A Worldwide Commitment To Zero Emission Cars: The OECD Should Lead The Charge

Will the automobile sector meet the EU targets to reduce the CO2 emissions of new passenger cars and light commercial vehicles by 100% by 1 January 2035?
A Worldwide Commitment To Zero Emission Cars: The OECD Should Lead The Charge
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Gasoline and diesel cars are responsible globally for over 25% of crude oil consumption and outdoor air pollution that contributes to millions of premature deaths. Despite these negative impacts, these cars continue to dominate the automotive landscape. Nearly 1.3 billion fossil fuel cars are on the road globally, and their number continues to increase fast. Sales of electric vehicles (EVs) are also rising rapidly, yet they accounted for only 14% of new car sales in the world last year.

Under current trends, clean vehicles will represent only a small share of the total number of vehicles in use by 2050, according to projections by the U.S. Energy Information Agency. To reverse these trends, we need comprehensive policy packages, based on whole-of-government initiatives and cost-effective actions. We also need a global agreement requiring that all new cars will be zero emissions by 2035.

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Fast EV adoption in some countries

Several countries have made visible progress in the adoption of electric vehicles and show the way forward. There is a notable enthusiasm for clean cars in China, Denmark, Finland, Germany, Iceland, Netherlands, Norway, Sweden and Switzerland. California also stands out, with 39% of registrations in 2021.

A recent CEP Policy Brief identifies three crucial policies driving the adoption of electric vehicles:

  • Fiscal incentives play a key role in making electric vehicles more affordable to all citizens. This includes tax credits, lower VAT rates, reduced registration fees, road tax exemptions, free parking, and toll-free highways. Making these fiscal incentives subject to income caps is essential to ensure cost-effectiveness.
  • Widespread availability of charging stations is crucial to address the driving range anxiety of drivers. For instance, the U.S. Infrastructure Investment and Jobs Act includes US$7.5 billion to help build a national network of 500,000 electric vehicle chargers along the country’s highways.
  • Making electricity affordable relative to gasoline and diesel is also essential. In countries with high taxation of fossil fuels, switching to electric cars comes with significant savings, especially for frequent drivers.

Multilateral pledges

To complement these initiatives, the European Union has agreed to targets that reduce the CO2 emissions of new passenger cars and light commercial vehicles by 100% by 1 January 2035 in all member states. This is sending a strong signal to the automobile sector, which is now getting ready for this deadline.

The OECD could broaden this pledge to non-EU countries, using one of its legal instruments, as it has done recently with a pledge to eliminate plastic pollution in the environment. OECD member and accession countries could pledge that all new passenger cars and light commercial vehicles will have zero emissions by 2035. This would encourage G20 Leaders to make a similar commitment when they meet for their next summit.

This would not solve all the world’s energy challenges, but it would be a good start.

Learn more by reading the report: Global EV Outlook 2023

The Global EV Outlook is an annual publication that identifies and discusses recent developments in electric mobility across the globe. It is developed with the support of the members of the Electric Vehicles Initiative (EVI). This edition features analysis of the financial performance of EV-related companies, venture capital investments in EV-related technologies, and trade of electric vehicles. 

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