Input to the consultation on the EU Climate ambition for 2030
Our member companies provide the hardware and the software infrastructure to charge all types of electric vehicles at all power levels. E-mobility will be instrumental in supporting the decarbonization of the transport sector in Europe. It is therefore crucial for Europe to develop an integrated climate policy that also takes transportation into account. Below we outline key considerations for the EU’s climate 2030 ambition.
1. ETS and road transport
With regard to the potential extension of the Emission Trading Scheme (ETS) to the road transport sector, ChargeUp Europe would like to stress the following:
Such a proposal will require an adjustment of the CO2 price for the road transport sector to make the measure efficient. Many studies have demonstrated that the current CO2 price would not have a meaningful impact on the reduction of CO2 emissions from the road transport sector since the price gap between conventional technologies and (near) zero-emission technologies is much larger compared with other sectors. A sectoral approach should therefore be envisaged.
Setting up a dedicated CO2 price for some sectors such as road transport could alleviate this but would then lead to a situation where an overlap of measures would create a negative impact on the final consumer. The EU should avoid duplication of regulations as the automotive sector is already regulated through other CO2 reduction measures such as CO2 targets for new vehicles and ETS for manufacturing sites. It would be more effective to ensure these Regulations are implemented properly and the targets are achieved.
In order to assess the effectiveness of carbon pricing in non-ETS sectors (through an ETS extension or other carbon pricing tools), the upcoming European Commission impact assessment needs to look at the number of emissions sources, respective abatement costs, effect on the overall cap and the existing national policies and taxes.
It is also important to consider correction factors to reflect different low carbon fuels due to differences in efficiency between electric motors, fuel cells, and combustion engines.
Recommendation: We encourage the EU to align the existing CO2 emission standards with the Green Deal objectives and ensure proper and effective implementation to make sure targets are achieved rather than extending ETS to road transport.
2. Renewable power credit scheme for EVs
Decarbonizing the energy system goes hand in hand with increasing the share of renewable energy to power electric vehicles. While the Renewables Directive set targets for Member States to use renewables sources for transport, we believe that there is an opportunity to better leverage the role that electricity from green sources could play.
In RED II, renewable electricity used directly in transport can count towards the 7% advanced fuels target. Renewable electricity is subject to multipliers (1 energy unit of renewable electricity used in road transport can count 4 times towards the target), whereas renewable electricity used in rail transport can count 1.5 times (the latter is voluntary). Countries must use the share of renewables in the national grid to claim the share of renewable electricity used in transport.
In the case where the charging installation is directly connected to a renewable energy generation facility, 100% of the renewable electricity can be counted. In many countries, the compliance mechanism for the RED target rewards only the use of liquid renewable alternatives - mainly biofuels. To reward the use of renewable electricity in transport, such a mechanism would allow for a technology-neutral and cost-effective implementation of the advanced target and would include and treat all renewable energy forms in an equal manner.
So far, the majority of EU countries have not incentivised the use of electricity in the same way they do with biofuels. Through the implementation of the new RED for the period 2021 to 2030, Member States have the opportunity to include renewable electricity in their compliance mechanism to reach a target for renewable advanced fuels.
California, Netherlands and Germany are three examples showing that such a system will diversify the options available to the RED obligated parties - fuel suppliers - for meeting their targets and allow them to use other options beyond biofuels. It will also generate new financial resources to support the decarbonisation of transport and energy systems. It will encourage the uptake of renewable electricity and provide an additional private financing route for the roll-out of electric charging infrastructure or targeted rebate programmes for purchasing EVs. The system could generate up to €5.9 billion of credit value in 2030 at EU level or up to €1.2 billion for a country like Germany.
A crediting system is a key tool for creating a level-playing field between renewable electricity supplied to EVs and blended biofuels, enabling the most cost-effective compliance with RED II for fuel suppliers.
Unfortunately, EU rules do not propose a harmonised way of integrating electricity in fuel markets, but Member States have the possibility to set a dedicated crediting system in place. Such a national system will give companies that supply electricity to transport the opportunity to qualify for clean fuel credits which they can sell to fuel suppliers (e.g. oil companies or petrol stations). On top of diversifying compliance options, this is an opportunity to implement the “polluter pays principle”: Fuel suppliers that deliver final transport fuels will need to purchase renewable electricity credits to reduce their GHG footprint, when in most cases these fuel suppliers don’t invest themselves in electric mobility or in the production of electricity as a transport fuel. At the same time, the system can create a direct financial flow to entities taking part in building electromobility services, without using public money.
HOW TO ENABLE SUCH SCHEMES
Who is entitled to generate the credits? In the Dutch system, companies that deliver electricity to road vehicles and that have connections to the electricity grid exclusively for that purpose are entitled to credits. This means that in reality only a small share of very large charge point operators benefit (smaller ones have not opted for the system and are excluded by the system). The way the system is applied in California is different as it is centralized through the California Air Resources Board (CARB) who provides credits based on estimates for all entities delivering power to EVs (incl. private charging).
For non-residential areas, several entities such as EV fleet operators, charging point operators and car makers (e.g. through metered information on board the vehicle), can opt into the system and generate their own credits. This system applies not only to electric cars, but also to electricity used by buses, trucks, rail lines and forklifts. In Germany, fuel suppliers pool with utilities, which provide electricity for EVs in public (certified consumption) and private charging points (estimated consumption basis).
Functioning of the crediting system: Electricity can be traded as a renewable unit (as in the Netherlands) and is then subject to the RED multiplier or, as it is applied in California, where there is a carbon intensity target set for the fuel supplier which extends the scope of the system to all low carbon fuels (not only renewables). Companies can also demonstrate ‘carbon free’ charging (e.g. solar panels on charging sites) which increases the electricity credits they receive. In Germany, only utilities can sell their renewable electricity credits to fuel suppliers. Charge point operators, electro-mobility platforms, car manufacturers and individuals that own an EV cannot participate, which is a real burden to the system.
Allocation of the revenue: It is desirable that the revenue generated from such schemes would be allocated to the deployment of charging infrastructure and would at the same time decrease the need for public finance intervention for such networks. In Germany, the revenue from selling the credits stays with the utilities. The German scheme does not include any earmarking of revenues for promoting EVs. In the Netherlands there is no re-allocation of the funds to e-mobility projects. There is no provision in the legislation – national and EU - to do so. In California though, the revenue from selling credits is earmarked by utilities for rebate programmes including providing point-of-sale rebates to EV buyers or payments to customers owning an EV.
Recommendation: We encourage European and national authorities to further explore and implement credit mechanisms to leverage the potential of renewable power for road transport as part of the renewable fuels obligations in REDII.