MHA | Sustainability, ESG & the Future of Transportation

Sustainability, ESG & the Future of Transportation

Mark Lumsdon-Taylor · Posted on: March 4th 2024 · read

I Stock 1415861736

In 1888, the German Andreas Flocken designed the Flocken Elektrowagen, often regarded as the first ‘real’ electric car.

That was just two years after Carl Benz, on January 29, 1886, applied for a patent for his ‘vehicle powered by a gas engine.’

We can speculate where we might be had the automotive industry focused on Flocken’s designs instead of the route chosen by Carl Benz. The fact is that today, under pressure from climate change and the contribution to global warming from fossil fuel emissions, electric vehicles are now in the spotlight.

There is a problem.

Electric vehicles are expensive to buy, they are battling against the horror stories found regularly in news media and lacking the infrastructure necessary to make them a viable alternative to the internal combustion engine.

In the UK there is another issue: in 2001, British Prime Minister Tony Blair and Chancellor of the Exchequer Gordon Brown (who subsequently became PM) introduced vehicle tax rates that favoured diesel vehicles, based on CO2 emissions.

There was a boom in diesel vehicle sales, reaching some 12 million by 2018 when the tax break was removed due to increased awareness of the contribution to nitrogen dioxide and other emissions made by diesel vehicles.

The legacy remains in the form of a mistrust of government initiatives relating to road vehicles – which includes EVs.

As if to reinforce that mistrust, in his Autumn Statement of 2022 Chancellor Jeremy Hunt announced electric vehicle owners will have to pay vehicle excise duty from 2025, essentially removing the fiscal measure that owners would often use to justify higher EV purchase costs.

A total of 14% of all new cars sold in 2022 were electric. This, despite heavy promotion of EVs by manufacturers, governments and other organisations. It is estimated that 1 in 250 cars is electric.

According to the Ford Motor Company, widespread adoption for mass-market consumers will not happen until the costs are more aligned with traditional vehicles.

Indeed, the company’s EV business, referred to as Model e, lost $4.7 billion in 2023, whereas it expects sales of its hybrid vehicles to grow by 40% in 2024 and margins for its combustion-powered vehicles to grow from 7.2% to at least 10% by 2026. This is despite the economic advantage represented by fewer moving parts in an EV providing opportunities to streamline sourcing, production and labour forces.

It is a fair assumption that for motor manufacturers, their ICE vehicle sales are effectively underwriting the development of their share of the EV market. The implication is that ICE vehicles will remain with us in volume until the imbalance in investment and cost is redressed.

Then there is hydrogen.

Powering road vehicles with hydrogen has been lauded by some as the optimum solution to the road transportation dilemma.

Advocates claim they are quieter, highly energy efficient, produce no emissions and have a range and performance similar to gasoline powered vehicles. It’s certainly attractive that the only tail-pipe emissions are water.

They have a point. With a broad spectrum of encouragement, legislation and taxation support, the focus has been very much on electric vehicles.

EV purchase cost is an issue, but there are others too. The cost of replacing batteries is astronomical at present; range has been cited as a major concern amongst drivers; battery disposal is an environmental issue and motoring organisations point to the fact that when an EV breaks down, it cannot be towed due to the absence of a neutral gear. This necessitates the use of a flatbed vehicle for removal instead.

Although the world almost certainly has enough lithium to power our electric vehicles for the foreseeable future, the bigger question is whether we can access it. Mining can be costly in both fiscal and environmental terms. Our Earth holds approximately 88 million tonnes of Lithium but only approximately one quarter is likely to be economically viable to mine.

Popular Mechanics estimates there are currently 1.4 billion cars on the world’s roads. Assuming a mineable 22 million tonnes of Lithium and an average 8-kilogram requirement for each EV, that gives a capacity of 2.8 billion EVs. Given world population growth that might seem to be a tight margin, and it is, which brings us back to Hydrogen.

The major factor acting against Hydrogen for road vehicles is cost. Hydrogen is a highly flammable substance; it cannot be easily transported from one place to another and the water hydrolysis process necessary to produce Hydrogen is currently complex and expensive.

The hydrogen fuel cell has been ‘tomorrow’s technology’ since the 1990s.

A trial of Hydrogen powered home heating boilers in the UK town of Redcar was cancelled in 2023. In part it was due to a realisation that the considerable amount of renewable electricity required for the electrolysis process might be more efficiently used to directly power alternatives such as heat pumps, but there is also evidence that some residents were concerned about the gas’s flammable properties.

So, even if Hydrogen could be processed at acceptable cost, there will almost certainly be a need for a wider ‘education’ programme to mitigate consumer fears.

There are currently just 15 hydrogen filling stations in the UK despite earlier UK government predictions that there would be 65 by 2020; and only a handful of commercially available hydrogen powered cars that include the Toyota Mirai, the Hyundai Nexo and the BMW iX5 Hydrogen.

It is likely that future road-vehicle power will not come from a single -source, much as the power to date has included electric, diesel and petrol variants.

Load-carrying vehicles and buses are already deploying some hydrogen powered units and they report that around 30% of operations, mainly urban work, can be met by battery-electric haulage whilst, for other operations, it is the hydrogen fuel cell that can replace the internal combustion engine.

As UK company Element 2 drives forward with its development of a UK hydrogen refuelling point network, the technology will take a step closer to becoming mainstream and if hydrogen now sees the same meteoric R&D investment as EVs that reality will grow closer still.

In the meantime, motorsport companies and aftermarket performance companies are leading a charge to optimise the internal combustion engine.

In December 2022 Akio Toyoda, president of the Toyota Motor Corporation, openly questioned an EV-only strategy in the quest for carbon-neutral automobiles. ‘The silent majority’ he claimed ‘is wondering whether EVs are really OK to have as a single option. But they think it’s the trend so they can’t speak out loudly.’

Porsche has announced it has powered a 911 using a new e-fuel developed from air and water, produced in Chile by the Highly Innovative Fuels company. The fuel is made by capturing atmospheric carbon and combining it with hydrogen taken from water to create methane. However, the fuel is still largely experimental, costly and its environmental credentials will need to be properly verified.

Even the EU modified its ban on ICE vehicles by 2035 to allow those running on synthetic fuels.

The real dilemma is this: it is almost certainly the case that the drive to focus on the rapid development of electric vehicle technology has diverted attention, and funding, away from other potentially more effective solutions such as hydrogen.


Automotive & Transport

Read more

The real dilemma is this: it is almost certainly the case that the drive to focus on the rapid development of electric vehicle technology has diverted attention, and funding, away from other potentially more effective solutions such as hydrogen.

Mark Lumsdon-Taylor  Partner and Head of ESG

To achieve the best result for both the planet and the people who live here, we need to refocus on all of the technologies that could comprise the optimum road vehicle power solution; and ensure we avoid a particular technology winning through sheer weight of investment as opposed to technical superiority or true fitness for purpose.

Get in touch

If you would like to know more about how you can deliver a more sustainable future for your business and assess what changes need to take place, please contact our Sustainability & ESG team.

Contact the team