(Washington, D.C.) July 31, 2024 —   The auto industry can eliminate more than 95% of greenhouse gas emissions from producing the steel for passenger vehicles by switching to fossil fuel-free steel, according to a new report released today by the International Council on Clean Transportation (ICCT).

“Primary steel, a critical component of today’s auto sector supply chain, is a global driver of greenhouse gas emissions and a danger for the health of local communities, due to the industry’s heavy reliance on coal. Already, steelmakers are piloting fossil fuel-free technologies that can eliminate 95% of the emissions from producing steel in the average vehicle” said Anh Bui, a researcher at the ICCT. “As automakers invest in strategies to meet ambitious climate goals, prioritizing fossil-free steel would slash emissions and create a powerful market signal.”

The report, Technologies to reduce greenhouse gas emissions from automotive steel in the United States and the European Union, compares strategies for automakers to reduce steel-related emissions from vehicles.

Most of the greenhouse gas emissions from the lifetime of vehicles comes from the gasoline and diesel they burn. But vehicle manufacturing causes significant emissions too – and as we make progress in leading countries switch over to electric vehicles running on an increasingly decarbonized grid, those manufacturing emissions grow in importance. To achieve a fully net zero GHG transportation sector by 2050, it will be necessary to drastically reduce the embodied emissions in key materials like steel and batteries.

Procuring primary steel without fossil fuels is the strongest possible pathway to reduce steel-related emissions from vehicles – and this could be done at scale in the U.S. by the end of the decade. Collectively, automakers are among the largest buyers in the steel market in both the U.S. and EU. In 2022, the auto industry consumed 26% of the 82 million metric tons of steel produced in the U.S., and 60% of all domestic primary steel. In the same year, 17% of the 136 million metric tons of steel produced in Europe went to the auto industry, and 24% of all domestic primary steel. Due to the primary steel industry’s heavy reliance on coal, steel is responsible for up to 27% of embodied emissions in a typical internal combustion engine vehicle.

“Procuring primary steel made with green hydrogen and renewable electricity instead of fossil fuels takes a big chunk out of supply chain emissions — but it’s also very cost-effective for automakers,” said Marta Negri, an associate researcher at the ICCT. “For less than 1% of vehicle costs, automakers can help transition one of the dirtiest industries on the planet toward clean energy, provide clean air to local communities, and meet their climate goals.”

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Media Contact
Jessica Peyton, Associate Communications Specialist, ICCT
communications@theicct.org

Publication details
Title: Technologies to reduce greenhouse gas emissions from automotive steel in the United States and the European Union
Authors: Anh Bui, Aaron Isenstadt, Yuanrong Zhou, Georg Bieker, Marta Negri

About the International Council on Clean Transportation
The International Council on Clean Transportation (ICCT) is an independent research organization providing first-rate, unbiased research and technical and scientific analysis to environmental regulators. Our mission is to improve the environmental performance and energy efficiency of road, marine, and air transportation, in order to benefit public health and mitigate climate change. Founded in 2001, we are a nonprofit organization working under grants and contracts from private foundations and public institutions.

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“What seemed inconceivable just years ago is now the unequivocal path forward. This historic legislation offers clarity to industry, leveraging zero-emission heavy vehicles as the most technologically feasible and cost-effective route to meet Europe’s climate goals. The trucking industry, Europe’s second largest contributor to transport CO₂ emissions, is about to experience a transformative shift,” said Felipe Rodríguez, Director of the Heavy-duty Vehicle Program at the International Council of Clean Transportation (ICCT), a research organization advising governments on transport decarbonization.

Trucks and buses make up just 2% of the total vehicles on the road in the EU but account for a quarter of all transport-related emissions. Under the newly approved regulation, manufacturers must progressively introduce cleaner vehicles into the market to avert fines. On average, new trucks need to emit 43% less CO₂ in 2030 than they did in 2019, 64% less in 2035, and 90% less in 2040. City buses will witness an even swifter transition, with 90% of sales required to be zero-emission by 2030 and a complete phase-out of fossil-fueled bus sales by 2035.

The regulatory scope has been significantly expanded to include more truck types, buses, coaches, trailers, and vocational vehicles such as garbage trucks. Under this new scope, over 90% of all new truck and bus sales are covered by the revised CO₂ standards, up from 65% under the original standards. Small trucks of less than 5 tonnes remain unregulated but will be considered in the review in 2027.

“European regulators are seizing the opportunity to boost a booming industry: electric trucks. Over the past year, these zero-emission vehicles have been hitting EU roads, with sales tripling between 2022 and 2023. Shares of zero-emission city buses also accelerated last year, overtaking diesel sales to become the most popular powertrain, and reaching an all-time high of over 40% by the end of 2023,” said Eamonn Mulholland, ICCT’s expert on Europe’s truck CO₂ standards.

Despite last-minute interventions, the role of e-fuels remains excluded from the heavy-duty CO₂ standards. The European Commission is tasked with assessing the role such carbon neutral fuels could play in the regulation by 2027.

Media contact
Susana Irles, susana.irles@theicct.org
+49 (0) 302 332 68412

About the International Council on Clean Transportation (ICCT)

The International Council on Clean Transportation (ICCT) is an independent nonprofit research organization founded to provide exceptional, objective, timely research and technical and scientific analysis to environmental regulators. Our work empowers policymakers and others worldwide to improve the environmental performance of road, marine, and air transportation to benefit public health and mitigate climate change. We began collaborating and working as a group of like-minded policymakers and technical experts, formalizing our status as a mission-driven non-governmental organization in 2005.

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International shipping significantly contributes to sulfur (SOx) and nitrogen oxide (NOx) emissions in the atmosphere, which causes adverse environmental and health effects, such as contributing to premature deaths and disrupting aquatic and terrestrial ecosystems. Studies have shown that ECA’s surrounding the continent could lead to significant health benefits for those living in coastal communities. ECA’s have already been established in the North, Baltic, and Mediterranean Seas. This study would suppor the establishment of a new ECA connecting the already established control areas.

Read the full article at DGRM here.

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The Advanced Clean Fleets rule is CARB’s latest in a series of regulations aimed at reducing greenhouse gas and criteria air pollutant emissions from some of the state’s highest-emitting vehicles. Today’s board approval will accelerate the deployment of ZEVs in both public and commercial fleets. Benefits of the rule through 2050 include:

• 327 million metric tons of carbon dioxide emissions avoided
• 147 thousand tons of nitrogen oxide emissions avoided
• 7 thousand tons of fine particulate matter emissions avoided
• $48 billion in vehicle ownership cost savings
• $26 billion in health benefits

The rule requires the deployment of ZEVs for federal, state, and local fleets as well as large commercial fleets of 50 trucks or more, or with $50 million in annual revenues. CARB sets separate requirements for drayage trucks to fully transition to zero-emission by 2035 via the state’s drayage registry. In complement to these fleet-side rules, CARB advances sales requirements for manufacturers that were first implemented under the Advanced Clean Trucks rule. This new rule requires manufacturers to sell only zero-emission medium- and heavy-duty vehicles by model year 2036. Twenty-seven national governments have endorsed a Global Memorandum of Understanding that sets the goal of 100% new zero-emission truck sales by 2040. California is the first government to adopt a legally-binding and enforceable 100% sales requirement for zero-emission trucks.

Zero-emission medium- and heavy-duty vehicles are more efficient than conventional diesel engines and produce zero tailpipe emissions. CARB’s action today means that communities disproportionately exposed to diesel exhaust can expect lower rates of lung cancer, heart disease, and childhood asthma. The rule also represents a significant step toward achieving California’s climate targets.

The Advanced Clean Fleets rule sets a new bar for ZEV policy by mapping the transition to zero-emission for fleets as well as manufacturers. This rule is supported by an ecosystem of progressive climate and transportation policies in California as well as recent federal incentives made available through the Inflation Reduction Act.

“Zero-emission trucks are both technically feasible and deliver significant social and economic benefits,’ says ICCT Heavy-duty vehicles program director Ray Minjares. “With today’s decision, California has re-framed the debate and set the pace for other states and nations to follow.”

Contact:
Claire Buysse, Heavy-duty vehicles Researcher, c.buysse@theicct.org

About the ICCT:
The International Council on Clean Transportation is an independent nonprofit organization founded to provide first-rate, unbiased research and technical and scientific analysis to environmental regulators. Our mission is to improve the environmental performance and energy efficiency of road, marine, and air transportation, in order to benefit public health and mitigate climate change.

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This proposal would lock in the first phase of a national transition to zero-emission trucks and buses. Today’s action would result in increasing zero-emission sales for trucks, leading to 1.8 million metric tons of avoided carbon dioxide emissions, 72,000 fewer tons of nitrogen oxides emitted, $250 billion in vehicle operating cost savings and net social benefits equivalent to $320 billion through 2055. Buses, local delivery trucks, refuse trucks, and other vocational vehicles with a daily range under 200 miles will see the largest shift towards electrification over the course of this rule.

The rule supersedes existing Phase 2 GHG regulations for model year 2027-2029 vehicles last adopted in 2016. Those standards failed to predict the coming ZEV transition. By providing certainty to the heavy-duty vehicle industry and to consumers about the role of ZEVs in the transportation fleet, this EPA action will generate significantly greater GHG reductions than current rules require.

ZEVs are more efficient than diesel engines and offer significant climate benefits. Those benefits are magnified by the ongoing transition towards renewable energy, a cornerstone of domestic and international climate goals. And because ZEVs produce zero tailpipe emissions, communities disproportionately exposed to diesel exhaust near ports, warehouses, and highways will face lower rates of lung cancer, heart disease, and childhood asthma.

Over the coming weeks, EPA will take comment on pathways to strengthen the rule. A stronger rule would increase the likelihood that the U.S. meets its commitments under the Paris Climate Accords. It would increase the likelihood that major truck manufacturers, carriers, and retailers such as Navistar, Fedex, and Amazon reach their 2030 sustainability targets. And improvements to the rule can ensure its benefits are delivered in low-income and minority communities.

Incentives made available through the Inflation Reduction Act (IRA) have made possible faster deployment of ZEVs. ICCT projects that all major vehicle categories will achieve total cost of ownership (TCO) parity with IRA incentives within the time frame of the rule.

In response to the EPA’s proposed rule, Drew Kodjak, Executive Director of the International Council on Clean Transportation, issued the following statement:

“EPA’s proposed Phase 3 rule is a strong bid for the U.S. to reclaim its global leadership position on progressive climate policies.  EPA should move quickly to finalize the rule this year.”

Contact:
Ray Minjares, Heavy-duty vehicles Program Director, ray@theicct.org

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The proposed targets are far-reaching and would yield a notable reduction in emissions from trucks and buses through 2050. The revision requires most new trucks to cut their emissions by 45% in 2030, 65% in 2035, and 90% in 2040, demanding high shares of zero-emission vehicles. It also extends the scope of vehicles regulated from 60% to 90% of Europe’s heavy-duty sales, sets performance targets for trailers, and introduces a phase-out for combustion bus sales by 2030.

“Europe is seizing the opportunity to spearhead the transition to zero-emission trucking. Although the proposed CO₂ standards will not fully decarbonize the sector by 2050, they do establish an ambitious long-term vision, broaden the scope of regulated vehicles, and rapidly move towards 100% electric buses. These are promising policy signals with the potential to catalyze the decisive transformation that the sector needs,” says Felipe Rodríguez, ICCT’s Heavy Duty Vehicles Program Lead.

Trucks and buses are the highest emitters on Europe’s roads: they make up just 2% of the vehicle stock but produce over a quarter of road transport-related CO­₂ emissions. Expected rises in freight activity out to 2050 put Europe’s decarbonization at risk. The current standards adopted in 2019 require new trucks to reduce CO₂ emissions by 15% by 2025 and 30% by 2030. ICCT’s analyses show that more ambitious targets are needed to ensure the sector stays on track.

To date, two manufacturers representing a third of European truck and bus sales have pledged to only sell zero-emission vehicles by 2040, and all have pledged toward ending the sale of fossil-fueled vehicles by the same date. Further, ten Member States have signed a Memorandum of Understanding pledging to enable a full transition to zero-emission trucks and buses by 2040. According to recent ICCT estimations, if all manufacturer pledges were met, the EU would be on track to meet its climate goals. Converting pledges into regulation would require a 60% target in 2030 (compared to the proposed target of 45%), 90% in 2035 (compared to 65%), and 100% in 2040 (compared to (90%).

“This proposal is an essential step in ensuring manufacturers’ ambitions do not run out of steam and reach their voluntary zero-emission goals in a timely manner. We expect that the proposed targets will drive high levels of electrification in most vehicle segments. As the most comprehensive CO₂ standards for trucks worldwide, the proposal carries significant industrial policy implications, enabling Europe to gain a competitive edge in the race to zero emissions trucks and buses,” adds Rodríguez.

While most manufacturers’ ambitions already align with the proposed standards, new provisions are expected to facilitate their compliance. For instance, one of the newly proposed compliance flexibilities would allow manufacturers to report zero-emission vehicles from other manufacturers, bringing down their fleet-average CO₂ emissions. Manufacturers can register another’s vehicles up to a maximum of 5 percent of their own sales. Another policy tweak will offer manufacturers the option to use zero-emission vehicles falling outside the scope of the CO₂ standards to contribute towards their emissions reduction target.

Starting in the 2029 reporting period, the Zero- and Low-Emission vehicles (ZLEV) factor, a mechanism that allows manufacturers to reduce their compliance target by producing zero- and low-emitting vehicles, will be phased out. This move is in line with the industry’s goals, as manufacturers had already set their sights higher than the benchmark established by the proposed standards.

The proposal goes beyond the currently proposed targets in China and sets the tone for the upcoming U.S. greenhouse gas emission standards to be released in early 2023. In June 2022, China announced a proposal (“Stage 4”) estimated to tighten fuel consumption standards in the heavy-duty sector by 15% in 2026 as a general target across all vehicle segments over its previous Stage 3 implemented in 2019. U.S. Phase 2 standards adopted in 2016 and applicable for 2018-2027, are estimated to reduce CO₂ and fuel consumption that vary by vehicle type and range from 16% to 30% compared to its 2010 baseline.

Europe’s zero-emission truck and bus sales are, however, lagging in the global market. In 2021, zero-emission trucks made up just 230 of Europe’s quarter of a million heavy truck sales. The global zero-emission heavy-duty vehicle market continues to be dominated by China, which accounts for nearly 92% of the sales in 2019-2021 compared to Europe’s 4%.

– end – 

Contact

Felipe Rodríguez, ICCT’s Heavy-Duty Vehicles Program Lead
f.rodriguez@theicct.org

Policy brief: Recommendations for revising the modalities of Europe’s heavy-duty vehicle CO2 standards
Authors: Eamonn Mulholland and Felipe Rodríguez
Download: https://theicct.org/publication/recs-eu-hdv-co2-standards/

Fact sheet: The seven amendments needed to align Europe’s heavy-duty vehicle CO2 standards with the European Climate Law
Download: https://theicct.org/publication/fs-recs-eu-hdv-co2-standards/

Blogpost: Europe’s new heavy-duty CO2 standards, explained

Webinar: Analysing Europe’s CO2 standards for trucks and buses

About the ICCT

The International Council on Clean Transportation is an independent nonprofit organization founded to provide first-rate, unbiased research and technical and scientific analysis to environmental regulators. Our mission is to improve the environmental performance and energy efficiency of road, marine, and air transportation, in order to benefit public health and mitigate climate change.

@TheICCT

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“Euro standards have a long history of being the driving force behind the wide deployment of emission control technologies that would not have been commercialized in the absence of a strong regulatory pull. This revision lacks the teeth to spur further investment and exploit the full technology potential,” said Peter Mock, ICCT Europe’s Managing Director.

Over 95% of cities in the EU have air pollutant concentrations above the World Health Organization guidelines. Although the continent is moving towards 100% zero-emission vehicles, the cars, vans, trucks, and buses built before the transition is complete will be on the road for decades. Euro 7 is the last opportunity to protect people’s health from the nitrogen oxides (NOx), ultrafine particles, and other harmful pollutants emitted by these petrol and diesel engines.

Recent ICCT studies in Europe suggest that the proposed targets do not go much further than the emission levels that are already possible with current emission control technologies. In the case of cars and vans, the proposal stays narrowly in line with current Euro 6 targets and would fail to pull the cleaner technologies the European Commission identified in its medium- and high-ambition scenario.

Existing emission control technologies can drastically cut emissions at a lower price than expected. A recent study estimated that the cost difference is less than 500 euros per vehicle. An ICCT analysis found that the technologies required to achieve ultra-low pollutant emissions are already in production or close to commercialization.

“The technologies to make the last generation of engines cleaner are not prohibitively expensive. New investments in manufacturing Euro 7 cars and trucks will be spread over more than 40 million new vehicles in the EU, with the added benefit of avoiding tens of thousands of premature deaths as Europe transitions to 100% electric road transport,” stated Felipe Rodríguez, ICCT Program Lead.

The health impacts of weaker standards will be felt in European cities for years to come. The average age of cars and vans in the EU was almost 12 years in 2020, and in some countries the average age was 17. ICCT’s emissions measurements in Warsaw show that around 70% of vehicles are beyond what Euro 7 considers as normal vehicle lifetime, which means older than 8 years or more than 160,000 km on the odometer. By comparison, the durability requirements in the United States are 240,000 km or 15 years.

The proposal can also hinder the EU automotive industry internationally. In the long run, European car manufacturers could find difficulties in accessing other markets like China and the United States, where phase-outs are not yet planned and adopted emission standards are already stricter than the proposed Euro 7. Meeting stricter emission requirements in these countries could become more costly for European manufacturers and slow their access to these markets. Most notably, China, the largest vehicle market, will implement a NOx emission limit for cars of 35 mg/km in 2023 as part of its China 6b regulation; which is over 40% more stringent than the proposed Euro 7.

Contact: Felipe Rodríguez, f.rodriguez@theicct.org, +49 (0) 30 233268413

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The proposed standards have the potential to reduce a significant number of premature deaths, childhood asthma cases, and disparities in pollution exposure among the nearly 72 million people – disproportionately people of color and low-income households – living along diesel truck corridors. But to realize this opportunity, these new standards must reduce the real-world NO_x emissions of diesel trucks and they must be finalized by the end of the year.

EPA puts forward as their first option a proposal that aligns with California model year 2027 NO_x engine standards in model year 2031. This is a big step in the right direction. Certain elements of the proposal do not capture the full benefits available, and so in the coming weeks we will be recommending additional ways EPA can strengthen these. ICCT modeling shows that nationwide alignment with the California Omnibus rule could avoid $1.3 trillion in health damages associated with ambient PM_2.5 and ozone pollution from 2027-2050.

With the realities of climate change upon us, new truck pollution standards should also be aimed at moving the markets towards ambitious, science-based goals that are balanced by feasibility. While the proposal includes updates to GHG emission limits on heavy-duty trucks, these changes simply meet the markets where they are without moving them forward. Our research shows that far more is possible and far more is needed.

We look forward to responding to the EPA request for comments on how its proposal could promote electrification of heavy-duty vehicles, such as transit and school buses and urban delivery trucks. We recently outlined how this could be done in this briefing. In the coming weeks we will be sharing with EPA the ways in which we think the proposal can require far more electrification of the truck and bus fleet.

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The final rule is an important step in the direction of the larger goal. Now the task becomes developing the standards for years 2027 and beyond, which will have to be significantly more ambitious to put the U.S. on the path toward the 50% electric vehicle target set by the President while Incorporating the full range of vehicle efficiency technology.

Achieving that target is a crucial part of an effective response to the climate crisis. But greater ambition is also important if the US auto industry is to remain competitive globally. The recent regulatory proposal in the European Union requires manufacturers to ensure a 100% reduction in CO₂ for their new passenger car and light commercial vehicle fleets by 2035 compared to the 2021 standard. Such farsighted regulation is driving global technology innovation and investment in the zero-emission vehicle transition. We applaud the Biden Administration’s efforts with this rule to return the United States to a position among climate policy leaders.

Contact: communications@theicct.org

Passenger car CO₂ emissions, normalized to CAFE

Light truck CO₂ emissions, normalized to CAFE

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The new regulation is fundamentally flawed. It is based on incorrect data and relies on an intellectually unsound cost-benefit analysis. As we have shown in our own independent analysis of the U.S. automotive market and through analyses conducted in cooperation with U.S. and international auto suppliers on turbocharging, transmissions, and lightweighting, manufacturers are capable of meeting the standards that the new regulation rolls back. The ICCT’s estimated compliance costs for the more stringent 2025 standards would have been about 70% lower than the agencies’ purported compliance costs used to justify the rollback. In addition, the fuel savings for consumers under the original standards are several times larger than the cost to comply.

The global auto sector continues to see major innovations in efficiency and electrification technologies. Technologies such as downsized turbocharged engines, high compression ratio engines, cylinder deactivation, lightweighting, and mild hybridization make compliance with strict standards even more cost-effective. Further, ICCT research indicates electric vehicles will reach cost parity with internal combustion vehicles and become a highly cost-effective compliance option by 2025. The new lower efficiency standards put the United States out of step with other major auto markets with standards that are significantly more stringent. The new rolled-back standards disincentivize continued innovation and put U.S. manufacturers at a competitive disadvantage as the global industry shifts to advanced technologies. In contrast, the regulatory electric vehicle sales targets for Europe are 15% (2025) and 35% (2030), and targets for China increase to 20% in 2025. Both of these major auto markets are also investigating stronger standards with increased supportive fiscal, infrastructure, and incentive policies.

Contacts:

Drew Kodjak, Executive Director, drew@theicct.org
Nic Lutsey, U.S. Program Director, nic@theicct.org
Anup Bandivadekar, Passenger Vehicles Program Director, anup@theicct.org

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