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Why we need to ban diesel cars

I recently took part in a podium discussion organised by the European Commission on how to push innovation in energy. All of the podium panellists were asked; if Europe could do one thing, what would it be. My answer was simple: ban diesel cars. My rational was simple: diesel technology is not future proof and Europe is behind, in terms of both battery technology and the rollout of electric cars, and there is a real risk of losing a global competitive advantage in one of the most important employers in the region. People looked at me as if I was from Mars or something but thankfully the person next to me, who is a senior executive in one of Europe’s leading utilities backed me up and called for Europe to introduce quotas for electric cars.

It was thus with great interest that I read the German study by the economic institute, the IFO, which was commissioned by the German Association of the Automobile Industry, on the impact of a ban of internal combustion engines (ICEs) in automobiles. The study concludes that it would be detrimental in terms of jobs losses and on the Germany economy. Having read the report I am more than ever convinced that banning diesel cars, as opposed to all internal combustion engines, would be good for not just the future of the German, but also the wider European automobile industry. It would also be good for the environment noting that the IFO report states that a ban would lead to an 80% reduction in CO2 emissions by 2050!

By way of background, Europe has steadily moved its fleet from gasoline to diesel powered engines over the last 30 years with close to 50% of new registrations in 2016being diesel. In stark contrast, US diesel new registration levels are at 1% and Japanese at 4%, which of course begs the question why. Europe went diesel because it was the cheapest way to reach increasingly stringent fuel consumption targets and related CO2 emission targets. The US, on the one hand, was more concerned about air pollution and in particular fine particle and NOx emissions, which kept diesel penetration levels down. Japan, on the other hand, was concerned with both fuel consumption and air pollution and so instead pushed smaller cars and hybrid cars; noting that 20% of all Japanese automobile purchases are hybrid, as against the US with over 3% and Europe at just over 2%.

But let’s be clear what the VW diesel scandal has shown world is that the European automobile industry has invested too much into a technology which cannot produce cost effectively clean diesel which gives us low NOx & particulates emissions and higher fuel efficiency (thus lower CO2 emissions). And the European Union is very clear why we need to lower NOx and particulate emissions as they put them down as a major cause of the 400,000 annual deaths across Europe caused by air pollution.

The implication is that we will see a move back to gasoline-powered engines coupled with larger so called 48-volt batteries, which will enable both lower air pollution and lower CO2 emissions at lower prices than cleaning up diesel. In addition, we will see a continuing move to the full electrification of the automobile (so much more fun to drive) over the next decade. And herein lies the issue, Europe is way behind and the IFO study backs me on this.

The study produces some interesting statistics around the automobile industry and in particular that some 625,000 people, more than 10% of German’s manufacturing workforce would be directly affected by any ban of the internal combustion engine. With that I agree totally but the issue is that these jobs are all in jeopardy anyhow and these businesses have to make big changes in the coming years. The electrification of transport is a given and Germany, cannot block or isolate itself away from these global trends. But more concerning is the technological position that the European industry has, and again this is backed up by some interesting statistics in the IFO study.

Over the last 20 years, the vast majority of all patents in and around the internal combustion engine have come out of Europe. In contrast, in the area of batteries, the key component in an electric car, the majority of patents come from two countries Japan and the US. But more interesting is the period 2010-2015. Germany and France may have developed 48% of the world’s patents for ICEs over this period, but they only developed 21% of the world’s patents around batteries. In contrast, the US is No1 with 29%, then Japan with 23%, Korea with 14% and China with 13%. And to make things worse all of these countries have their own battery manufacturers: Tesla, LG Chem, Panasonic, BYD, CATL. Meanwhile back in Europe we have nothing and this is for the core and most expensive component in an electric car!! Talk about sleeping at the wheel. In the meantime, while Daimler calls 3 million diesel cars for retrofitting, Chinese electric companies BYD and BAIC are starting for the first time in history to sell electric cars in Europe. A little over a decade ago the German solar producers were laughing at the first Chinese solar modules being sold in Europe, today German solar producers are out of business.

Banning diesel cars say in 2023 across Europe will force innovation in an industry that reminds me very much of the utility industry with its male dominated conservative engineering culture. And there are lessons to be had from the massive changes we have seen in the European utility landscape. Europe led by Germany pushed renewables and caused a painful transition amongst energy companies but the result is that in companies like Enel, Dong and EDP, we have today world-class businesses, all of whom were forced to push renewables and change their business models and innovate. The same needs to happen in the automobile industry, otherwise the future of the automobile will belong to the Asians and in particular the Chinese. If the automobile industry continues to block the transition, by pushing technologies such as clean diesel or far from commerical hydrogen solutions the experience will be very painful for not only the German automobile industry but for the whole of Europe. The other benefit of banning diesel and would be an improvement in the air quality in the two cities which I spend my most time in, London and Berlin. Having them both meet European air quality standards would be good not just for me but also the health of all of our children.