Fuelling Europe’s Future: How the transition from oil strengthens the economy

The findings summarized below followed six months of discussion and analysis between the consultants and the expert working group:

1. The analysis showed that by 2030 the shift in spending away from diesel and gasoline use in road transport would reduce EU spending on imported oil by €49bn.
2. More spending the European automotive and infrastructure value chains and towards domestically produced electricity and hydrogen would lead to a mild increase in GDP and a net additional 206,000 jobs in Europe and could generate annual savings for European motorists. The impact on the employment structure requires permanent monitoring in order to anticipate the social consequences of structural change.
3. A shift to low-carbon and zero-emission vehicles in Europe would reduce CO2 emissions by 88% compared to today and emissions of particulate matter from car exhausts would be cut from around 28,000 tonnes per year in 2018 to below around 750 tonnes in 2050, meaning that as many as 467,000 premature deaths could be avoided.

After a panel debate on how automotive innovation can create jobs and provide clean air in Europe, Lyubomir Ganchev, Advisor to the Bulgarian Minister of Economy concluded: “Reducing bad air quality in cities is one of the top priority of the Bulgarian Presidency of the European Union.”

• Thanks to E-mobility, Europe could cut its spending on oil imports by €49 billion in 2030, according to the report’s central scenario. At present, the European Union imports 89% of its crude oil, the vast majority of which is used for transport fuel. Replacing imported oil with domestically- produced energy will keep many billions of euros re-circulating in the European economy.
• EU economy will be strengthened: In all three scenarios explored, the transition to e-mobility leads to a mild increase in GDP. Overall, there is a net increase in EU GDP as a result of making the fleet of cars more efficient to meet the EU’s 2020 CO2 standards, equivalent to an additional 0.1% of annual GDP in 2030. Further innovation to meet future climate goals would further increase national GDP after 2025. This leads to a 0.2% increase in annual GDP in 2030 and a 0.5% increase by 2050.
• By 2030, e-mobility will help create 206,000 net additional jobs in Europe, but this should not be allowed to mask the significant transformational changes. Efforts must be made to ensure workers who are currently producing legacy technologies are retrained for quality jobs in producing the technologies of the future. From 2030 onwards, the structural changes become much more profound and uncertain. For example, the location of future battery manufacturing will have a significant economic impact, but what proportion of the battery value chain will be located in Europe is difficult to predict.
• Health: A scenario whereby 2030 a quarter of new vehicle sales are zero-emissions vehicles (ZEVs), a quarter are fully hybridised and the remaining half of the fleet becomes mild hybrids, Europe would be on track to reduce CO2 emissions from cars by 88% by 2050 (from around 605 MT per annum in 2018 to about 70 MT per annum in 2050). This improvement to technologies would cut NOx from cars from around 1.3 million tonnes per year to around 70,000 tonnes per year and hence help cut air pollution from causing 467,000 premature deaths in Europe every year.
• Impact on consumers: The purchasing cost of zero-emissions vehicles and diesel/gasoline cars would be almost equal by 2030. In 2020, battery-electric and fuel-cell electric vehicles are projected to be more expensive than diesel and gasoline vehicles and their hybrid variants. However, by 2030 the difference in price will be narrowed as diesel and gasoline cars become more expensive to meet air pollution and CO2 limits and as ZEVs achieve scale economies. There is a convergence in costs in our central case, although not complete parity by 2030.
• Investment in Grids and Chargers: Investments in transport infrastructures are needed but the benefits are likely to outweigh the costs. Up to around €23 billion of cumulative investment in electric vehicle charging infrastructure could be required in Europe by 2030, of which €9 billion would cover publicly accessible chargers. While electricity grids will need modernisation, smart charging could be used to mitigate the costs. Taking Germany as an example, instead of an increase of peak demand by 22 GW in a worst-case scenario in 2050, smart charging can avoid such an increase almost completely. The costs of implementing smart charging can be more than offset by the value created by connected electric vehicles providing services to the network operator. By 2030, the smart-charging benefits per electric vehicle would be around €100 per year.