The automotive industry is under increasing pressure to decarbonise, placing emphasis on Original Equipment Manufacturers (OEMs) and Tier 1 suppliers to take the lead. As pivotal figures in the automotive sector, OEMs are responsible for reducing supply chain costs and carbon emissions, and compelling their Tier 1 suppliers to meet Scope 3 objectives.
Challenges faced by key players
OEMs have made progress in reducing their Scope 1 and Scope 2 emissions, but there is a need for accelerated advancement, particularly in addressing Scope 3 emissions originating from their suppliers. This necessitates OEMs to exert pressure on their vendors for significant supply chain modifications and innovation. Similarly, Tier 1 suppliers are under pressure to produce more environmentally-friendly products, despite the challenges of increased production costs and energy-intensive processes.
External influences such as government regulations, public expectations, and scrutiny from shareholders also play a significant role in compelling OEMs and Tier 1 suppliers to hasten their decarbonisation efforts.
Three approaches to decarbonisation
The automotive industry is pursuing three primary approaches to decarbonisation. The focus is on reducing manufacturing emissions, transitioning towards sustainable materials and establishing partnerships within the supply chain, as well as shifting vehicle production to favour green mobility solutions. This requires collaboration within and across companies, and a drive for innovation in product design and business models.
Decarbonisation strategies
Decarbonisation strategies in the automotive sector can be classified into two main areas: addressing OEM’s own emissions (Scope 1 and Scope 2) and their Scope 3 emissions. Comprehensive strategies such as the implementation of Energy Savings as a Service, On-Site Solar, and Green Supply/Power Purchase Agreement sourcing can simultaneously reduce costs and carbon emissions globally.
Addressing Scope 3 emissions involves supplier mapping, material replacement assessments, and strategic partnerships with key suppliers. Additionally, a shift towards new vehicle types such as electric and hydrogen vehicles is crucial in addressing tailpipe emissions.
The future of the automotive industry
As the automotive industry navigates the transition towards new vehicle types and addresses upstream Scope 3 emissions, there is a concerted effort to propel the industry towards a greener, decarbonised future. It is essential to acknowledge the far-reaching impact of the automotive industry and to focus on sustainable production processes and energy procurement globally.
In conclusion, the targeted decarbonisation strategies of the automotive industry are driving economic efficiency and environmental responsibility as it moves towards a greener future.
About the author: Sébastien Wagemans, the Managing Director of Sustainability Solutions at Engie Impact, has played a pivotal role in addressing the complex challenges of automotive decarbonisation.
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