Decarbonisation of
the automotive industry

Digitalisation, decarbonisation, electrification: The German automotive industry is facing major challenges. In order to achieve climate neutrality and to secure value added, employment and training positions in Germany as an automotive location, the Ministry for Economic Affairs and Climate Protection (BMWK) brought together a dedicated body of experts entitled the “Transformation of the Automotive Industry”.

To support the work of the body of experts the Ad-hoc working group (AhG) “Decarbonisation of the automotive value chains” was set up. Prognos, together with the Fraunhofer IAO, carried out the accompanying research on the decarbonisation of the automotive value chain, on behalf of the BMWK. 

Prognos delivered input for recommendations for action

The accompanying research contributes to, 

• demonstrating the action requirements in the capture, quantification and removal of CO₂ emissions along the entire automotive value chain,
• presenting the systematic (regulatory) requirements for companies concerning the capture and reporting of CO₂ emissions,
• illustrating the financial market perspectives on carbon assessment. 

The accompanying research thus delivers valuable input, which can in turn be used to develop recommendations for action that will enable Germany as an automotive location to become climate neutral as well as securing value added and employment.

Three-part final report on carbon assessment

The final report for the BMWK comprises three parts:

1. Needs for action in carbon assessment

The first part of the report contains an overview of the needs for action in the business and product relevant carbon assessment. Selected results are: 

• The goals and requirements of carbon assessment must be determined. It will require hot-spot as well as carbon-accounting approach perspectives.
• The key methods and standards of the assessment should be harmonised at international level. An expansion of the universal rules of carbon footprint assessment to include non-EU countries is necessary in the mid term.
• A data basis and IT infrastructure must be created for assessment reporting and an efficient verification system put in place.
• The implementation of carbon assessment will require transparency along the entire delivery chain and the qualification of all involved parties.

To identify these needs for action, theses were formulated based on a survey of players in the automotive value chain, which were then scrutinised during in-depth interviews. 

2. Gathering emissions data and reporting from companies.

The second part of the report analyses the (regulatory) requirements of businesses in the capture and reporting of C0₂ emissions. This part of the report shows, in particular:

• The number of regulatory requirements with a focus on carbon calculation is increasing. Companies face major challenges through various methodological demands and uncertainties about connections.
• Increases in the gathering and calculation of CO₂ emissions is necessary at product and not company level and will thus require use of primary data.
• The Greenhouse Gas (GHG) Protocol as well as EU methods on ecological footprints are often the methodological basis.
• The requirements enable overall increased transparency, higher resilience in the value chain, and improved risk management and higher credibility.

3. Perspectives of the financial market on carbon assessment

The third part of the report investigates the perspectives the financial market has on carbon assessment. For this purpose, expert interviews were conducted with various actors from the financial market. The following results could be concluded:

• The climate footprint of companies plays an increasingly important role. It has a financial influence, as it justifies potential credit spreads and makes access to finance more difficult.
• The regulation of carbon assessment increases the stability of the financial market. This demonstrates there is still a major need for action.
• ESG rating agencies have a strong influence on investment streams. The ESG rating agencies’ estimation of the emissions profiles of companies still vary considerably. The level of freedom in the calculation methods continue.
• From the capital market perspective, carbon assessment is examined in terms of results. It is unlikely that the financial market will measurably boost the methodical development of carbon footprint assessment in the future. 

Links and downloads

To the report on carbon assessment (PDF, in German)

More information (BMWK website, in German)

More on the “Transformation of the Automotive Industry body of experts” (ETA website, in German)

Dr. Jan Trenczek at the convention of the body of experts

Project team: Michael Astor, Alex auf der Mauer, Nico Dietzsch, Stina Lorenz, Tim Trachsel, Dr. Jan Trenczek

Latest update: 17.04.2024