How can fuel retailers navigate the EU’s dynamic path to net zero CO2 emissions?
By Mark Schwarz, Head of Public Policy, Gilbarco Veeder-Root
Decarbonisation is a paradigm shift for the transport sector, but many questions remain regarding speed, scope and process.
Although it might seem distant, the EU’s 2050 net zero target is already influencing the vehicles used on European roads while continuing to divide industry and policymakers, but we’ve reached a fork in the road and fuel retailers need to be mindful.
Change is inevitable. Transport produces almost a quarter of the EU’s greenhouse gas emissions, and 73% of that comes from road vehicles [1] – despite improving efficiency, passenger and freight traffic have increased by 25% and 45% respectively between 1995 and 2022 [2]. It is therefore hardly surprising that it is a priority, with current EU regulations setting a 2035 deadline for all new cars and light commercial vehicles (‘LDVs’) to emit zero CO2 at the tailpipe [3]. If that sticks that would effectively begin the regulated phase out of new petrol, diesel and hybrid passenger and light-duty vehicles across the next decade.
Meanwhile, consumers are benefitting from fast-evolving technology and economies of scale as the automotive industry works towards those deadlines under sufferance in some cases. Like-for-like battery costs fell 84% in the decade to 2024, according to Bloomberg NEF [4], offering a more affordable, capable and varied selection of vehicles. Industry body ACEA (European Automobile Manufacturers Association) claims there are 290 plug-in hybrid and battery-electric models on sale in Europe today [5].
However, those strategies and timeframes are challenged on two fronts. Last year’s European Parliament elections have shifted the balance of power towards parties that favour a slower and/or more technologically neutral route to net zero, if not a U-turn. Last month the Commission watered down its goals [5]. Pushback including from the automotive sector, which employs 13m Europeans and contributes €1tn in GDP, has advanced the arguments for a more technology neutral approach including roles for zero and low-carbon fuels, including e-fuels and advanced biofuels (many of which can bring immediate environmental benefits) [6]. Finally, just last week the German chancellor, Friedrich Merz urged the EU to soften the 2035 cutoff date for the sale of combustion-engine cars [6].
In July, the Commission began a consultation inviting public feedback on an “economically viable and socially fair” route to zero-emission mobility, using a range of technologies while strengthening Europe’s automotive industry and creating jobs [7]. The results of the consultation are now expected in the week of December 15th.
What should C-store owners make of all this? Traditional fuels still have a place. PwC is forecasting 70% of European mileage and 50% of the vehicle fleet will still use petrol or diesel in 2040, and they will need a place to fill up [8]. Equally the use of renewables will play a role using existing infrastructure.
But the forecourt will diversify as electricity joins hydrogen, e-fuels and other low-carbon alternatives so it’s critical that C-store owners plan for a multi-energy future remaining agile as the regulatory environment adapts with the changing political landscape, technological development and the scaling of infrastructure to support new technologies. This can be achieved in two ways.
First, maintaining and improving existing infrastructure remains hugely important, whilst new technologies are introduced to sites, at different speeds per country and incrementally over time.
Second, it is hugely important to choose integrated solutions that offer the ability to add, remove, upgrade and certify products, infrastructure and software, whether they be fuelling products, chargers, payment or automation technology.
REFERENCES:
[1] https://www.eea.europa.eu/en/analysis/indicators/greenhouse-gas-emissions-from-transport
[2] https://www.eea.europa.eu/en/topics/in-depth/transport-and-mobility
[7] https://www.acea.auto/files/Joint-ACEA-CLEPA-letter-to-President-von-der-Leyen.pdf