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The role of the transport sector for decarbonization strategies in Germany and the European Union (EU)

Interview with Dr. Martin Lange of the German Federal Environmental Agency (Umweltbundesamt, UBA)

The transport sector accounts for a significant share of energy-related greenhouse gas (GHG) emissions worldwide. According to the International Energy Agency, nearly a quarter of total global GHG emissions comes from road, aviation, water, and rail transport (IEA, 2019a). 

Against the background of the Paris Agreement, and China’s carbon emission peaking target for 2030 and carbon neutrality target for 2060, the NDC Transport Initiative for Asia (NDC-TIA) places climate protection efforts and measures into a common framework to support Chinese stakeholders to decarbonize the transport sector and tap the potential of the transport transition towards zero emissions. In addition, NDC-TIA is providing a platform for China and the EU and Germany to learn from each other in the development of medium and long-term transport decarbonization strategies. 

The German Federal Environment Agency (Umweltbundesamt, UBA) is Germany’s central environmental authority, headquartered in Dessau since May 2005. In addition to scientific work, the enforcement of environmental law and providing information to the public about environmental protection issues are key areas of UBA’s work. The UBA is a partner and point of contact in Germany for a number of international institutions, for instance the World Health Organization (WHO) and the European Environment Agency (EEA). 

To foster the dialogue on GHG emission reduction strategies and introduce relevant international experiences to China, especially the Green Deal and the German Climate Change Act, the NDC-TIA project organized an interview with Dr. Martin Lange, head of the Pollutant Reduction and Energy Saving in Transport Division of the UBA.  

GIZ: In both China and the EU, the transport sector is a “hard nut to crack” when it comes to the mitigation of carbon emissions. The European Green Deal aims for the EU to achieve climate neutrality by 2050. According to the EU Climate Law, EU member states (MS) are to cut GHG emissions by 55% from 1990 levels by 2030 and become net-zero-emissions economies by 2050. In order to better understand relevant transport climate strategies and measures, could you give us a brief introduction to the current situation of transport demand and transport-related emissions in the EU and Germany? 

Dr Lange: Transport demand in Germany and the EU is still increasing in both passenger and freight transport. With the current measures in place, a further increase is expected. The volume increase in freight transport is higher in comparison to passenger transport.  

In Germany, due to improvements in efficiency and modal shift, transport related GHG emissions were almost saturated, with a peak around the year 2000. However, in 2019, the emissions were again on the same level as in 1990. In other sectors,1 GHG emissions have significantly decreased with a clearer trend towards reduction. 

Within this decade, emissions in the transport sector will have to be reduced by almost 50% relative to the year 2019, from 164 Mt to 85 Mt by 2030. Hence, further measures for emission reductions will be needed. In 2045, transport will have to become climate neutral with a further ambitious reduction target for 2040 (140 Mt for all sectors: currently no sector targets).  

In the EU, the historic picture is qualitatively comparable, with an emission peak at around 2007. On the EU level, there are no sector targets. As transport is not part of the EU Emission Trading System (EU-ETS), climate targets for transport sector are part of the Effort Sharing Regulation,2 which regulates national targets for all emissions not in the EU-ETS and is considering the development status of different member states. Hence, the necessary reductions for Germany are significantly higher than e.g. for Eastern EU member states. 

GIZ: Was/is there a peaking/plateau period for each transport sub-sector (e.g. urban passenger or road freight transport, aviation) and how long did/does it last in Germany/the EU?  

Dr Lange: Emissions of passenger transport already peaked in the mid-1990s. The emission plateau was relatively short, about 10 years.  

Road freight emissions of heavy-duty vehicles (HDVs) peaked in 1999, but are still in a period of plateau – still at 1995 levels in 2019 and only 10% under the peak level. Emissions of light commercial vehicles are still increasing. 

Emissions from inland aviation, which is not as significant in Germany, peaked between 2000 and 2008. 

On EU level, emissions from passenger transport plateaued from 2005 to 2019, similarly for HDVs ( Intra-EU aviation emissions are not easily determinable. 

GIZ: What are the main drivers for the decarbonisation of the transport sector in Germany and the EU?  

Dr Lange: In Germany, the main instruments focus on increasing the pricing of emissions in transport (national ETS), improvements in vehicle efficiency – as a result of EU-wide CO2 standards – and a parallel switch to electric vehicles (as well as standards) and alternative fuels, with an increase in renewable fuels driven by the EU Renewable Energy Directive (RED II)3 and national-level implementation. The switch to alternative fuel vehicles is driven by subsidies. For battery electric cars and plug-in-hybrids, there is a vehicle purchase bonus. For freight, a CO2-based truck tolling system is another important measure. A huge number of medium important measures is additionally in place, such as for strengthening railways and non-motorized transport. 

The EU focuses on vehicle CO2 standards and the promotion of renewable fuels (RED and RED II) through EU directives with national-level implementation, hence with a certain degree of flexibility. Further EU laws address truck tolling systems and energy taxation. Non-technical measures are more measures on state level and are less harmonized across the entire EU. The overall targets for reductions of GHG emissions are also well defined for all member states through the Effort Sharing Regulation, complementing the RED and the CO2 standards. 

GIZ: What is the specific role of the transport sector in the short-, medium-, and long-term carbon emission mitigation strategies/roadmaps in Germany and the EU? 

Dr Lange: In Germany, emissions from transport have not significantly contributed to the overall reduction in emissions relative to 1990. Hence, the reduction targets for transport until 2030 and the reduction needs to reach climate neutrality by 2045 are much more ambitious than for other sectors. Outside of transport, the reductions until 2030 are slightly higher relative to 1990, such as for the energy sector, but also lower (e.g. for agriculture), considering the reductions already achieved, the potential measures to reduce the emissions, and the emission reduction potentials (partly also the costs for mitigation).  

The reductions from 2020 to 2030 have a linear reduction pathway. For transport, this increases the pressure to implement concrete measures that deliver reductions fast, as the contribution of many key measures is expected to contribute more in the 2nd half of the 2020s and are therefore not delivering in a linear way. 

GIZ: How can the transport sector transition towards zero emissions in Germany and the EU be better linked with the energy transition?  

Dr Lange: The energy transition in transport is mostly the result of the promotion of electric vehicles, but from a broader perspective also the usage of renewable energies in form of alternative fuels. These include fuels based on biomass, which are not favoured by the UBA, as well as waste and residues (in limited amounts), and from so-called e-fuels made from CO2 and renewable electricity. In general, the demand for electricity is considered in the different scenarios and impact assessments on German and EU level.  

Problems and the need for adjustment occur when the switch to electric drive is accelerated as a result of tightened climate reduction targets and increasing ambition4. The maximum limit on emissions in the EU-ETS and national targets for renewable electricity ensure, as a percentage of the electricity demand, that GHG-emissions in the medium-term do not significantly increase the GHG-intensity of the grid mix. 

A better linkage could be achieved if additional electricity demand would be directly coupled with an additional installation of renewable electricity in the amount of the demand. Another important aspect is the flexibility of the electricity demand of electric vehicles, either as incentives by flexible pricing for electricity or by limiting the electric charging power. In the future, vehicle-to-grid technology could help to stabilise services in an electricity system with a higher share of renewables and hence more fluctuation in energy production. 

The usage of alternative fuels is regulated by the RED and RED II, which sets targets for the overall share of renewable energies in transport and the resulting GHG reductions. 

GIZ: What (advanced) zero-emission technologies are applied in Germany and the EU, in particular in road and rail, aviation, and maritime transport, to bring the transport sector on the low carbon track?  

Dr Lange: Besides non-technical measures,5Avoid-Shift-Improve, the main technologies are electrification and the usage of alternative fuels in transport. The role of biofuels is still seen as somewhat controversial among ministries in Germany and on EU level across member states. The UBA sees limitations on the potential amount of biofuels and a negative environmental impact from their production. Hence, the UBA favours the direct usage of electricity while increasing the share of renewables in electricity production, ultimately aiming at a higher share of GHG neutral transport.  

Where direct electrification is not possible, renewable electricity should be used to produce synthetic fuels (e-fuels). This is in particular the case for maritime transport and aviation. With the national implementation of the RED II, a 2% share of e-kerosene is expected to be reached by 2030. Freight transport could use electricity with overhead catenary lines installed over roads. BEV trucks are also further developing from a technical perspective and are becoming an increasingly viable option for larger parts of, if not the entire freight sector.  

However, hydrogen, meaning green hydrogen from renewable electricity, is also being discussed. As a result, in long haul transport for freight, the discussion is more open than, for example in passenger transport. Also, in the case of trucks, the UBA would favour the direct usage of electricity, whether through trolly trucks or as BEVs, over hydrogen and other e-fuels like Power-to-Liquids or Power-to-Gas-methane, mainly due to costs and the much higher electricity demand. 

GIZ: What are key technologies and measures to reduce emissions in the transport sector in Germany and the EU (in your area of expertise), and what are potential (future) technological breakthroughs and related technology roadmaps?  

Dr Lange: Electrification, in practice meaning BEVs and some plug-in hybrids, is mostly driven by CO2standards for new passenger cars and light trucks, and in the next decade also by the CO2-standards for new trucks. Both measures also improve the efficiency of internal combustion engine (ICE) vehicles, but it is expected that car manufacturers will focus on electric vehicles instead of focusing on measures for ICE-vehicles to comply with the standards.  

The GHG-quota (“THG-Quote”), as the national implementation of the EU’s RED II, will help to foster the uptake of the charging infrastructure for electric vehicles and the update of e-fuels, such as in aviation, and the usage of green hydrogen in fuel production. Technological improvements are mostly expected in the batteries for electric vehicles and the efficiency of the e-fuel production processes. Both with high impact on the costs for BEVs and e-fuels. For trucks, a concrete roadmap or decision on the main technology is somewhat lacking or still open. A switch either to electric trucks with or without overhead lines or to hydrogen will need a concrete roadmap for a roll out. A minimum infrastructure for alternative fuels, not necessitating overhead lines, will be driven by the alternative fuel infrastructure directive, revised as part of the EU’s Fit for 55 package. 

GIZ: What are the key initiatives/programmes in Germany related to raising the ambitions to reduce transport sector emissions?  

Dr Lange: Ambition for the climate protection in transport is mostly driven by the Federal Climate Change Act (Bundes-Klimaschutzgesetz). Concrete GHG reduction targets for 2030 and the linear pathway forces the ministries in charge to implement new measures and improve existing ones. As a result of the new law, Germany is also increasing the ambitions in negotiations on EU level regarding the instruments there. This includes more ambitious CO2-standards for new cars, which will be needed to comply with the national targets. Germany is therefore at least more open to further reductions within the EU regulation relative to those in the Federal Climate Change Act. The other programmes are strongly connected to techniques and measures. 

GIZ: Which specific policies in Germany and the EU aim at transport sector carbon emission reduction (such as incentive policies)?  

Dr Lange: Incentives and pricing play an important role for climate protection in transport.  

Financial incentives are given to support the technologies described in the questions above mostly in the phase of market uptake. Additional costs relative to fossil fuel techniques during market uptake, such as for BEVs, are often partly reduced by the respective federal state. However, this often subsidises the transport systems in general. Hence, the UBA favours revenue-neutral instruments, like the Bonus-Malus-System or quota, such as for electric vehicles, where it is not the general taxpayer who is paying, but rather the costs stay within the transport systems. While these are being discussed, they are not yet implemented. In Germany, a number of environmentally harmful subsidies are still present that should be abolished. As Germany has two levels of value added tax, an application of the reduced tax, e.g. for using rail instead of road transport, incentivises climate friendly travelling. Incentives are given also non-financially, such as by ensuring right of way privileges for electric vehicles in cities. However, at the federal level, only the framework is given, while the cities/regions decide on their concrete application. 

GIZ: What are the coordination and cooperation mechanisms related to climate action in the transport sector on national level (e.g. between ministries) in Germany and the EU?  

Dr Lange: The Federal Climate Change Act (Bundes-Klimaschutzgesetz) sets ambitions for different sectors in order to reach overall reduction targets. The definition of concrete measures, instruments, and programmes is then initiated by the ministry in charge of the respective sector. In Germany, this is the Federal Ministry of Transport. This ministry also coordinates with other ministries, such as the Federal Ministry of Environment or Federal Ministry of Finance. As most of the measures are on federal level, the federal states (Bundesländer) play a less important role.  

The coordination and cooperation at EU level are quite complex. In some cases, EU law is a direct EU regulation which is ultimately translated directly into national law. In this kind of EU regulation, there is little room to consider the national circumstances of the member states, or it is at least done in a simplified way. EU directives are more of an EU-wide framework that is ultimately implemented by each MS itself, such that they can decide on the concrete adjustment of the instrument and the contribution of different measures. EU regulations are enacted to affect the entire EU internal market. Therefore, CO2standards are a direct EU regulation.  

The implementation of the RED II is done at national level, as the RED II is only a directive. Member states can decide which role selected alternative fuels can play, if the focus should lie with electric vehicles or the usage of biomass, as long as they comply with the overall target for renewable energy in transport. These targets then consider the national circumstances, such that stronger MS have to act stronger. In both cases – for EU regulation and EU directives – there is a typical law-making process: the European Commission proposes the regulation/directive, which is then discussed in parallel in the European Parliament and the Council of the EU (with the member states). This relatively long but iterative process considers the different perspectives of the various stakeholders in the EU. For financial law, the member states have more rights under the “principle of unanimity.” 

GIZ: What are effective approaches for inter-sectoral cooperation (e.g. transport, urban development, energy, information sector) and what are the exchange mechanisms to effectively address climate change (e.g. inter-sectoral carbon emission reduction project collaboration, data sharing regimes)?  

Dr Lange: The Federal Climate Change Act (Bundes-Klimaschutzgesetz) sets ambitions for different sectors in order to reach overall reduction targets. The definition of concrete measures, instruments, and programmes is then initiated by the ministry in charge of the respective sector. In Germany, this is the Federal Ministry of Transport. This ministry also coordinates with other ministries, such as the Federal Ministry of Environment or Federal Ministry of Finance. As most of the measures are on federal level, the federal states (Bundesländer) play a less important role.  

GIZ: What are the key transport sector-related elements of the European Green Deal to reach the 2050 climate targets? How have they been/are they being implemented?  

Dr Lange: Key elements of the European Green Deal are: 

  • Amendment of the regulation setting CO2 emission standards for cars and vans 
  • Amendment to the Renewable Energy Directive (RED) to implement the ambition of the new 2030 climate target – RED III 
  • FuelEU Maritime for a green European maritime space 
  • RefuelEU Aviation 
  • Revision of the EU Emission Trading System 
  • Effort Sharing Regulation 
  • Revision of the Energy Tax Directive 
  • Revision of Alternative Fuels Infrastructure Directive (AFID) 

They are implemented either as EU regulations or as EU directives. Currently, they are all only proposals from the Commission to amend the current legislation or propose new legislation. In the coming months (in 2022 or perhaps later), the ordinary legislative procedure will be followed, and the proposals will be discussed in the European Parliament and the Council of the EU, with the possibility of significant changes.6 

GIZ: Can climate targets in the EU Green Deal be effectively implemented in EU member states with different socio-economic conditions (with special regard to energy structure, transport demand, and socio-economic structures), and what are the key implementation mechanisms?  

Dr Lange: In many cases, EU regulations cover the entire internal EU market and give member states no national scope for adaption or choice of the concrete measures. This is often linked to the internal EU market and the aim to avoid any barriers between the member states for trade. However, such as in the case of the CO2standards, it is up to private companies to decide where to sell more efficient, and thereby perhaps more expensive cars or to sell more electric vehicles in order to comply with the law. The average emissions are calculated for the entire EU with no national limits or targets. Hence, the vehicle manufacturers are optimising their vehicle production and sale strategy.  

However, there are also small mechanisms in EU directives. For example, the sales numbers of electric vehicles are multiplied with a factor in Eastern European member states, where GDP is significantly lower, such that for the vehicle manufacturers, it is also attractive to sell BEVs there. As a result, it is difficult for the member states to comply with national GHG targets, as they cannot be sure how the CO2 targets will deliver nationally. In other cases, national circumstances are considered, e.g. in the Effort Sharing Regulation. Here, member state with better economic status and other factors need to reduce their emissions outside of the EU-ETS (heating, transport) more strongly than other member states.7 

EU directives only require MS to fulfil general targets, often together with concrete reporting obligations. A typical example is the Renewable Energy Directive or the Alternative Fuels Infrastructure Directive (AFID). The latter only set a requirement for the scale of fuel infrastructure (e.g. for LNG) or charging infrastructure, but do not introduce concrete instruments or measures, which are left to the member states. However, with the Fit for 55 package, the European Commission decided to change the AFID from a directive to a regulation. 

GIZ: In your opinion, what are the common challenges and opportunities for China and Germany/EU in decarbonizing the transport sector, and what can China, Germany, and the EU learn from each other in this field?  

Dr Lange: The technical measures for zero emission transport are globally the same. Whereas the role and opportunities of non-technical measures and growth projections for transport demand might be different in China and Germany/EU, the need for additional measures is the same. These would include electrification, efficiency of vehicles and the transport system, and alternative fuels.  

In order to identify globally beneficial technical solutions and measures, it is very interesting for the German/EU side to see perspectives from other regions of the world on the capabilities of the technologies themselves, as well as the setting of priorities among these technologies and their chronological ordering. As climate change is no local problem, it would be best to consider not just the German/EU perspective on those three aspects, but to try and optimise them more globally. More local solutions for a GHG-neutral transport are possible if they are low hanging fruits, but difficult if not. 

Learning curves for future technology – electrification of HDVs, synthetic fuels from electricity – will need to be gone through, which is much better done globally in a harmonised way. Through reverse innovation and economic cooperation, the strengths of China, Germany, and the EU can be combined and complement one another.