EU Brewing "Carbon Barrier": Automobile Industry Export Faces Severe Challenges

In the formulation of environmental protection policies, the European Union has become more and more brave, almost into no man's land.

The European Green deal, recently released by the European Union, proposes to reduce greenhouse gas emissions by 55% by 2030 compared with 1990 (the previous target was 40%), and plans to achieve carbon neutrality by 2050.

In order to achieve the above objectives, the EU has formulated a package of policies, including tightening the carbon emission trading system, increasing the use of renewable energy, accelerating the introduction of low emission transport modes and supporting their infrastructure.

Among them, in terms of transportation, the EU proposes to reduce carbon emissions of passenger cars and vans by 55% and 50% respectively by 2030 (previously, the above targets were 37.5% and 31%, respectively). Meanwhile, the EU proposes that all newly sold vehicles in 2035 will be zero emission vehicles, which means that the EU will ban the sale of fuel vehicles from 2035.

This radical timetable will undoubtedly put pressure on all car manufacturers. According to the previous plans released by various auto companies, only Volvo is ahead of the European Union among the traditional car companies, and Volkswagen barely "steps on the spot". Volvo said it would become a "pure electric luxury car company" by 2030. Volkswagen announced last month that it would stop selling fuel vehicles in Europe in 2035. Daimler, another traditional car company, which announced plans to ban fuel, plans to achieve full carbon neutrality in its new vehicle product lineup by 2039.

The barriers to carbon emissions are not only reflected in the product level, but also in the whole life cycle process such as manufacturing. The green new deal issued by the EU confirms that it will implement the carbon border adjustment mechanism (CBAM), the so-called "carbon tariff", which is expected to be formally implemented in 2026.

The implementation of carbon tariffs, on the one hand, will protect European enterprises from being at a competitive disadvantage because of the adoption of higher environmental protection standards. On the other hand, the path of European enterprises to avoid strict carbon emission inspection by setting up factories abroad is basically blocked. Since this year, BMW and other car companies have said that they will expand the carbon reduction target from vehicle use to the whole vehicle life cycle including production. Daimler, Volvo, and Porsche have also indicated that carbon neutrality has become the common goal of the whole industry chain and product life cycle.

Whether the above-mentioned new policies issued by the EU can be fully implemented is still unknown. At present, there are many disputes on policies such as carbon tariff and ban on the sale of fuel vehicles, both internationally and within the EU. It is understood that the new deal proposal needs to be negotiated and approved by EU Member States and the European Parliament, which is expected to take two years.

However, in the long run, with increasingly stringent environmental regulations, the automotive industry chain will eventually face a comprehensive and sustainable development path. Some people in the industry pointed out that under the strict emission regulations of foreign countries, the export of China's automobile industry chain will face no small pressure of carbon reduction.

Radical policies are opposed by the auto industry

The green new deal proposal announced by the EU has caused a lot of repercussions. In the automotive industry, the radical proposal to ban the sale of fuel vehicles is the most opposed.

The European Association of automobile manufacturers (ACEA) has publicly stated that car manufacturers are willing to work to reduce emissions to zero, that all ACEA members support the goal of carbon neutrality by 2050 and are willing to invest billions of euros in innovation and sustainable technologies.

ACEA stressed that fuel vehicles, hybrid electric vehicles, pure electric vehicles and hydrogen fuel cell vehicles can play a role in the process of carbon reduction. In particular, energy conservation and emission reduction should not only be measured by new cars, but also by all vehicles in the market. Therefore, the energy conservation and emission reduction of fuel vehicles in the transitional period is also very important“ It is not internal combustion engines that are harmful to the environment, but fossil fuels. " ACEA said.

In addition, ACEA also pointed out that the new carbon reduction target will significantly accelerate the structural transformation of automobile value chain, which requires careful management to minimize the impact on economy and employment.

The industry's strong rebound on the EU's Green New Deal proposal seems to be in contradiction with the previous image of the auto industry to actively reduce emissions. However, in fact, there are some different voices within European car companies on the topic of energy conservation and emission reduction. For example, Volvo has been very active in "banning combustion". It has not only announced that it will not sell fuel vehicles in 2030, but also publicly called on the EU to stop selling new gasoline and diesel fueled models, including hybrid vehicles, around 2035.

Volvo believes that the EU's "tough" rules on stopping the sale of fuel vehicles will send a clear signal of investment to car manufacturers, supply chains and infrastructure providers. At present, in the UK, which has already announced the "ban on fuel", the operation of relevant enterprises has been significantly stimulated.

Carbon reduction in automobile supply chain

Although the "carbon tariff" has not really been implemented, it has given enough warning to European car companies. In the past year, the energy saving and emission reduction of European automobile industry has extended from the product level to the production field, even to the production field of suppliers.

Zhao Mingnan, director of the green and low carbon Research Office of China Automotive Data Co., Ltd., once told the media that the European Union will set up carbon footprint limit regulations for auto parts and vehicles exported to the EU. It is estimated that by 2024, power battery manufacturers and suppliers entering the European market must provide carbon footprint statements, and by 2025, Every car exported to the EU needs to calculate and publish its life cycle carbon dioxide emissions. Because of this, many multinational automobile enterprises began to adjust the supplier system in order to avoid risks ahead of time.

It is understood that Daimler has taken carbon emission index as an important standard for supplier selection, and said that some power batteries of the next generation can only be produced with renewable energy; BMW has also reached an agreement with suppliers that it must use green power to produce cells; Volvo proposed that by 2025, carbon emissions related to the global supply chain would be reduced by 25%, and at the same time, it said that environmental protection and recycling of raw materials were an important basis for entering Volvo's purchasing list

The latest case is Porsche. Recently, Porsche has called on its nearly 1300 parts suppliers to adopt renewable energy. According to Porsche, its flagship electric vehicle, taycan cross Turismo, will become the world's first full life cycle carbon neutral vehicle (including production, manufacturing and use processes). It is said that starting in July, all new suppliers will need to meet the clean energy plan of Porsche, otherwise it will no longer sign a contract with it.

According to the draft released by Porsche, its manufacturing supply chain accounts for about 20% of its total greenhouse gas emissions, which is expected to rise to 40% by 2030 as the proportion of electric vehicles increases. Before that, since 2020, Porsche's battery suppliers have had to use green energy.

Supply chain enterprises are also obviously in the rapid development of layout. On July 26, German brand tire told the 21st century economic reporter that it had taken the lead in expanding the scope of carbon emission reduction to the whole industrial chain, including raw material procurement, supply chain, production, use and even recycling links: in the procurement of raw materials, the source is fully traceable, and in the production process, local environmental regulations and enterprise standards are strictly observed, In the use of products, we will strive to achieve 100% sustainable tire materials by 2050.

What is the impact of auto industry export?

Once the European Union "carbon tariff" is implemented, it will undoubtedly have an impact on the automobile industry exported to Europe. It is difficult for foreign enterprises to meet the requirements of the European Union when facing the strict environmental protection standards review of the whole vehicle or parts.

China Automotive daily, a media in the auto industry, once quoted a person in the industry who did not want to be named: under the background of carbon neutrality, Chinese vehicle enterprises must be alert to carbon shocks when exporting.

It's the same logic for auto parts. As a matter of fact, multinational automobile enterprises have already asked supply chain enterprises to reduce carbon, and many Chinese parts suppliers have felt the real crisis. In order to deal with the emission requirements, the original scale advantage and cost advantage are no longer obvious, or even no longer exist.

However, it should also be pointed out that the "carbon tariff" and the verification of carbon emissions in the whole life cycle of automobiles have not been implemented substantially at the policy level. Even in the EU's green new deal, the "carbon tariff" is only imposed on the five major industries of cement, steel, aluminum, chemical fertilizer and electric power, and automobile is not involved. From this point of view, European car companies in the whole production chain of energy conservation and emission reduction, on the one hand, in order to make more or less contribution to the strict automobile emission reduction, on the other hand, it is also prepared in advance without rain.

Comparatively speaking, the Chinese automobile enterprises exporting finished vehicles to Europe are still in a wait-and-see state for the time being. Recently, the head of the International Business Department of a certain automobile enterprise exporting to Europe told the reporter of the 21st century economic report that the European Union does have a lot of ideas on environmental protection and a lot of voices are thrown out. Some standards have been issued continuously, but the standards are a series, and the local automobile enterprises in Europe have different opinions on some standards“ European Economic and political circles are still discussing this series of issues, and their opinions differ greatly. But we are closely following all policies, laws and regulations, and tentative standards that are being discussed and published. "