Daimler Truck

How the decarbonization of the transport industry succeeds

15.03.2023 | CEO News

Martin Daum spoke to representatives of politics, non-governmental organizations (NGOs), industry and academia about the three factors that will make decarbonization of the transportation industry a reality. The occasion was an event organized by the newly opened European Transport and Energy Research Centre (ETERC), which is part of the Institute of Transportation Studies at the University of California at Davis.

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Good evening everyone. I am glad to be with you tonight. Before I share a few thoughts on decarbonization, I would first like to express my congratulations. First of all: congratulations to UC Davis for setting up this event! And particular congratulations for setting up the European Transport and Energy Research Centre! I know that three people have played a key role here:

  • Dan Sperling, head of UC Davis Institute of Transportation Studies,
  • Lew Fulton, Director of STEPS and Energy futures within ITS-Davis,
  • and Pierpaolo Cazzola, Director of the European Transport and Energy Research Center.

Well done, my sincere congratulations!

In the U.S., the UC Davis Institute of Transportation Studies is doing very valuable work. The Institute produces data to support climate and transportation policies and creates a forum for manufacturers, policymakers, academics and NGOs. It is a great platform to discuss the data and policies in a very constructive way – a way that has led to regulations that are positive for the environment and for business. I am therefore sure the European Transport and Energy Research Centre will play a very positive role here in Europe going forward. Today’s event is a great start. Here all stakeholders come together – and this is highly needed. Because transformation to zero-emission is such an enormous task that no one can do it alone. We only can master it together.

Some of you probably know that I like to compare this task to a multiplication with three factors. To make zero-emission transport a success we do not just need the right vehicles. We also need the right green energy infrastructure for battery and hydrogen vehicles. And we need cost parity with conventional vehicles. Our customers must be able to easily charge their vehicles. And they must be able to make money with them. Otherwise they do not buy them. It is that simple.

These three factors are linked in a multiplication problem, which means: If one factor is zero, the entire result is zero. I first introduced this formula more than three years ago. But today it is more relevant than ever. The reason is this: These factors are not moving at the same speed.

When we look at factor one – vehicles – the commercial vehicle industry is fully committed to decarbonization. And we do not just say that – we deliver. Our industry is bringing more and more zero-emission vehicles on the road. At Daimler Truck, for example, we already had eight zero-emission trucks and buses in series production by the end of 2022. In the course of 2023, there will already be ten zero-emission models available. And in the next years additional models will follow, particularly for long distance. We are rolling out a comprehensive zero-emission portfolio that is purpose-built for the various use cases of our customers.

This means: On the road to zero-emission transport, vehicles and manufacturers are not the bottleneck. If regulators want to speed up the transformation to zero-emissions, it therefore does not help to set even more ambitious CO2 targets for manufacturers.

I want to be very clear here: We are not going to hit our targets as society by pretending we can just mandate more zero-emission vehicles. To really speed up this transformation, regulators should rather focus on the other two factors that are needed as well. Because today there is no cost parity. And there is way too little momentum in building a green energy infrastructure. In Europe, for example, 50,000 publicly accessible truck charging stations need to be in operation by 2030 to meet the CO2 reduction targets. In addition, around 700 hydrogen filling stations will be required. Today only a few initial facilities are up and running.

So my first message tonight is this: There is good progress with zero-emission vehicles – now we need to make sure we catch up with green energy infrastructure and cost parity.

My next message is that we now need to differentiate. Because the cost parity challenge is very different from the infrastructure challenge. While both factors are equally important, the good news regarding cost parity is this: Cost parity can be achieved relatively fast if policymakers are ready to make some bold decisions. It can be achieved, for example, by the right CO2 pricing, CO2-based toll, or subsidies. This means: Cost parity just needs the right regulatory framework – and such a framework can be built fairly quickly.

In contrast, a green energy infrastructure cannot be implemented by the stroke of a pen. This infrastructure has to be physically built, all the way from green energy generation to distribution. To get this accomplished in due time, two things are necessary: All stakeholders need to get at it right away. And we need to drastically speed up infrastructure projects. Today, lead times often are prohibitively long. Utilities usually respond to fleet depot electrification requests with multi-year timelines – and this is just one example where things take way too long. I therefore strongly agree when people argue that we need a kind of “Bureaucracy Reduction Act”. A blueprint can be the construction of the first new LNG terminal in northern Germany. Here, approval and implementation was a matter of months instead of years – and this would be the right way to go. As Daimler Truck, we help to move things forward with green energy infrastructure. We are in intense discussions with policymakers and energy companies, and we have started some key pilot projects together with partners.

My third and last message tonight is about some important regional differences when it comes to managing the transformation to zero-emissions. Here, Europe and the U.S. are taking a fairly different approach. Europe is spending a considerable amount of money to subsidize conventional, carbon-based energies. And, of course, it is quite understandable that policymakers want to make the current energy price inflation bearable for the general public. But it has to be clear: By doing so, Europe is slowing down transformation instead of accelerating it. The U.S., in contrast, has chosen a different path. With the Inflation Reduction Act the U.S. is not subsidizing the old world. It is rather incentivizing future-oriented investments into the new world of zero-emissions.

And there is another topic where Europe and the U.S. proceed differently. I mean the way they are dealing with conventional drive technologies. In Europe, the EU Commission has proposed a new Euro VII emission standard which is hardly feasible in terms of time and technology. This applies in particular to the particle number limit in conjunction with the extremely low NOx (nitrogen oxides) and N2O (nitrous oxide) limits. In the U.S., the latest Clean Trucks Plan of the Environmental Protection Agency (EPA) is pushing internal combustion technology to the limits – but not beyond. The Environmental Protection Agency considered critical stakeholder feedback and found a solution that will result in real environmental progress without significantly reducing fleet options.

On a more general note, my position here is this: Regulations must be data driven, technologically feasible, and anchored in the realities of the commercial vehicle market. NGOs, governments, researchers, manufacturers, fleets, and utilities must work together to create sustainable regulations to accelerate zero-emission transportation. And one thing is obvious: All the money and resources that go into even stricter emission standards for conventional drive technologies cannot go into zero-emission technologies. And this will slow down transformation.

This is the food for thought I wanted to offer you for dinner. This is how I currently see the big picture of zero-emission transformation – the progress and the challenges. I am confident that the European Transport and Energy Research Center can help to tackle these challenges. For example, by providing the data we need to evaluate the best way forward, and that we can discuss in forums like today’s. This will help encourage more transatlantic conversations and more sharing of information – and will subsequently lead to better policies. With that, I am looking forward to discussing all of this further over dinner.

Thank you very much.