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In Midst Of COVID-19, Auto Faces The Next Big Challenge — Carbon Neutrality

Featured In Forbes

By Marc Boilard
This article first appeared in Forbes on May 27, 2020.

Automakers face a stark reality when it comes to climate change: With road transportation accounting for almost one-fifth of the carbon dioxide (CO2) released into the environment, they have no choice but to play a large part in any effort to reduce global emissions.

But while they have tried to chip away at the total with electric vehicles, hybrids, and better fuel efficiency, auto emissions continued to rise through 2019.

When it comes to controlling emissions, the fragmented nature of the automotive industry raises challenges to achieving carbon neutrality that often appear beyond the control of car companies. Like most heavy industries, automakers can attack the problem by increasing the efficiency of their manufacturing processes and ensuring that they use clean sources of energy to power their production from renewables. But most emissions related to their primary product are generated after the automobiles have left their possession or reside in the complex supply chains of independent companies around the globe that provide the components to build automobiles.

Most emissions related to their primary product are generated after the automobiles have left their possession or reside in the complex supply chains of independent companies around the globe that provide the components to build automobiles.

France recently said it will support sales of lower-emission autos, like electric vehicles (EVs), using coronavirus corporate bailout money to make them more affordable for consumers. While stay-at-home orders, travel restrictions, and business closures put into effect because of COVID-19 decimated demand, it also cut almost one-fifth of emissions. That’s a temporary respite, and while economic activity is unlikely to come charging back, emissions will most certainly begin to climb as soon as the virus-related rules relax.

Editor's note: Oliver Wyman is monitoring the COVID events in real-time and we have compiled resources to help our clients and the industries they serve. Please continue to monitor the Oliver Wyman Coronavirus hub for updates.

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