Volvo boss backs CO2 pricing – Euractiv DE

The implementation of EU emissions trading in road transport is necessary to convert truck traffic to electric and hydrogen drives in the long term, explained Martin Lundstedt, head of the Volvo Group, in an interview with Euractiv. He thinks this can also be made socially just.

From 1990 to 2023, transport emissions in the EU have increased by 26 percent, making the sector the “problem child” of climate policy. The EU has set itself the goal of reducing emissions here by 90 percent by 2050.

On Wednesday (April 11) the European Parliament will vote on new regulations for trucks and buses. This requires truck manufacturers to increase the number of zero-emission vehicles such as battery or hydrogen trucks and significantly reduce the number of diesel trucks.

The goals are “difficult but achievable,” said Martin Lundstedt, managing director of the Volvo Group, which makes trucks and buses. His company has the ability to ensure the production of important vehicles.

“But the truth is that although you may have the equipment available, you also need infrastructure, grid capacity, green energy and TCO equity (Total Cost of Ownership), (…) and you need a supply chain,” he explained . Lundstedt.

“And each of these things are multiplied together because if one of them is equal to zero, they are all equal to zero,” he added.

The EU has adopted several laws in the last five years to ensure the state of electrification. These include the Renewable Fuels Infrastructure Regulation (AFIR) and the Renewable Energy Directive (RED).

However, Lundstedt said: “Europe must move from PowerPoints to implementation.”

To improve the competitiveness of zero-emission vehicles, “it is very important that we continue to work on the CO2 price,” explained Lundstedt. “This is something that needs to happen to create demand for the right solution.”

From 2027, the EU will put a price on CO2 emissions caused by petrol and diesel. To achieve this, oil producers will be required to buy emissions certificates as part of the new emissions trading system (ETS2). This is expected to increase demand for more environmentally friendly alternatives.

The exact impact on petrol and diesel prices is not yet known. But the risk of unfair social burdens caused by high prices recently led Yasmin Fahimi, chair of the German Trade Union Confederation, to question the introduction of a second emissions trading scheme.

Lundstedt acknowledged that “if you want a sustainable society, it must be environmentally, socially, ethically and financially sustainable.”

But he also said that a higher tax on CO2 could be “offset” by tax cuts elsewhere, for example on labour.

“But of course that’s a much longer debate,” he said.

Although he did not question the EU’s CO2 targets for new trucks, Lundstedt also warned against the prospect of “hockey stick”-like progress in the spread of zero-emission trucks.

According to the industry association ACEA, diesel trucks still accounted for 95.7 percent of new truck registrations in Europe in 2023. The market share of electric trucks, on the other hand, rose from 0.8 percent in 2022 to 1.5 percent.

“We cannot expect (…) that everything will be accomplished by 2028 or 2029 and then have the expectation that the whole market will suddenly change to battery-electric or fuel cells (trucks) or hydrogen combustion vehicles,” he explained.

“I’m not sitting in a corner and crying. What I’m saying is that we have products and equipment available and now we need to continue working on the whole value chain.

(Edited by Donagh Cagney/Zoran Radosavljevic)