Europe's automakers race to decarbonize ahead of deadline

PARIS -- Europe’s automakers have already shown they can pivot to electric powertrains from combustion engines. Now, they need to prove they can decarbonize their entire value chain, from suppliers to production to the full-vehicle life cycle.

Working under the EU’s target of complete carbon neutrality by 2050 -- a stricter standard than any other region -- automakers that produce in the region are finding ways large and small to cut emissions, with ideas coming from both the shop floor and advanced R&D labs.

"It’s much more severe in Europe," David Palmer, vice president of Toyota Motor Manufacturing France, who leads Toyota’s decarbonization efforts across its European factories, said of the regulatory burden around emissions. "The expectation from a legislation point of view is higher, as well as from a reporting point of view."

Toyota, which has large assembly plants in the Czech Republic, France, the U.K. and Turkey, has committed to reaching carbon neutrality in Europe by 2040, with a focus on Scope 1 neutrality (emissions from its own sources) at its European factories by 2030 – five years ahead of Toyota’s global goals. 

The automaker says it has already eliminated Scope 2 emissions (from energy it uses) across Europe, by buying only green energy to power its factories and other facilities -- although Palmer noted that it still produces greenhouse gases. 

Palmer told Automotive News Europe that Toyota’s regional operations generally take their cues from the home office in Japan, but on carbon neutrality Toyota Europe takes the lead.

Toyota Europe regularly hosts groups of employees from around the world to show off its carbon neutrality efforts, he said. They spend hours on the factory floor to observe the latest improvements suggested by team members -- known as "kaizen" in the Toyota Production System -- as well as the latest emissions-reduction technology.

One innovation those visitors are seeing is in the paint shop, which accounts for about 23 percent of all production emissions, Palmer said. Starting in France and Turkey, Toyota is replacing the old system of using gas burners to heat air, which is then released into the sky, with heat pumps and a system that recovers and reuses the hot air. 

This will save 562 tons of CO2 every year, Palmer said, and cut energy costs by 70,000 euros a year. A similar system is being rolled out for overall factory HVAC (heating ventilation air conditioning).

On a much smaller scale, Toyota employees found that tracing and stopping leaks in compressed air systems could save energy. "That means the compressors are working hard and losing money," Palmer said. 

"The actual impact on CO2 is not so huge, but the mindset and thinking of our [employees] is then really aligned with what we are trying to do," he said.

Toyota still faces challenges, Palmer said. Ovens for smelting have proved difficult to decarbonize, and the automaker will still rely on some offsets such as afforestation to meet its goals. 

But in Europe, at least, in-house decarbonization efforts may help dealers move cars, Palmer said. 

"The European customer also has a much higher expectation [on carbon neutrality efforts] than perhaps a Japanese or U.S. customer," he said. "We communicate with our sales team, and we look for opportunities to leverage it as a selling point for our products because it shows we are making them in a responsible way."

Renault is also taking an aggressive decarbonization approach in Europe, and especially in France, where it has localized EV production at four sites in the north and plans to build 500,000 electric vehicles a year by the mid-2020s.

By 2025, Renault’s northern French sites will be carbon-neutral; across Europe, by 2030, and the rest of the world by 2030, Nicolas Estebe, vice president industry decarbonization and energy efficiency at the French automaker, said in an interview.

Focusing on Scope 1 and Scope 2 emissions per vehicle -- meaning the production process rather than the supply chain, too -- Renault was able to cut CO2 production emissions per vehicle from 389 kg (860 pounds) to 284 kg in just one year, from 2019 to 2020, Estebe said. This was done primarily through agreements to purchase only renewable energy in factories including Spain and Romania. 

In 2021, Renault put in place a plan to cut energy use per vehicle produced by 40 percent by 2025, he said. In the first year, consumption at French sites was down 10 percent -- the equivalent of a single factory, he said.

Renault is turning to the latest monitoring tools and so-called digital twins to track and optimize energy use in a collaboration with Google Cloud. It also hosted a hackathon at the end of 2021 that led to energy management projects in paint shops, ventilation and the electrical network.

In northern France, Renault is embarking on a huge project to generate 50 percent solar electricity for its factories there by 2027. Working with Voltalia, it will build solar farms that will generate about 500 gigawatt-hours per year. "This is the largest sustainable power purchasing agreement of its type in Europe," Estebe said.

Audi, too, has moved faster in Europe than in other regions to push for decarbonization. All of Audi’s sites in Europe now use 100 percent renewable energy, and the Brussels factory, which builds the A8 E-tron SUVs, is fully carbon-neutral, the Volkswagen Group brand says. 

Audi is aiming for carbon neutrality across the life cycle of its vehicles. It is factoring in Scope 3 emissions, meaning those from its supply chain -- a challenge that is just beginning to be tackled but with perhaps the greatest potential for gains, automakers and experts say.

As an intermediate step, Audi is targeting a 40 percent CO2 reduction per vehicle by 2030, compared with 2018, with a key component closing what it calls the "material loop" to, for example, reuse aluminum or steel scrap instead of reselling it on the secondary market. Aluminum and steel production is a particularly energy-intensive process.

In a test of the process, Audi is planning to produce 15,000 door parts for the A4 compact at its home factory in Ingolstadt, Germany, using steel from dismantled older Audis. "Our emphasis on cycles enables us to use our products and the materials they are made from as long as possible," Johanna Klewitz, head of supply chain sustainability, said in an email.

BMW, like Renault, is turning to the sun to cut emissions at its Landshut, Germany, metal foundry, its sole light-metal casting facility in Europe. The factory began sourcing aluminum produced using solar power in 2021, and now more than one-third of the metal that it uses is supplied this way.

At the same time, two-thirds of the aluminum it uses comes from a closed recycling loop.

While so-called green aluminum has huge potential to cut emissions, BMW is also chipping away at greenhouse gases with a project to use recycled vegetable oil to fuel diesel trucks for shipping and logistics. Well-to-wheel, the oil uses 90 percent less CO2 than fossil fuels.

"Every gram of CO2 we can save helps," said Michael Nikolaides, the head of BMW’s production network and logistics, in a news release in April.

The magnitude of the challenge to reduce, and ultimately eliminate emissions throughout the vehicle life cycle is just now coming into focus, experts say.

"I really think the industry has not understood what a challenge there will be in the next decade," Polestar CEO Thomas Ingenlath told Bloomberg in a recent interview. "Switching to electric mobility, in review, will look like peanuts because it’s actually doable and we know how to do it. How to reduce the CO2 footprint of our vehicles is much more of a challenge."

One area that automakers are just starting to attack is their supply chain, including asking their own suppliers to do their part.

Polestar calculated that in 2022, 65 percent of its greenhouse gas emissions could be traced to the supply chain. The path to decarbonization can be "accelerated if manufacturers come together and place requirements on suppliers," the automaker said in its 2022 sustainability report.

One of Polestar’s targets is that all electricity used by suppliers will be fossil-fuel free by 2025. 

Other automakers are also involving their suppliers in decarbonization efforts:

• JLR, which is aiming for carbon neutrality across its supply chain by 2039, is asking its Tier 1 suppliers to set complementary targets, including among their own suppliers.
• Audi says it has been working with suppliers to decarbonize since 2018, with a particular focus on battery emissions, in a program called Audi CO2. "The aim of the program is to improve the carbon footprint in the supply chain before cars travel the first kilometer on the road," Audi says, adding that in 2022, more than 375,000 tons of CO2 were saved through the program.
• Mercedes-Benz says that in 2020, it started to send an "ambition letter" to materials suppliers, asking them to commit to provide Mercedes with products that are carbon-neutral over their life cycle.

Stellantis says it, too, is focusing on its EV supply chain for its decarbonization efforts. For new EV projects, the group has a list of 70 products that in total account for 80 percent of the supply chain’s carbon footprint. For these products, part of the criteria in awarding contracts is the CO2 "cradle-to-grave" performance, a Stellantis spokeswoman said.

Every new project is assigned a rating based on its global warming potential, or GWP, she said.

"Stellantis strives to integrate its suppliers in its decarbonization strategy, notably by encouraging them to use decarbonized energy and to source material with low emissions along the total value chain," the spokeswoman said in an email.

Overall, Stellantis achieved an 11 percent reduction in scope 1 and 2 emissions at its production sites in 2022 from 2021, the automaker said last week in releasing its latest corporate social responsibility report. Key projects in Europe included the installation of photovoltaic panels at factories including Mirafiori, Italy; Mangualde, Portugal; Sochaux, France; and Rüsselsheim, Germany.

Toyota is ahead of schedule to meet its European decarbonization targets, says Palmer, but he admits that the road map to carbon neutrality in 2025-30 is uncertain, and capital hasn’t yet been allocated for specific technologies. 

That is because he is confident that there will be new discoveries to further cut emissions --- perhaps mass use of biofuel or hydrogen power. But he is not particularly concerned, he said.

“Five years ago, we didn’t know how we were going to get through the last five years,” he said, “but we found ways and methodology to do it.”