Green Deal poised to aid EU’s pandemic recovery

The European Union’s ambitious target to become carbon neutral by 2050 is needed more than ever as the region recovers from the economic recession caused by the coronavirus, the deputy director general of the European Commission told viewers of the first Automotive News Europe Congress Conversations panel discussion.

Click here to see the full panel discussion.

The so-called European Green Deal, announced last December, calls for investment of €1tn in environmental measures such switching customers to zero-emissions vehicles, raising questions on whether spending should now be reprioritized to help economies recover from the effects of the pandemic.

Sticking to the terms of the Green Deal will aid that rebound, Clara de la Torre said in the online panel discussion. “The Green Deal is even more important now that we have to recover our economy. Both things go hand in hand,” she said.

The green-focused investment will help create valuable jobs, she said.

The post-pandemic response from European governments to help sectors such as automotive shows they are just as committed to reducing CO2 as before the outbreak, William Todts, executive director of green pressure group Transport & Environment, told the panel.

“We could have seen governments backsliding and saying, 'We don’t want to progress with the Green Deal.' But that is not what we have seen,” he said.

The climate change emergency is as pressing as ever, he said, adding that “the big lessons of the coronavirus crisis are that you can’t negotiate with science.”

Incentive schemes to persuade people back into car showrooms strongly favor electrified cars in major markets such as Germany, France and Spain but also smaller markets.

Kia Europe Chief Operating Officer Emilio Herrera gave the example of Ireland, where buyers can receive up to €10,000 off an electric vehicle.

Government incentives were needed to reduce the prices of electric cars to make their costs comparable to models with internal combustion engines, but the subsidies also increased the pressure on supply chains, Herrera told the panel.

“The biggest issue is the supply of batteries. We are making a lot of progress and reducing lead times, but the demand is high and now governments are putting in place support programs for electric vehicles in most countries,” he said.

The increase in demand for EVs highlights the importance of keeping incentives in place, Herrera warned. “Yes, there is more demand but we have to keep in mind that until we arrive at price parity the demand for electric vehicles is tax driven or government-support driven,” he said. “You see that clearly in Norway, But then you have countries where there is no government support like Poland, where no one is interested in EVs.”

The EU’s strategy to try to move battery cell production from Asia to Europe via the Battery Alliance initiative will help increase supply and reduce costs, T&E’s Todts said. “A big thing that is happening is that we are scaling up,” he said, citing local investments by Asian cell makers such as China's CATL and LG Chem of South Korea, but also European companies such as Northvolt of Sweden.

The resulting economies of scale will reduce battery prices. “I think the spirit of generous government support [for EVs] needs to be time limited," Todts said, "and we need to go to a real market [driven by customer demand rather than subsidies]."