"CMIA helped to explain the potential for project-based mechanisms across a variety of constituencies and is a key voice driving the conversation on results-based finance and sector approaches for scaling-up emission reduction investments. We urgently need input from organisations like CMIA to operationalise Art 6 of the Paris Agreement."

Mr. Franz-Josef Schafhausen, former Director General Climate Change, European and International Affairs, Federal German Ministry of the Environment, Nature Conservation, Building and Nuclear Safety

Can Autonomous Electric Vehicles accelerate the low carbon transition?

28th March 2018 by CMIA

In some projections, A-EVs alone could bridge 1/3 of the gap needed to limit warming to 2 degrees, triggering major business disruption.

Autonomous Electric Vehicles (A-EVs) use AI, next-generation batteries and other Fourth Industrial Revolution (4IR) technologies and could transport passengers more efficiently, without the need for drivers or fossil-fuel-driven internal combustion engines (ICEs). Given the advantages of cleaner and quicker transport, A-EVs could potentially accelerate much-needed greenhouse gas emissions reductions in the transport sector.

Our Low Carbon Economy Index 2017 highlights the considerable gap between current decarbonisation efforts and the Paris Agreement’s goal to limit warming to 2 degrees Celsius. This ‘transition gap’ emphasises the need for immediate action, and indicates a number of risks and opportunities for business. These include market, technology and policy disruptions that could bridge the gap to 2 degrees but present substantial risks to a number of sectors. A-EV technology is one example of such a disruption.

So just how great an impact could A-EVs have? And how certain can business feel about the future of this technology? We’ve analysed a range of  projections to model the impact of A-EVs and answer these questions.

The projections tell different stories, driven by the underlying assumptions behind these ‘scenarios’. We’ve focused on the following recently published scenarios:

We’ve isolated the reduction in oil demand triggered by A-EVs in each scenario to give an upper bound, ‘best case’ estimation of their potential impact on global carbon intensity. For comparison, we considered two additional scenarios. These project potential reductions in oil demand from road transport as a result of more stringent policy measures:

How great an impact could A-EVs have?

A-EV projections vary significantly, with implications for their impact upon decarbonisation efforts.

Rethink X’s scenario implies that renewable energy-powered A-EVs alone could bridge around a third of the gap between the 2011-16 decarbonisation rate (2.7%) and the 6.3% annual reduction needed for 2 degrees, up to 2030. BP and Wood Mackenzie’s scenarios show a more modest impact, increasing reliance on other technologies and sectors to bridge the gap to 2 degrees.

Multiple factors besides A-EV penetration will impact whether net vehicle emissions rise or fall.

Our analysis isolates A-EV technology to show ‘best case’ decarbonisation impacts from each scenario. However in real terms a range of other factors are likely to influence emissions from vehicles, such as the number of Internal Combustion Engine (ICE) vehicles left on the road. RethinkX’s view that ICE vehicle ownership would actively fall while A-EV usage increases would represent a major deviation away from rising ICE vehicle ownership trends.

A-EVs will catalyse major disruptions if they deliver a step change in decarbonisation

The impact on oil demand and the wider economy in BP, BNEF and Wood Mackenzie’s scenarios is noticeable, but does not amount to a paradigm shift. In contrast, RethinkX envision a total reshaping of mobility as an on-demand service. This fundamental shift leads to oil prices dropping to $25/barrel by 2030. This leads to oil fields, pipelines and refineries all increasingly at risk of becoming uneconomic or “stranded assets”, with knock-on effects for investors.

What are the implications for business?

This range of scenarios demonstrate the current uncertainty of how this technology could impact the economy. A-EVs are just one of a number of emerging technologies under the Fourth Industrial Revolution (4IR) that could disrupt current business models. A range of stakeholders are likely to be impacted by these disruptions, including vehicles manufacturers; oil producers; utilities companies; regulators and consumers.

View the full report here: https://www.pwc.co.uk/sustainability-climate-change/assets/aev-report-website-final.pdf

Source: https://www.pwc.co.uk/services/sustainability-climate-change/insights/autonomous-electric-vehicles.html