Expert Insights

How Will the Auto Industry Reduce Its Greenhouse Gas Emissions?

Carson Bristol
January 24, 2024
The production and use of passenger vehicles accounts for 15 percent of the world's annual greenhouse gas emissions. How can the automotive industry contribute to slowing climate change? A new report by Polestar and Rivian provides some answers – but also emphasizes the urgency of the issue.
Rivian Pickup being charged outside in a mountainous scene.

How Will the Auto Industry Reduce Its Greenhouse Gas Emission?

If you’re reading this article on GreenCars, you’re probably aware of the Paris Agreement, which requires curbing global greenhouse gas (GHG) emissions – 15 percent of which are a direct result of passenger vehicles – to limit warming to 1.5 degrees Celsius above pre-industrial levels by 2050. The agreement sets out a “budget” for GHG emissions – and looking at the automotive industry, it’s clear  many challenges lie ahead. At current rates, passenger vehicles will have used up their entire greenhouse gas budget by the year 2035 – and are on pace to have overshot the budget by 75 percent by the year 2050.

In 2023, startup automakers Rivian and Polestar joined forces to co-commission a report conducted by third-party independent research organization Kearney. The company’s Pathway Report aims to identify what – if any – route exists for the automotive industry to reduce its carbon footprint in accordance with the targets set by the Paris Agreement.

As you might expect, the industry’s path to keeping warming below 1.5 degrees is neither simple nor easy. Rather, achieving the 1.5 degree goal will require significant collaborative commitment across the industry. But, the report does identify three significant ways the industry can accelerate decarbonization.

Chart showcasing the emission pathway of the passnger vehicle fleet

Transition to Zero-Emissions Vehicles (ZEVs)

According to the Pathway Report, the global passenger vehicle fleet must be electrified. Electrification represents the single most significant opportunity for industry-wide emissions reduction. A move away from internal-combustion engine (ICE) vehicles and towards ZEVs like battery electric vehicles (BEVs) greatly reduces the “vehicle use-phase emissions,” or the emissions caused by actually driving the cars. Use-phase emissions account for over 80 percent of emissions associated with passenger vehicles – and  over 60 percent of those emissions are tailpipe emissions, which are eliminated in with an electric vehicle.

Of course, transitioning to zero-emissions vehicles is nothing new to the automotive industry; much of its decarbonization efforts in the last decade have been centered around the idea of BEV adoption. The speed of adoption, however, is critical in the pathway towards sub-1.5 degree warming. What’s also needed is rapid development of infrastructure and education. This includes better access to information for consumers, an increase in charging ports, better production strategies, and much more.

Generating Clean Energy

To maximize the impacts of the adoption of zero-emissions vehicles, those vehicles must be powered by clean energy. The “use-phase” of electric cars cannot be truly carbon-neutral until those vehicles are powered entirely by fossil-free energy sources. Fossil-free energy sources – like wind, solar, hydro, nuclear, and others – currently make up just under 40 percent of the global power mix. “Greening” the grid will continue to drive emissions lower, ultimately reducing use-phase emissions to close to zero.

While this lever has significant implications for passenger vehicle contributions to global emissions, the emissions reduction benefits of a fossil-free grid extend far beyond the transportation sector. Ultimately, to reach the targets set by the Paris Agreement, a widespread transition to fossil-free energy is essential.

Cropped photo of a Polestar vehicle being charged

Reducing Supply Chain Emissions

An assessment of the supply chain for passenger vehicles – beyond their actual use – also reveals other significant opportunities for decarbonization. Rivian and Polestar’s Pathway Report focuses primarily on the idea of reducing the carbon intensity of materials and processes in vehicle production. The bulk of production emissions – roughly 75 percent – comes from the procurement of steel, aluminum, and batteries, as well as the vehicle manufacturing process itself. In the report, Kearney lays out a path towards greatly reducing these four contributors, by employing strategies such as electrification, hydrogen usage, and leveraging other fossil-free power sources.

Chart showcasing that around 7 percent of the GHG budget in the baseline trajectory is consumed

Greenhouse Gas Emissions: The Bottom Line

The unfortunate reality uncovered by the report is that no single method on its own is enough to curb the auto industry’s emissions to a point where they will be in compliance with Paris Agreement targets.

A full switch to BEVs is not enough to limit global warming to 1.5 degrees Celsius – even if the entire global fleet is completely powered by fossil-free energy production. Rather, all three methods, and more, must be activated if the goals of the Paris Agreement are to be met by the automotive industry. It’s going to take a fully electric fleet, powered by 100 percent fossil-free energy, manufactured from a significantly decarbonized supply chain.

And it needs to happen fast. Every year, passenger vehicles deplete 7 percent of their remaining GHG budget, meaning there isn’t a single year to spare in the push for electrification. Though possible, the window is extremely tight, and as the report points out, it’s going to take buy-in from everyone in the industry – and the cost of inaction is very high.