Is the NAIGT Roadmap leading us anywhere?

Climate Change refocuses everything. The trajectory that we were all on has suddenly been interrupted with a new emerging awareness that how we have been living and what we have been making as a human species has been and is continuing to have an effect on the planet’s ecosystem. Oh, and it’s serious. Unfortunately transport is one of the sectors where the CO2 emissions are still increasing - at the moment transport accounts for over 20-25% of the world’s total emissions.

Transport is made up of air travel, shipping, freight hauliers, rail and personal transport. We depend on all of them. But can they change?

The auto industry has had a rude awakening. Not only are they beginning to understand that they have to downsize their SUVs, they have to somehow compete with auto makers on a global scale. Players like Toyota unexpectedly captured a large segment of the US auto market with their popular Prius. And amidst the financial meltdown, auto companies have had to receive loans, declare for bankruptcy, and beg for stimulus packages such as the recent scappage schemes to help keep themselves and their dealers afloat. But these are short term measures, and as the money for the schemes dry up, they are once again faced with the changing world before them.

In this context, with the growing knowledge that transport emissions have to decrease, combined with the recent collapse of the financial systems across the world, and the introduction of regulatory frameworks to help bring emissions down, the UK government has been working with the automotive industry to get a handle on where new car technology is heading, and where investors would best put their money.

“A competitive, growing, and dynamic industry making a large and increasing contribution to employment and prosperity in the UK, and playing a decisive global role in developing and manufacturing exciting, low carbon vehicle transportation solutions” DBERR on the NAIGT vision

The New Automotive Innovation and Growth Team (NAIGT) was established by the UK government in April 2008, led by industry and chaired by Richard Parry-Jones (ex-CEO from Ford). While the collapsing economics had a devastating impact on car makers and their suppliers globally, the NAIGT concluded early on that they should focus on the long term rather than short term survival. In 2009 they produced a report setting out its 20 year vision for the automotive industry and its recommendations to Government and industry to achieve this. The report was a product of stakeholder meetings with senior industrialists, academics and financial analysts experienced in the automotive sector. Their research was an attempt to both plan out where technology was going in the near future as well as trying to decipher where they needed to invest in order to maintain a competitive edge amongst emerging players (like China).

The report sets out an integrated and strategic vision for the future development of the auto industry in the UK.  A major emphasis of the report is the need to embrace the challenge of climate change and invest in technologies capable of providing innovative solutions in the form of safe and satisfying future low carbon vehicle products that customers want to buy.

Key among the recommendations in the report are proposals to:

• Establish a joint industry/government Automotive Council to develop, guide and implement a long term strategic framework for the industry; and
• Focus the UK R&D agenda around a new industry-consensus technology roadmap, and as part of this establish ‘Test Bed UK’ - a bold, large scale pilot to develop, demonstrate and build the new low-carbon personal transportation system including its infrastructure

According to the then UK Business Secretary, Lord Mandelson, “The Automotive Council will be an opportunity for Government and industry to work together on the long term strategic development of the sector. The car industry needs to capitalise on the economic opportunities and job creation offered by the shift to low carbon.”

The NAIGT Roadmap

Looking at the technology roadmap below, for the near future NAIGT emphasises the increasing electrification of vehicle propulsion, as well as providing a vehicle recharging infrastructure with adequate capacity and density, and the development of second generation biofuel powertrain technologies that enable the reduction of fossil fuel dependence of internal combustion engines. Surprisingly, fuel cell technology is relegated to beyond 2020, and all bets are on for a breakthrough in battery technology around 2020.

The UK roadmap for passenger cars is seen as a kind of defining plan for the industry, and used as a basis for lobbying for R&D funding from the government. However, this kind of mapping approach seems about as relevant as KPI’s (key performance indicators), to use management consultancy speak, which, while indicative, are a legacy of the 20th century approach to linear planning that fails to notice the world just doesn’t work that way.

We bang on these days about efficiency – which is really a management idea thought up at the beginning of the industrial revolution, and fully realized by Henry J. Ford, who started the car industry. Management pursued the goal of using resources (including human labour) as efficiently as possible on order to secure the greatest economic outcome.

Unfortunately efficiency is myopic, and I would argue, boring. Efficiency rewards compliance to a strict and timely organizational structure, and at the least sign of stress, tightens it’s reliance on compliance to limits even more strongly.

We tend to predict what will happen on a model of what has already happened; unfortunately that approach doesn’t work because the world is changing too quickly

There is an old saying I picked up years ago - it goes something like, ‘argue for your limitations and they become yours’. This somehow seems an appropriate way to approach the limitations of the NAIGT roadmap produced in the UK. What we really need is risk taking in every direction!

The systems around us are changing rapidly, and we’re in the midst of this huge transition. Also, according to futurist Ray Kurzweil, technology is changing exponentially, not linearly. None of can predict anymore what the world will look like in 10 year’s time.

We need to create a brave new world. Together we have to use every ounce of inspiration, creativity and resources at our disposal to lean into this changing paradigm. The old ways certainly won’t do. We don’t have time for caution, nor can we depend on government’s support for the changes that we need businesses to make. Businesses have to pull out all the stops, without any guarantees.

We need to see some humility from the car makers. Their industry is hardly one that is ‘very strong and sound’, as SMMT’s Paul Everitt often admonishes. In fact, car makers, if they have had any plan at all, have followed a tragic strategy at best. If they have been planning to undermine the earth’s underlying ecosystem, they are succeeding.

The auto industry doesn’t have a financial problem. They have a big design problem.

In conclusion, what we need is a major rethink by the car industry, a humble reckoning, and a new approach which directly combats the problems facing us rather than slowly perpetuating it, albeit, more ‘efficiently’. Maybe the future is electric, maybe it’s hydrogen, but there are no maps for human ingenuity.

Blake Ludwig, for We Are Futureproof

Scrappage scheme + green car incentive = success!!

A lot has been written this week about the proposal to introduce a scrappage payment for old cars in the UK. Car industry interest in this is unsurprising given the perilous state of the international car industry; car production is down this month by 59% compared to last year. Manufacturers have a clear interest in scrappage schemes, since they can “pull-through” new demand at a time when new car sales are falling off a cliff. In theory at least, Government makes its money back through VAT receipts, which could make the whole policy cost-neutral.

Environmentalists distrust scrappage schemes because the industry supports them. However, as I put it at one meeting recently, just because the car industry supports a particular policy doesn’t necessarily make it a bad thing!

The serious question is whether this is an environmentally friendly policy. On the face of it, trading in an old banger for a nice new motor has benefits, particularly from an Air Quality point of view. Old cars (pre-2000) were built before air-quality restrictions (so-called Euro Standards) came into force. Therefore from an air-quality point of view, trading in your old clunker for a new model is usually going to be a good thing, even if you’re swapping an old petrol for a new diesel car (air quality regulations on diesels are tighter these days than the old “pre-Euro” petrol cars).

The tougher issue is whether scrappage schemes do anything for CO2 emissions. On their own, scrappage schemes don’t help, simply because there is no way to tell whether people will ditch old fuel-efficient models for new gas guzzlers. They may trade in their SUV for a Prius; or they may swap their Clio for a Hummer. There’s no way to tell, or control this.

That’s why we need another tool in the toolbox – a genuine incentive for people to buy a low carbon car. If we had this in place alongside a scrappage scheme, then we could really see people ditching old gas-guzzlers for shiny new low-carbon cars, and transform the market practically overnight.

There are various purchase incentive options. The easiest for the Government is to reform VED even further, making it more expensive to own a gas-guzzler than a gas-sipper. The Government has made useful reforms here, but the drawback is it doesn’t send a clear message at the point-of-sale.

Another option would be to cut VAT for fuel-efficient, low-CO2 cars, in the way that VAT is reduced for energy-efficient household products like lightbulbs. Even better, the Government could go the whole hog and introduce a car-purchase tax weighted by CO2 emissions. However this might be politically tricky (to put it mildly).

I think the easiest option is to reform VED further to give a clearer signal that gas-guzzlers cost a fortune to own, and combine this with a big customer campaign to make sure people are aware of this when choosing their new vehicle. Doing this alongside a scrappage scheme could get people trading in their old gas-guzzlers for climate friendly models in huge numbers, creating a win-win for the climate and the carmakers.

Alex Veitch, for We Are Futureproof