Tipping points, automotive innovation and the fall of carbon neutrality

Will a reading of +1.5°C in the next four years trigger a social tipping point?

Two months ago the World Meteorological Organization (WMO) dropped the bombshell that "there is a 66% likelihood that the annual average near-surface global temperature between 2023 and 2027 will be more than 1.5°C above pre-industrial levels for at least one year". Business executives can be excused for having a feeling of cognitive dissonance, given that many climate-related policies were implemented with the intention of stopping global warming from exceeding a 1.5°C increase by 2100. With a heat wave in the southern Mediterranean, historical records for ocean temperatures being smashed, floods in Vermont and recent wildfires in Canada, the realities of near-term physical climate risk are very apparent. In June, the WMO reported that global air and sea temperatures hit new records. As part of transition risk planning, firms should consider the potential for more severe and more frequent extreme weather events to shift social perceptions of climate change – as well as voting patterns. The impact of major flooding and devastating wildfires on Australian climate policy is a case in point.

Carbon neutrality will die as firms shift away from a PR-driven climate strategy

Carbon neutrality was so much easier to achieve 15 years ago. Firms could calculate their Scope 1 and Scope 2 emissions, then call a broker and buy a package of unbundled RECs and/or carbon credits for $2/tCO2 emitted. Next step was to pay a few thousand dollars for 'independent' certification as a carbon neutral organization, before firing off the corporate press release. Firms can still buy carbon neutral certifications from Climate Impact Partners – who will also sell you the offsets and RECs. So why is the PR halo so hard to achieve in 2023? Multiple mainstream media outlets have turned against carbon offsets due to the bad projects that will always exist in an unregulated market, operating across developing economies. Standard setters like the SBTi have cast out offsets as an acceptable part of a science-based net zero strategy. Ad regulators are taking action against spurious climate claims and the European Commission’s Green Claims Code intends to ban green product labels based solely on the use of carbon offsets. Shifting consumer opinions are undermining the value of spending $137 million per year on carbon offsets, as Delta Airlines did in 2021. Consumer focus groups run by Verdantix have already flagged up mixed perceptions of carbon neutrality trending to negative.

Drilling into BMW's holistic management system for vehicle carbon lifecycle analysis

In March this year, the European Council finalized its regulation banning the sale of new internal combustion engine (ICE) vehicles from 2035. In the US, California has also set 2035 as the start date for the exclusive sale of zero tailpipe emissions cars. More US states are set to follow. How is the manufacturer of “the ultimate driving machine” responding? BMW now defines decarbonization targets for all vehicles from the design phase. The BMW holistic management system measures carbon emissions in the supply chain, manufacturing and use. What's interesting about this holistic approach – and has some commentators calling them out for hanging on to petrol and diesel engines for too long – is that EVs can have cradle-to-grave lifecycle emissions that are higher than cars with internal combustion engines. The main culprit, of course, is batteries – due to their high metal content, they require 50 tonnes or more of raw materials to be extracted and refined. BMW has also set itself a challenging target of reducing Scope 1 and 2 emissions by 80% by 2030, which has drawn attention to the steep costs of electrifying production lines and installing on-site renewables.

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