How can we make investment in eco-friendly transport count?

Investment in electric vehicles and other forms of electric transportation is now the hot-button global investment category when it comes to putting cash into cleaner, greener technologies. In fact, investment in this critical area has actually overtaken renewable energy investments and, according to a study by Bloomberg, now accounts for a third of global energy transition investments.

Which is just as well, as transport’s share of total carbon emissions is growing. The Department of Transport, in its recent announcement of new plans to reduce car use and car dependency, noted that 39 per cent of the State’s transport emissions are from cars, while eco-think-tank Transport & Environment estimates that transport emissions will account for almost half of all of Europe’s greenhouse gas emissions (GHG) by 2030 because “the transport sector has decarbonised three times slower than the rest of the economy, making it the ‘problem child’ of Europe’s climate efforts”.

So it’s good news that more investment is being ploughed into making up that deficit.

“We do need a modal shift and we do need more public transport use, not just in Dublin but right down to the local community level” says Stephen Prendiville, sustainable infrastructure leader at Deloitte.

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“That investment will almost entirely come from Government, whereas, when we talk about electric vehicles and charging, almost all of that investment will come from the private sector – it’s sort of a public service via private-sector investment.”

Money flowing into such areas is almost unquestionably a good thing but surely we need to tread financially carefully. Investment money will tend to flow to where the best and quickest returns can be found – but how do we make sure that those are the same areas which are going to give us the most ‘green’ outcomes?

“I tend to use the word sustainable” says Prendiville. “Something that’s green might be good for the environment but it may or may not be sustainable. So I go with sustainable as the balanced measure.”

Prendiville says this very question is driving a lot of legislation at the moment, “such as the Sustainable Financial Reporting directive, such as the Corporate Responsibility Reporting directive – and those are all about creating that information flow so that investors can have confidence, and that they are actually putting their money in a place that’s sustainable”.

So it’s about accepting that everything has a carbon footprint “but then working out whether an investment in one particular area is more green, more sustainable than it would be in another,” he adds.

With that in mind, there are those who feel that directing investment towards electric vehicles should be the last thing we do. Heletjé van Staden is assistant professor of supply chain management at the Smurfit Business School in University College Dublin (UCD); she feels investment ought to be redirected to other areas first.

“The recent annual EPA report stating that 2022 transport GHG emissions increased by 6.7 per cent clearly shows that we are not close to doing enough, as the EU average for the same period was an increase of approximately 2.7 per cent,” she says. “Especially considering that Ireland has committed to halve its total transport emissions by 2030 and reach net zero by 2050.”

EVs should be used for unavoidable emissions – once we’ve improved our operational efficiencies and minimised or eradicated our avoidable emissions

—  Heletjé van Staden

Van Staden points out that EVs and electrification “are still often regarded as luxury beliefs”. While acknowledging that accessibility and uptake is slowly increasing, with 19 per cent of new cars sold in the Republic in 2022 being electric, the second-hand market, which would allow access to the majority of the Irish consumer base, is yet to take off, she points out.

“EVs are still too expensive for most people and research has shown time and again that subsidising new vehicles favour richer households, able to purchase new vehicles regularly,” she says. “Research further shows that EV adopters are generally wealthy, which may diminish efforts of equity, inclusion, and living standards.”

Van Staden thinks pleople – including investors – should follow the avoid-shift-improve framework, which in this case means: avoid unnecessary travel; shift to public transport and active travel; and only then, finally, improve, by taking the carbon out of the cars we still use at that point.

“EVs should be used for unavoidable emissions – once we’ve improved our operational efficiencies and minimised or eradicated our avoidable emissions,” she says.

Of course, it’s not just cars. Other forms of road transport have to make the change to electric power too and they may require even larger investments.

“We’re seeing the first electric buses and trucks on routes around Ireland, along with a growing commitment from the transport and logistics space to convert to electric fleets,” says Chris Collins, country president Ireland at Schneider Electric.

“Lots of businesses are interested in EV charging as part of their broader decarbonisation strategies. EV adoption has been influenced by the benefits smart charging can offer and the savings businesses can make by mapping routes and journey times based on their capacity requirements. This applies to fleet cars, delivery vehicles and even buses.”

Collins believes electric vehicles can be a bigger part of the solution than merely taking exhaust emissions out of the equation.

“A network of charging points can be achieved by working with stakeholders across the EV-charging landscape to create an infrastructure based on renewable energy that charges and stores EV battery power, using solar power by day and wind power by night,” he says.

“Modern EV batteries have electricity storing capabilities and are designed to support bidirectional charging and vehicle to grid transfer. This will require investment support for solutions that will cover use cases like destination charging in places like cinemas, shopping centres and places of work where drivers can top up their vehicle.”

Getting a sufficient number of electric cars on the road quickly enough is still a limiting factor, not least because in the first couple of months of 2024 electric car sales slowed down considerably.

“With circa 110k-115,000 EVs on Irish roads currently – 5 per cent of total cars – this leaves a gap of roughly 730k new EVs required over the next six to seven years to hit the Government’s emissions reduction targets of 51 per cent total reduction across all sectors,” says Simon Madden of vehicle leasing company Nifti Business.

“According to recent analysis conducted in UCC, to achieve this Ireland needs about 41,000 EV sales in 2024, which is almost double 2023′s figure of 22,493. But, critically, that figure needs to rise to 185,000 per year by 2030.

“So, despite the rapid growth in EVs, you can see the scale of the challenge ahead in terms of the volume of EVs needed if they are to help hit the ambitious targets. Obviously when looking at the numbers above, there is more we could do and more we need to do. However, to be fair to the Government and associated agencies, there are good incentives in place for people to switch to EVs. Certainly, these grants need to stay in place longer-term.”

Looking further ahead, there will be an enormous need for the wholesale recycling of electric vehicles and, especially, their batteries. Unless there is a big change in the chemical make-up of battery designs in the coming years – something that is being worked on but has not yet come to fruition – we will struggle to keep up with the global demand for lithium, manganese, and other rare-Earth metals batteries need.

Thankfully there is a solution: recycling. Almost all the metals and components in a battery can be recycled – almost endlessly so. Renault, among others, is investing heavily in this and has turned its factory in Flins, France, which once made the Renault 5 and Clio hatchbacks, into an enormous “re-factory” where it will pull apart tired, end-of-life cars and reuse as many of their components as possible, right down to the lithium in the batteries.

BMW has recently shown a concept car called the i-Vision Circular, designed to be not only easier to pull apart for recycling at the end of its life, but also to be made entirely of recycled materials from the get-go.

BMW’s software team, working at its campus in Cape Town, South Africa, is also working on an app which can, in real time, monitor the scrap value of the various components in a car, as well as monitoring the health of the car, and can work out when is the right time for an owner to bring it back for recycling.

In the Republic of Ireland considerable energy and investment are being put into recycling and end-of-life vehicle programmes.

“Investment is coming in – and increasingly so,” says Elena Wrelton of ELV Environmental Services (ELVES). “The volume of electric vehicles (EVs) reaching end-of-life in Ireland is still low. However, we still need to be prepared for greater capacity and the sector has been gearing up for increased volumes of electric end-of-life-vehicles for a number of years now.

“Over 200 people have now received training through our Electric ELVES programme and, in addition, we have recently started providing EV safety kits, which include the necessary tools for the job, to authorised treatment facilities (ATFs) in our network that have completed the training.”

As with BMW, ELVES is working towards an entirely circular economy when it comes to making, breaking, and reusing cars, and has begun the Electric Loops project.

“The Loops project aims to investigate the reuse, remanufacturing and recycling value in electric vehicles. By providing this information to ATFs and metal recyclers, we hope that it will support the development of reuse and recycling avenues for EV parts – the circular loops of the future,” says Wrelton.

There’s a national foreign direct investment effort that we need to make, similar to what we saw with the pharma and tourism industries

—  Stephen Prendiville, Deloitte

“The project is funded by the EPA’s Green Enterprise programme and has involved the removal of the EV-specific parts from two electric vehicles, their listing for sale for reuse, feedback from remanufacturers, as well as testing and assessment of the parts for recycling, all within an Irish context.

“Before starting the Electric Loops project we recognised the availability of data in this area to be very low, with many ATFs having no experience of electric vehicles and only some experience of dismantling hybrid vehicles. ELVES intends this project to be a significant first step in providing useful information to ATFs and in understanding the economics of recycling the modern electric vehicle.”

Investments in green or sustainable technology have to cover all of the above bases – and many, many more. Is the State, then, on the right track? Can we ensure that our money is not only being spent well, but that we can continue to raise the needed cash?

“The question becomes one of focus versus flexibility,” says Prendiville. “So, by maintaining the focus on certain areas we can get stuff done but by keeping some flexibility in the system we can create an openness of mind to new ideas.

“The base nature of our economy is that it’s small and it’s open, so we’re not in a position to dictate terms as to where the money goes.

“I would almost say that there’s a national foreign direct investment effort that we need to make, similar to what we saw with the pharma and tourism industries. We need to create a mission around that and we need to be nimble and able to react. So it’s very much a work in progress.”