Who will be first to ban combustion cars?

Cross-posted from GTM Wood Mackensie Business by Jason Deign November 07, 2016
Which Country Will Become the First to Ban Internal Combustion Cars?

The surge of innovation in automated driving and electric vehicles has made the prospect of ubiquitous clean-car fleets closer than ever before. And now a number of major cities, states and countries are introducing measures to enhance vehicle electrification.

Which country is likely to take the next step and become the first to ban conventional vehicles? Several nations have already toyed with the idea of clamping down on internal combustion engine (ICE) car sales. Here are five of the front-runners.

Germany

Last month Spiegel reported that Germany’s Federal Council, which represents the country’s 16 states, had passed a resolution on banning ICEs from 2030 onward.

According to the report, Germany has a carbon reduction goal of 95 percent by 2050, which will likely require significant levels of vehicle electrification. However, observers have noted that a resolution is not the same as a law.

And it is unclear how moves to forbid ICE sales might be opposed by Germany’s powerful auto manufacturing industry. German-owned Volkswagen, which vies with Toyota for the title of the world’s biggest carmaker, controls 270,000 jobs and is not known for its environmental credentials.

India

Germany isn’t the only country eyeing a phase-out of ICEs by 2030. In March, India’s Power Minister Piyush Goyal confirmed his government was planning for India to become a 100 percent electric vehicle nation within 14 years.

With a booming renewable energy sector and no significant petroleum reserves of its own, the move makes a lot of sense for India. But there are challenges. One is that Goyal hopes the vehicle electrification program will be self-funding.

Another more serious issue is that India has a long history of falling behind with major transformation programs.

Netherlands

The Netherlands, which has an electric vehicle penetration level of around 10 percent, voted to ban all new petrol and diesel car sales by 2025 in a motion passed in April. The move, approved by the lower house of parliament, was due to be debated by the senate last month.

Instead, the country announced plans to become “one huge Living Lab for Smart Charging of electric vehicles,” according to a press release.

The Living Lab program is light on targets and timeframes. But with a nationwide network of charging stations already in place, the Netherlands remains a major contender to become the first country banning fossil-fuel cars altogether.

Norway

Already the world leader in terms of electric vehicle penetration, Norway stepped up measures to phase out ICEs in February with a national transport plan target of selling nothing but zero-emission vehicles after 2025.

“The politicians in parliament will decide on the national transport plan in spring 2017, and then we will know for sure,” said Christina Bu, secretary general of the Norwegian Electric Vehicle Association, “but most politicians have said that this indeed will be the goal.”

However, she noted: “Norway will not ‘ban’ fossil-fueled cars.”

Instead, the plan is to use current tax breaks and other incentives to get to a 100 percent electric-vehicle sales goal. “I definitely think this will happen,” said Bu. “Who would want to buy anything else in about 10 years’ time?”

China

The world’s most populous country has good reasons to want to ditch gas-guzzlers.

Vehicle fumes are a major component of air pollution that killed 1 million Chinese in 2012 and put China at the head of a pollution-induced mortality league compiled by the World Health Organization.

Perhaps more importantly for its leaders, China is in the midst of a strategic move to lead the world in electric-vehicle manufacturing. But banning ICEs completely may be a challenge in such a vast market.

Even with the government’s best efforts to support electric vehicles, penetration in major cities is still only likely to be around 60 percent by 2030.

Who will be first?

Even the most aggressive ICE phase-out plans will not come into effect until halfway through the next decade. And Colin McKerracher, head of advanced transport at Bloomberg New Energy Finance, still thinks these targets may be overly optimistic.

“When you dig beyond the headlines, none of them are established policies yet, and most face very significant hurdles,” he said. “Fully eliminating ICE sales by 2025 is simply not realistic. Even 2030 looks very ambitious.”

A complete phase-out may be “potentially achievable in a small country like Norway, but very hard beyond that,” he said. “You can be sure that if any of these [measures] become law in a major car market, there will be significant objections raised by the automakers.”