Mobility of Tomorrow: Are Affordability and CO₂ Reduction in Conflict?

  • Expert Article

Martin Rothbart
Senior Product Manager, Energy & Sustainability

For more than four years, Martin is responsible for business development in the areas of energy, hydrogen, alternative and synthetic fuels as well as the sustainability in the product lifecycle. That includes predictions and the analysis of future market potential in various global regions.

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As a global society, we are pushing hard to achieve a transformation to net-zero-CO₂ but without loosing energy security and our current living standards. The transformation in the mobility will come at cost, which endangers affordable individual mobility in the future. Doing nothing, however, will generate even higher costs.

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Main Takeaways of This Article

  • Limiting the global GHG emissions and lowering the CO₂ output will cost us $ 9 trillion per year until 2050
  • When doing nothing the negative effect of climate change to the global economy accounts for $ 23 trillion per year in 2050
  • Transport emissions grew at an annual average rate of nearly 1.7 % from 1990 to 2021, faster than any other end-use sector
  • Fossil-lean mobility will be more costly in the short-term, mainly due to fuel costs and achieves cost parity 2030+

Net-Zero Comes at Cost – Doing Nothing Comes at Cost as Well

According to a McKinsey study "The net zero transition" the overall cost for reaching net zero in 2050 will be around $ 275 trillion or $ 9 trillion per year. Based on the McKinsey study developing countries and fuel rich regions will be more exposed to the transition than other regions. Let's assume the wealthy industry nations – the top 500 million households take over the burden. That would lead an amount of to $ 550,000 per household until 2050 (or $ 18,000 p.a.).

Projections indicate that by 2030, various alternative energy carriers, including electricity, hydrogen, and e-fuels, will be in a similar cost range per kilometer driven.

- Martin Rothbart, Senior Product Manager, Energy & Sustainability, AVL

Doing nothing at all, the climate change can be expected to reduce the global economic output by 11 to 14 % in 2050 according to a report from Swiss Re. That sums up to $ 23 trillion in reduced annual global economic output worldwide caused by climate change. That is more than the GDP of U.S. Different regions will be hit on different levels, where Asia will see the highest impact. The climate change impact is already seen today. Referring to Christian aid, the ten most financially costly events each had an impact of $ 3 billion or more.  

Reducing Fossil Fuels as a Transformation Option Into the Future

Most of the global energy demand is based on fossil energy supply. In the primary energy demand for all industries and applications only 14 % of the demand is covered by renewables. When zooming into the road transport the picture gets even worse. In the context of road transport, over 90 % relies on oil-based fuels. This reliance contributes to the sector's significant share of annual global greenhouse gas emissions.

The EU Emission Trading System (ETS), has seen increased costs for avoiding CO₂ emissions. However, the ratio between CO₂ avoided through the ETS and incentives for battery electric mobility remains high. This could potentially shift emissions from the transportation sector to the energy sector.

There are even higher costs associated with alternative and green transport options compared to conventional options in terms of capital expenditures (CAPEX) and operational expenditures (OPEX). However, BloombergNEF (BNEF) predicts that battery electric vehicles (BEVs) will achieve price parity with combustion engine vehicles by 2026, driven by battery cost reductions. For commercial vehicles, fuel cell powertrains are projected to have the lowest total cost of ownership (TCO) among zero-emission options in 2030 for long-haul applications. The overall TCO is influenced by factors such as driver costs and fuel costs, which have become more volatile due to the global energy crisis.

Non-fossil energy carriers currently have a cost disadvantage compared to fossil counterparts. Projections indicate that by 2030, various alternative energy carriers, including electricity, hydrogen, and e-fuels, will be in a similar cost range per kilometer driven, although specific costs vary by country and technology.

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Martin Rothbart
Martin Rothbart

Senior Product Manager, Energy & Sustainability

For more than four years, Martin is responsible for business development in the areas of energy, hydrogen, alternative and synthetic fuels as well as the sustainability in the product lifecycle. That includes predictions and the analysis of future market potential in various global regions.