The Green Finance Institute today launches the Coalition for the Decarbonisation of Road Transport, bringing together global experts and leading figures from the finance, automotive, energy and infrastructure sectors to accelerate the transition to zero emission vehicles.
The Coalition’s mandate is to unlock the level of private finance necessary for transport decarbonisation to happen at pace and at scale, co-creating financing solutions required to support the transition to zero emission vehicles.
Analysis undertaken by the Green Finance Institute, with support from KPMG’s Future Mobility Team, estimates that more than £150 billion of gross capital investment may be required to decarbonise the UK road transport sector between 2021 and 2030, requiring a significant acceleration in the rate of investment into zero-carbon transport solutions.
The Coalition for the Decarbonisation of Road Transport will focus on developing finance solutions initially in three core areas:
Consumer finance and leasing. Financial innovation is needed to help consumers overcome the barriers to choosing electric over fossil-fuel vehicles. Key to the approach will be mechanisms to mitigate the upfront costs of EVs and accelerate the maturity of the used EV market. The private sector has an instrumental role to play, including in providing affordable finance solutions to consumers and small businesses.
EV charging infrastructure The Green Finance Institute estimates that to meet growing demand more than 6.7 million chargers are required, at a total cost of over £20 billion. Public and private sector collaboration will be needed to unlock the finance for a national charging infrastructure roll-out.
The commercialisation of battery technology. The UK urgently needs to scale up current levels of investment into battery manufacturing to build a globally competitive battery sector. A capacity of up to 60 GWh P.a. may be needed by 2030, requiring at least three UK gigafactories and more than £5 billion in investment. Other issues to be addressed include safe and sustainable battery disposal, as well as the creation of a sustainable supply chain.
Dr Rhian-Mari Thomas OBE, Chief Executive of the Green Finance Institute, said,
“The Green Finance Institute has already demonstrated the impact of bringing together experts to co-design innovative financial solutions and promote the enabling conditions needed to channel capital towards net zero goals.
Identifying the most effective interventions and public investments in order to catalyse private sector finance requires thorough, detailed analysis as well as creativity and ingenuity. We’re excited to be working with KPMG and our founding coalition members to tackle the challenge of financing the decarbonisation of road transport.”
The CDRT brings together the public and private sectors, academia and non-profit organisations. Founding members of the coalition include:
- Energy Savings Trust (EST)
- Finance & Leasing Association (FLA)
- Lloyds Banking Group
- Lombard Odier
- Octopus Electric Vehicles
- Prospedia Capital
- Ratel Consulting
- Renewable Energy Association (REA)
- Transport for London (TfL)
- The EV Network
- Triodos Bank
Decarbonising transport is an essential part of the UK’s plan to achieve net zero greenhouse gas emissions by 2050. The UK has committed to phase out the sale of new petrol and diesel cars and vans by 2030. Transport is the largest contributor to UK greenhouse gas emissions, responsible for 24% of total emissions in 2019.
UK Transport Minister, Rachel Maclean, said:
“As we accelerate towards a net zero future, I’m delighted that government and industry are coming together to encourage more people to make the switch to zero-emission vehicles.
From government-backed grants to electric vehicle charging infrastructure, we’re offering £1.8 billion in support to help make EVs more affordable and to increase charging availability for those thinking about making an EV their next car. This will propel us further towards a green transport revolution as we build back better.”
The UK Government is set to publish its Transport Decarbonisation Plan this Spring in the run up to the COP26 Climate Summit in Glasgow, and last year established the Zero Emission Vehicle Transition Council, bringing together ministers and governments representing some of the world’s biggest car markets.
The CDRT is the second sector-expert coalition created by the Green Finance Institute to deliver practical solutions at scale in climate-critical sectors. In December 2019, the GFI established the Coalition for the Energy Efficiency of Buildings, focused on removing investment barriers to the widescale decarbonisation of domestic heating. In May 2020 the CEEB published a practical portfolio of financial solutions to retrofit UK homes to the highest standards of energy efficiency; since then it has launched innovation work on Building Renovation Passports, Metered Energy Savings and has produced the Green Home Finance Principles, which count major banks and building societies as supporters.