 tons from around 47 tons per vehicle. In particular, through the electrification of our vehicle fleets. In 2030, nearly 70 percent of our cars sold in Europe will be electric.?

But even an ID.3 today still has a CO2 footprint of 27 tons in the European energy mix throughout its life cycle.

This is made up as follows:

In production and the supply chain, we have already cut emissions from 14.4 tons to 13.1 tons by switching our plants and battery cell production to green electricity.

The 13.1 tons of CO2 consist of battery cells: 3.8 tons, other parts of the supply chain: 8.8 tons, in-house production & logistics: 0.5 tons.

Use and maintenance: 13.9 tons. In other words, half of the footprint. This can be reduced to nearly zero by charging with green electricity.

In most of the European countries like Norway, Sweden and Switzerland the ID.3 is already driving with green energy.

The prerequisite for decarbonizing the transport sector is the availability of green electricity from sun and wind.?

Energy generation and distribution must be the top priority. Let me give you an example of the effect: Our power plant in Wolfsburg generates electricity for the plant and district heat for the city of Wolfsburg.

We are currently converting it from coal to gas. That will save 1.5 million tons of CO2 per year, equivalent to the annual emissions of 870,000 cars. It is also cost-effective at just €14 per ton! That’s just one-third of the price of CO2 certificates. But the dependence on gas remains.

The solution: MAN ES is already working on an innovative technology to replace district heating from fossil-fuel power plants. A heat pump plant with sector coupling is being piloted in Esbjerg.

With an overall heating capacity of 50 MW, the plant will supply around 100,000 inhabitants with approximately 235,000 MWh of heat per year. This will save 100,000 tons of CO2 annually – equivalent to the CO2 emissions of 55,000 cars.

The heat pump generates climate-neutral heating energy from renewable energy sources – with high efficiency: The electrical energy input generates 3 to 4 times as much heat energy.

Heat pumps will be the best solution for decarbonizing all applications where heat below 100 degrees is needed and which today still use fossil fuels.

Costs for decarbonization can be high and vary from sector to sector. It will be particularly difficult and expensive in those areas that cannot be electrified: high-temperature processes, steel, cement, chemicals, aviation and shipping.?

The unavoidable remaining emissions for which we don’t have any technical or economic solutions yet we will have to remove CO2 from the atmosphere to reach the 1.5 degree climate target.

Carbon capturing to remove the CO2 is feasible, but not yet on scale and it is still very expensive. According to our estimations are that at scale it should cost about US$100 per ton, also very much depending on the availability of cheap renewable energy.

Many other of the technologies needed for decarbonization are ready for use now. For some of them, it is just a matter of industrialization and then scaling. The VW Group is planning a venture capital fund with an initial volume of €300 million that we will invest in a number of decarbonization projects and innovative start-ups.

Analysts from Goldman Sachs estimate that in their 1.5 degree scenario a cumulative US$56 trillion will be invested in green infrastructure by 2032 – that makes it the largest area of growth.

More and more industries are recognizing the opportunities, and even sophisticated investors like Bill Gates are financing major sustainability projects. The financial business case is accelerating the change.???

Progress in decarbonization today varies widely across economies. Germany’s emissions total 8.4 tons of CO2 per capita, China emits 7 tons per capita and the U.S. 16 tons.

Sweden switched very fast to carbon-free energy production and implemented a CO2 price of €100, which led to a shift in consumer preferences. The CO2 emissions amount to only 4.2 tons per capita, without compromising its standard of living. And despite those measures it’s one of the fastest growing economies in Europe.

Let’s assume that we can use the measures outlined to reduce the CO2 footprint in an industrialized country like Germany from around 8.4 tons to 3 to 4 tons in the medium term: In order to reach climate neutrality the cost would amount to €300 to €400 a year for capturing, roughly €1 per day for every inhabitant. A small amount compared to the horrible scenarios that experts forecast if we don’t act. In less industrialized countries, the amount is many times lower.

Mind you, many solutions for reducing CO2 are already cheaper today than the old fossil methods that we are used to.

Solar or wind power is in some regions already cheaper than coal power. Electric heat pumps reach amortization after only a few years and from then on are cheaper than heating with fossil fuels.

Electric cars are cheaper to run than combustion engine cars, electric city buses make public transport cheaper than using diesel or hybrid buses,...

Decarbonization will make many things more affordable, not more expensive.

Subsidies in worldwide fossil technologies are still estimated to be much higher than investments in renewable energies.?

Coal subsidies, reduced taxes on diesel, tax-free kerosene, air travel with a reduced VAT rate are slowing the transition into renewables.

Hesitant political reforms in the subsidy scheme are delaying the economic transition that would already be possible today.

Reducing CO2 is possible without sacrificing our standard of living.

We can continue to fly on vacation – it may be a little more expensive.

We can still eat meat – maybe a little less – it's healthier anyway.

We are still mobile – with CO2-free electric cars and airplanes with synthetic fuels.

Entire eco-systems can become climate-neutral as some worldwide projects will demonstrate. One is our European blueprint Astypalea, a Greek island where we are installing a fully electric transportation network based on green energy.

What’s true on Astypalea is true elsewhere: More and more people ?are switching into modern means of transportation. The new car is losing many of its negative qualities – it’s becoming cleaner, safer and more comfortable.?

Another big lever to reduce CO2 emissions is better utilization. Today, a car used for private or business purposes is one of the world's worst-utilized assets: Driven for only about one hour a day on average, it is parked the rest of the time, which in turn leads to major expenses for infrastructure such as parking spaces.

What’s more, it prolongs the lifecycle of those vehicles. The result: Less environmentally friendly, more outdated technologies are used for too long. Better utilization accelerates the change!

In the future, electric robotaxis will drive around the whole day to transport more people than today on one trip. This leads to a highly efficient use with fewer cars and fewer parking spaces in the cities.

Car Sharing can double the utilization to approximately 2 hours a day – a major improvement in utilization and reduction of parking spaces that are needed.

A significant improvement can be achieved by combining usage, which means to use the same car for sharing, rental and subscription. This would once again might double the usage time of cars.

With rental cars mainly being used on weekends and car sharing being used Mondays through Fridays, utilization can be maximized. The technological game changer will be your virtual key on your smartphone, which gives you easy, 24/7 access to a large car fleet.

A multi-purpose use of the fleets with one key can potentially increase the utilization of the cars up to three or four times compared to today.

We are looking forward to the future of mobility in better harmony with nature and the environment. It will be more sustainable, more comfortable and much safer.

The technologies are becoming available fast. Soon it will be a matter of scaling them up quickly and removing obstacles to expansion.

This requires a willingness to change and joint action among policymakers, industry and society to build the infrastructures.

Instruments such as CO2 pricing foster processes to the buildup of renewable energies.

Climate protection and quality of life are not opposites. Climate protection is cheaper than adapting to climate change and brings sustainable benefits for the quality of life.

To safeguard individual mobility, we have to decarbonize the transportation sector through electrification with green energy, fast cross-sector work and alignment is necessary.?

That is why we founded the CEO Alliance. Together with companies such as ABB, E.on, Enel, Iberdrola, SAP or Schneider Electric we support and advise the European Commission on the implementation of the Green Deal and the recently launched "Fit for 55" program. We are sharing ideas and experiences, working across industries on specific projects that contribute to climate goals. And we know: We can tackle climate change much more effectively when we work together rather than individually.

A person who has recognized the signs and is not only calling for action, but proactively engaging, is ENEL CEO Francesco Starace. He is one of the most energetic drivers of the energy transition in Europe.

Not only are we allies in the CEO Alliance, our companies also cooperate on green charging infrastructure in Southern Europe.?

speech from 12:07 / talk from 29:25

Thank you!