Energy Matters - People & Money | Networking Series

Recent Event

May
2022

Sustainability Leadership Industrial Private Capital

EXECUTIVE SUMMARY

RRA recently hosted the third instalment of the Energy Matters, People & Money Networking Series, focused on the topic of future mobility.

Chris Nicholson

London

Abigail Skerrett

London

Event Speakers

Shaun Kingsbury - Chief Investment Officer of Just Climate, Co-Founder of Climate Transition Capital and Chairman of CNG Fuels and Renewable Power Capital

Matteo De Renzi- Managing Director, Gett and Former CEO of bp pulse

The cost of living crisis – exacerbated by the war in Ukraine driving up energy prices – has enhanced the move away from internal combustion engines (ICEs) in favor of electric vehicles (EVs), as cost parity between the two is now ever closer. Further European Union’s sanctions removing 90% of Russian crude from the European market by the end of the year will only accelerate this transition. Nevertheless, the decarbonization of transportation remains a key challenge. More than one-fifth of global emissions come from transportation, and ICE vehicles are one of the largest sources of CO2 in the UK. As such, rapid scaling of solutions and infrastructure to address transport emissions will be instrumental in averting a global climate crisis.

Russell Reynolds Associates recently hosted the third instalment of the Energy Matters, People & Money Networking Series, focused on the topic of future mobility. It broke down key themes, challenges and market opportunities around the transformational technologies shaping tomorrow’s transportation industry.

Key Themes and Takeaways

Enabling the Private Sector - Bridging the Financing Gap

Sustainable finance is not yet mobilizing private capital at the scale and speed required for timely decarbonization of the transportation sector. Investors are increasingly cautious and have insufficient capacity to invest in capital-intensive emerging technologies that have not yet been proven at commercial scale. Innovative transportation solutions also tend to fall outside of ‘traditional’ capital allocation parameters: too big for venture capital, too asset-heavy for growth capital and too early for infrastructure capital. Governments must therefore catalyze private sector investments by simplifying the commercial roadmap to viability for emerging transportation solutions and mitigating the operational risk burden placed on early investors.

Enabling Transport Decarbonization Through Policy: Case-in-point

Heavy goods vehicles (HGVs) are disproportionate emitters of carbon and are particularly hard to decarbonize, in part, as a result of their long driving ranges and low production volume According to the Department for Transport, in the UK, HGVs account for just 1% of vehicles on the road, yet produce 18% of road transport emissions. The UK government has recognized the viability of biomethane (BioCNG) as a solution in the near term for lowering HGV emissions and has introduced a number of political and regulatory incentives encouraging the transition away from conventional fuels.

Electric Transportation - Becoming the ‘New Normal’

Electrification will play a key role in the transformation of the mobility industry and is a necessary step for ensuring an environmentally sustainable future. In the UK, 15x growth is expected in electric vehicle (EV) car parcs by 2030 and it is estimated that by 2050 almost all new-car sales will be electric. Europe is expected to remain the global leader in electrification as a region characterized by supportive regulation and high consumer EV demand.

Ride-sharing in a low-carbon future

Ride-sharing service providers are increasingly pledging to shift to 100% electric vehicle fleets over the next decade. In reality today, EVs are used for fewer than one in every 20 miles driven by Uber drivers in major European cities. Charging network infrastructures must mature to avoid becoming a potential bottleneck for EV ride-sharing mass adoption, and charging time during peak-load periods must be improved through enhanced connectivity. Moreover, ride-sharing organizations should introduce policies to help individual drivers manage the cost associated with EVs – which today are still more expensive than ICEs.

Mobility Innovation – Pressurizing Supply Chains

Future mobility components such as batteries, light detection and ranging sensors will constitute more than 50 per cent of the total market by 2030. Components used only in ICE vehicles such as conventional transmissions and engines will become less available and supporting infrastructure will lose focus (e.g. petrol stations being closed or fully converted to EV charging hubs). The transformation of the automotive industry toward electrification will disrupt the entire supply chain as new concepts of electric, connected, autonomous, and shared mobility are developed.

Change is Within the Realm of Possibility

Bridging the existing investment gap in the transportation sector will require targeted policies that make use of the lessons learned from the successful adoption of renewables over the last decade. A similar transition is urgently required across the transportation sector in the UK and internationally. We must move quickly as the next decade is pivotal for realizing net zero-commitments.

Authors

Chris Nicholson; a Partner in the firm’s Global Industrial & Natural Resource Practice, covering the Energy markets.

Abigail Skerrett; a member of the firm’s Global Industrial & Natural Resource Practice and co-lead of the Global Energy Transition Practice.

Shola Brown; a member of the firm’s Global Industrial & Natural Resource Practice.

More to Come in the Series!

We hope you can join us for the next event in the Energy Matters series which will take place in September.

Details to follow.