Greener ride

Beyond vehicle use, sustainability and decarbonization must be integrated into the whole automotive industry value chain, from product design, material selection, and procurement, to manufacturing, logistics, used cars recycling, and vehicle use.

Currently, the sector is undergoing a structural transformation of unprecedented speed and magnitude. The automotive industry is facing a transition to a circular economy, and zero-emission, connected, and increasingly automated vehicles.

European automotive industry players have set ambitious sustainability and decarbonization objectives and made comprehensive plans and investments to achieve their goals.

Sustainable materials

The aim to reduce greenhouse gas emissions and increase circularity is transforming material use in the automotive industry. Traditionally, the industry has relied heavily on materials such as steel, aluminum, synthetic rubber, and plastics. An average modern car weighing 1,500 kg contains today only 1%-2% of bio-based materials, consisting mainly of natural fibers such as flax and hemp used in interior trims and door panels. Renewable and bio-based materials are, however, gaining the interest of industry players as viable alternatives. These novel solutions come from a variety of initiatives targeting partial or full replacement of fossil-based materials.

Many of the leading brands, including Toyota, Mercedes-Benz, Volvo, BMW, and BYD, are adopting and promoting the use of bio-based materials. They typically emphasize three core strategic pillars related to climate neutrality, circular economy, and responsible sourcing. The opportunities to replace fossil- and even mineral-based materials are unique as they can simultaneously address all core pillars. This change is not only futuristic per se, but rather very pragmatic, with solutions and technologies that allow swift material substitution.

Three examples illustrate how tangibly bio-based materials can support the automotive industry to accelerate its material sustainability targets:

1. Cellulosic fibers

A typical car interior requires about 30-40 m² of textiles (~9-12 kg). Synthetic fibers, such as polyester and nylon, are widely used today in seat covers, cushions, seat belts, and carpeting. Novel and traditional man-made cellulosic fibers are beginning to make inroads into replacing some of these fossil-based textiles. For example, the Swiss start-up HeiQ AeoniQ™ is developing cellulosic yarns that match the performance of many synthetic fibers, utilizing wood pulp as the main raw material to produce biodegradable and recyclable fibers.

2. Bio-graphite

In 2023, the sales of 100% electric vehicles (BEVs) reached approximately 10.3 million units, accounting for some 12% of the light-duty fleet sold globally. It is estimated that each car battery requires around 60kg of graphite. Graphite is the main raw material in battery anodes production. One of the critical bottlenecks to expand battery production is access to graphite, which is today highly concentrated in a few countries, such as China (over 70% of global production), Madagascar, and Mozambique.

Wood-based anode materials are viable alternatives to replace natural and synthetic graphite. Several pathways to produce biomaterial-based anodes, including lignin-based or the carbonization of woody raw materials, are under consideration. A New Zealand-based start-up, CarbonScape, has developed a solution that utilizes about 8 BD tonnes of woodchips to produce a tonne of bio-graphite anode. The technical solutions being considered can substantially reduce process-related CO2 emissions and produce biographite with similar performance to synthetic graphite.

Current battery and engine coolants are made mainly from fossil-based chemicals, the production of which contributes significantly to greenhouse gas emissions. A new approach to producing automotive and industrial coolants is based on using wood as feedstock, instead of fossil-based materials.

Vehicle production

Finnish company UPM started up a biorefinery facility in Leuna, Germany, in late 2024. The company invested approximately 1.2 billion EUR in the plant, which will produce a variety of bio-based chemicals, including bio-monoethylene glycol (BioMEG) used as battery coolants and bio-based raw material for polyester textile fibers. The mill will also produce Bio-MPG (monopropylene glycol) as well as lignin-based functional fillers used in various rubber applications, including car tires.

Sustainable production

Energy consumption in automotive production varies strongly based on the size and efficiency of the production units and the type of vehicles produced, consisting primarily of electricity and heat. Small plants might use 50-100,000 MWh of electricity and 500,000 MMBtu of fuel annually, while large ones may use up to five times as much electricity and four times as much fuel annually. When battery production is included, the electricity demand can reach as high as 1,000,000 MWh/year. Most of the energy consumed in automotive production is used in the body shop and for painting, followed by the assembly line.

Electric engines used in battery electric vehicles (BEVs) are most likely to become the predominant drive train, and BEVs are expected to account for 50–70% of new car sales by 2030 in the EU. Analysis of greenhouse gas (GHG) emissions over the life cycle of a vehicle shows that, due to the industry's shift towards electric drives, the bulk of the emissions generated are shifting from the usage phase to the production phase. A focus on decarbonizing energy generated for production processes is a key to progress.

Energy consumed, automotive manufacturing

Green Energy generation

Many automotive companies have started generating their own electricity from renewable energy sources like solar and wind - with the goals to reduce Scope 2 emissions and obtain more stable energy costs. Almost all of them are procuring green electricity from solar, wind or hydroelectric power plants through the Green Power Purchase Agreements (PPA), a long-term contract in which the OEM agrees to buy electricity generated from renewable sources at a fixed price over a period of 10–20 years. Such contracts usually include also Guarantees of Origin (GoOs) to prove the source of the energy.

Local electricity storage

As electricity from renewable energy sources is intermittent and prices may vary strongly, automotive companies build stationary battery storages which play an increasingly strategic role. In many cases, ‘scrap’ electric vehicle batteries, batteries that are not fit for purpose for vehicles, are used for as stationary storage. In the future, after their primary use, refurbished, "second-life" batteries may be used for the same purpose.

Scrap and second-life batteries create a virtual power plant (VPP) that both stores surplus locally generated renewable electricity and electricity purchased from the power grid at times of low prices. A VPP can also shave peaks, manage load, and thus flatten demand spikes, to reduce grid tariffs.

Local heat generation

Germany's total heat consumption in the automotive industry is estimated at around 5-8 TWh per year, including energy for foundries, paint shops, welding processes, heat treatments, and other thermal processes. Technologies and costs to abate production emissions vary from site to site and for each process. Combined heat and power (CHP) plants are typically used to produce electricity and heat more efficiently.

Fossil-free heat production technology of choice depends on the temperature requirements for the various processes and can differ in cost. For "low" temperatures (<70 °C), heat pumps offer a good alternative, reducing both carbon footprint and energy cost.

Automotive abatement cost chart

Automotive production logistics

The oftentimes global logistics processes, typical in the automotive supply chain, are also a large emitter of CO2 and must also be addressed. Whether it is the "upstream" logistics of materials and components from suppliers to the automaker, or "downstream" delivery of finished vehicles to the local dealership, there are frequently ocean-going vessels involved, which, instead of fossil fuels, are increasingly going to use sustainable fuels. Logistics processes using trucks are being re-assessed for potential shift to rail, or at least carbon-neutral vehicles, i.e. using either battery-electric or hydrogen trucks.

Sustainable usage

While with internal combustion engines, around 90% of emissions from road vehicles occur from driving, electrified vehicles powered by electricity from renewable sources are almost emission-free during their use phase.

Intelligent and bidirectional charging

Electricity is one of the most volatile commodities on the planet. There are separate prices for each 15-minute period in most of Europe, and each of these prices changes continuously from a few days ahead until the time of delivery. Energy markets in Europe are seeing tens and even hundreds of hours per year with zero or even negative electricity prices. And as the energy transition continues, it will matter more when we consume electricity than how much electricity is consumed in total.

Vehicle-to-Grid (V2G) and Vehicle-to-Home (V2H) offer huge potential gains for flexibility, as they allow vehicles connected to the power grid to be charged at times when electricity prices are low and to feed back electricity into the home or the power grid when prices are high. Even the simplest form of overnight charging with a simple fixed day/night tariff could save 60-70% of the total charging cost. Moving electricity from the car’s battery to the grid or home can greatly increase the use of renewable energy and thus reduce the carbon footprint of automobiles during their operations. At the same time, bidirectional charging can save its owner several hundred euros per year for a single vehicle.

Looking ahead

The automotive industry is steadily shifting toward reducing the overall carbon footprint of vehicles, while simultaneously increasing their ability to recycle materials. Together with material supply partners, the industry is developing alternatives to traditional fossil and mineral-based materials. These new bio-based solutions are set to reshape the car of the future.

Authored by João Cordeiro and Steffen Schaefer, AFRY Management Consulting.

This article is part of our AFRY Insights publication series, where experts from AFRY Management Consulting share their insights into emerging global trends across the energy and bioindustry sectors, as well as sustainability transformation.