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EU rolls out greening measures for freight transport

On July 11th the European Commission proposed a slew of measures to reduce emissions from freight transport, including stronger support for low-emission heavy-duty vehicles, as part of its plan to cut emissions from the transport sector by 90% by 2050. EIU expects that these measures are likely to be approved easily by EU member states since automakers have been lobbying for them.

Why does it matter?

The EU is stepping up its climate-change efforts, partly in response to the US’s US$369bn Inflation Reduction Act, which aims to boost domestic investment. Given the importance of vehicle manufacturing to its economy, the EU is looking to support vehicle electrification early on and bring in standardisation across member-states to ease its green switch.

These measures for “greening” the EU’s freight transport sector are part of its Green Deal, which was proposed earlier this year. The new measures aim to provide stronger support for low-emission lorries, streamline railway infrastructure management and introduce a standardised methodology for companies to report their greenhouse gas emissions.

EU policymakers aim to cut transport emissions by 90% by 2050, as set out in the bloc’s Green Deal. To this end, the European Commission has revised its Weights and Dimensions Directive to allow incremental weight for zero-emission heavy-duty vehicles, adjusting for the additional mass of the electric-vehicle (EV) battery pack. The long-term aim, which factors in the development of lighter EV propulsion systems, is to favour low-emission ferries over conventional trucks by allowing them to carry additional payload. However, this round of initiatives is likely to support uptake of heavy electric CVs only after 2024.

The relaxation in rules will be extended to cross-border trade as well as multimodal transport, which will encourage fleet owners to switch to electric lorries. However, actual uptake is likely to be slower owing to weak vehicle supply as well as demand. Owing to a shortage of components, including semiconductors which are vital to electric vehicles, vehicle production is yet to rebound. On the other hand, subdued macroeconomic factors are keeping business confidence low. We do not expect sales of electric lorries to pick up until the second half of our forecast period (2023-27) given that policymakers and automakers can reach an agreement on the finer details, especially regarding standardisation across member-states.

Given the contribution of the EU’s freight sector to employment as well as carbon emissions, it is vital to decarbonise it. As such, policymakers aim to deploy zero-emission ships by 2030, and double rail freight traffic as well as ensure that new heavy-duty vehicles are zero-emission by 2050.The EU’s Green Deal follows on from the key components of its Fit for 55 package, which has set targets for recharging and refuelling stations, as well as the deployment of sustainable fuels in aviation and maritime transport.

What next?

This round of proposals will now be considered by the European Parliament, which we expect to pass relatively easily. Even so, we will not immediately revise upwards our new-commercial vehicle forecasts for Europe.

The industry analysis featured in this article can be found in EIU’s Country Analysis service. This integrated solution provides unmatched global insights covering the political and economic outlook for nearly 200 countries, enabling organisations to identify prospective opportunities and potential risks.