Excerpt
Table of contents
Introduction
Methodical approach
Defining sustainable development
Sustainability in the automotive sector
Internal barriers of innovation inside German automotive sustainability
External barriers of innovation inside German automotive sustainability
Necessary steps towards the successful transition to automotive hydrogen technology Technological steps
Legislative steps
Hydrogen as a potential fuel alternative
Conclusion
References
The world around us is changing. While technical innovation is accelerating at unprecedented rates and delivering solutions that were unthinkable only a few decades ago, a new factor, impacting all sectors and industries alike, is becoming increasingly important: sustainability.
While sustainability is frequently referred to as a new science, one among many, a deeper examination indicates that it is not a distinct area. Instead, it's altering the way we think about all past studies and completely reorients the focus towards new facets. Material consumption, transportation routes, product-life cycles, recycling, and many more aspects demand increased consideration, resulting in the complete re-evaluation of processes. As a result, three term papers are presented that address the various domains of policymaking, the impacts of global migration and lastly the technological capabilities of artificial intelligence, in the framework of a scientific discourse. Topics take exemplary industrial fields to highlight the urgent call to action by NGOs, societies, and researchers alike. The Sustainable Development Goals (SDGs), also known as Global Goals, are a set of 17 interconnected global goals aimed at achieving a better and more sustainable future for everybody. The United Nations General Assembly established the Sustainable Development Goals (SDGs) in 2015, with the goal of achieving them by 2030. These goals are the cornerstones for the following essays.
The results of this research were presented in a shared colloquium in summer 2021. We would like to thank all institutional and private supporters who have actively helped us with this project and further research projects.
Introduction
The mobility of humanity has often been revolutionized by technical innovations, either by rail in the 18th century or by air in the latter half of the 20th century. However, no utility even came close to the affordability-individuality ratio of the automobile. Starting in the earliest days of the 20th century as a luxury product for just a few, modern industrialization, and supply chains, starting with the Ford T in the US, brought us to today’s society, where owning one or even more cars in families has become the common and not the exception. Policies and dignitaries promoting the purchase and use of cars led to the intergenerational crave for this object, independent of the income or reasonable necessity. While this trend started and manifested in the Western hemisphere first, rapidly growing industries of the Global South, mainly in China and India, aim to provide the same luxury to their society as well. This movement led to a variety of social and ecological issues; the central role of nearly 60% of EU- CO2 emissions output by the private transport sector (German Federal Statistical Office, 2020) leads to irreversible ecological, health and consumption consequences.
Germany’s role in the EU is a particular one; on the one hand its private sector CO2 emissions, compared to the representation in other EU countries, is surpassing the ratio by far (European Commission, 2020), on the other hand it harbors the dominant European automotive brands, responsible for both the technological and economic success as well as the ecological responsibilities of said region.
The industrial sector of German automotive manufacturing is manifested by a long tradition for fossil fuel based, almost exclusively diesel and gasoline operating vehicles. Since the growth to an international market competitor, the industry became most known for its constant expansion to other markets, first in the US, and in the last decade more and more in Asia, surpassing all other, even domestic markets, regarding exports. Since 2015 the step-by- step disclosure of the emissions scandal, caused by a lot of international automakers, explicitly the German Volkswagen Group, tendencies for more ecologically friendly ways of mobility were demanded by share- and stakeholders alike.
This development furthered hastened by national and supranational institutions, EU- and UN authorities respectively, pressured the current established manufacturers to rethink their current strategic orientation and radically change both their products and services towards ensuring to meet a variety of ecological frameworks. These frameworks suggested abandoning the current level of fossil-fuel based technology and shift towards renewable energy sources while also raising the current circular based economics rate, not just in the company itself, but along the whole supply chain.
Methodical approach
This paper discusses the concept of sustainable development in general and takes an in- depth look, what difficulties it faces in the sector of automotive manufacturing in Continental Europe. These difficulties are split up into internal and external barriers, which need to be overcome in order to successfully establish a sustainable and socially justifiable strategy for the next generations. Consequently, the necessary technological and administrative steps are outlined, to identify the necessary steps towards a diversified and thereby unregulated innovation. National policymaking often falls back to taxes on consumption, disregarding the market mechanics of said industrial sector. After presenting the potential problems with this administrative strategy, the idea of hydrogen as a solution towards independent innovation is presented.
Defining sustainable development
The most impactful organization from a global perspective, the United Nations, published an agenda of 17 so-called sustainable development goals (SDGs) in 2015. This agenda ensures that all 178 member states accepted working towards these goals in upcoming decades and thereby providing better economic development, public health, energy infrastructure, legal and social fairness, education, environment safety and many more sustainability concerning aspects for future generations. SDG number 12 focuses on the efficient use of resources by adapting sustainable standards to production and consumption alike (United Nations, 2021) and is considered to be the basic legal framework for an ethical and sustainable strategy for industrial sectors.
The suddenly erupting and consequently crippling paralysis caused by the global Covid- 19 pandemic halted the up to recently common practice of unsustainable use of resources and the unbalanced relationship between waste and recycling. This sudden stop, while not an advantageous method of transformation, uncovers the potential for a recovery with an ecologically aware focus and thereby quicken the ecological revolution rather than returning the status quo. Through the basis of transnational partnerships, the UN aims to eliminate potential unjust enrichment through lesser regulated countries and thereby guarantee a fair and even development worldwide.
One of the most urgent effects of current resource management in the globally active supply chains it the one of rising resource scarcity and simultaneous environmental degradation. This advancement accelerates further, as countries, formerly being part of developing states, offer higher living conditions and thereby wish to consume higher-tier goods than in the past. This will undeniably result in higher consumption of resources and ecological restraints; therefore, sustainability programs focus on both on the market demand, influenced by the consumer, as well as the market supply, represented by the producer.
The effects of the rising social wealth worldwide can be (economically) monitored with the development of the prices, built on the classic relationship between supply and demand, or rather production and consumption (Sándor Kerekes et al., 2018, p. 93f.): When the costs of purchasing or maintaining the current technological standard are rising, the goods become innovative entrepreneurs either will try to overcome the limited supply and search for alternatives to profit from solutions, that involve more customers and thereby become more profitable or search for means to access previously uneconomic sources of resources (Sándor Kerekes et al., 2018, p. 97f). Institutions on any level, being it on a local, national, or international level, can intervene in this market; with their legislative decision-making they can long-lastingly impact the future way of life of the representing society.
The success of these policies however is dependent from various factors, that are mostly industry dependent. Attributes of the automotive sector are diverging tremendously from other industries portrayed by the classic substitutionary goods like butter and margarine and thereby the possibility of choosing a sustainable choice is not always present (United Nations Environment Programme, 2017). The search for an alternative is often called a difficult endeavour, as the heterogeneity of stakeholder groups and their interests makes a general and decisive strategy impossible. Contradicting social notions collide as investment-focused shareholders clash with increasing social and ecological efforts from stakeholders, rendering the strategic decision-making paralyzed how to proceed (Camillus, 2008).
To implement sustainability effectively along a whole industry, it is crucial to understand that sustainability and innovation are not seen as contrary point of views, but rather as the proposed problem-solving technique by respecting all three dimensions of the sustainability triangle (Kleine & von Hauff, 2009): ecology, economic and society. Actions taken by public authorities and companies alike, can be allocated and reviewed by their respective interest. Balancing these actions and incorporating the interests of each dimension results in potential solutions to problems, often described as wicked or unsolvable. Although the perfect allocation of resources, especially non-renewable and semi-renewable resources respectively, is far out of our current reach, it is crucial to aim for a reasonable excavation rate to forestall, or at least postpone it as long as possible as with increased time, technological breakthroughs provide practical solutions whereby the ecologic capacities and as a consequence our resource pool increases (Sándor Kerekes et al., 2018, p. 29ff) or substitutions can be found, where the need for a specific resource plummets in a couple of years because of cheaper alternatives (Sándor Kerekes et al., 2018, p. 101).
Sustainability in the automotive sector
The sustainability agenda proposed by the UN demands big changes in energy- and resource-intensive economic branches. The automotive industry is not only defined by its huge consumption in fossil-based fuels; looking at the full supply chain, many necessary resources result in high ecological costs in extraction, refinement, and transport to the specific plant. This paper focuses, similar to the innovation strategy of the German automotive industry on incremental steps, thereby looking at realistic alternatives to reduce the emissions of the private transport industry in its daily use.
Internal barriers of innovation inside German automotive sustainability
The automotive sector differs from other industries substantially by its market structure and strategy-making regarding innovation. While the customer base is diverse, the European automotive market is split up between just a few competitors. Mostly reduced to national symbols, their respective national administrations have deep interest in keeping them as a national asset, therefore making policies of both purchasing and maintaining the products as comfortable as possible (Zhao, 2017).
Market entry barriers propose unique feature; being a capital-intensive business field, the founding of new original equipment manufacturers (so-called OEMs) is nearly impossible, as the necessary cost- and organizational structure both need exhausting amounts of financial and know-how capacities. The limited amount of competition and the special treatment and focus of national policies to bolster the growth of these industries led to the transformation from an open market towards an oligarchic market. Brands like Volkswagen became conglomerates, that use different marketing and value propositions to tailor their sub-brands to a particular customer segment, but cost-reducing modular supply chain systems have become the norm in their manufacturing portfolio, thereby selling ideas of mobility rather than individual products.
This market inequality results a specific king of innovation aversion. Of course, it would be incorrect to state, that the automotive companies, especially in the German domestic market, don’t invest into new technological achievements, the research and development of this industrial sector is rising, both on a national level (Kords, 2020a) as well as on the international stage (Kords, 2020b). Still, qualitative studies pointed out, that new technologies, independent from the potential, are seen rather as a threat to the current operative business (Högelsberger & Maneka, 2020). Fearing the rise of new regulations, a sudden and disruptive change of production could inquire a complete reorientation and the whole operative scale, as the current technological level of combustion engines is feasible in terms of profits. While the call for a total conversion of the manufacturing commodities regarding social and ecological terms is requested from parts of society and some political institutions alike, a strictly ecologically compatible and sustainable strategy contradicts the present profit-orientated system. The “comfort”, which established through the oligarchic market structure is based on the amassed incremental technological innovation, built up in the last years and decades. This further reduces the willingness and the openness to adapt completely new products. Lock-in effects arise through the sheer number of efforts already put in a specific technological field and new technologies are complementary products rather than a substitute.
The long-lasting missing demand from the few OEMs for different technologies lead to missing investments from their suppliers too, which were often degraded to mere outsourced subcompanies rather than traditional business partners.
External barriers of innovation inside German automotive sustainability
The limited choice of brands increases the barriers of consumers to move to a more sustainable behaviour, as the automotive sector, even more than other industries, rely on so- called unexpected barriers of behavioural science (United Nations Environment Programme, 2017). Most choices taken by consumers on a day-to-day basis are often habitual and influenced by social norms and peers and not based on logic and reason. This choice-making often overshadows the realistic consideration of the consequences of consumption, possibly degrading it to activism rather than serious moral argumentation, resulting in cars becoming heavier while transporting the same number of passengers (US Office of Energy, 2018) or even fewer every year (VCOE (Verkehrsclub Österreich), 2015).
Driven by the limited brand choice, the search for an automotive based way of transport become harder, as currently proposed means of transportation focus on the complete change mobility, turning away from individual mobility towards shared/public transportation (Wagner et al., 2003) and clashing culturally with the current understanding of mobility
Necessary steps towards the successful transition to automotive hydrogen technology Technological steps
To be considered as an effective alternative towards a carbon-reduced future, various technological steps must be reached, in order to become an adequate substitution and not just a complementary technology. While technological advancement has come a long way in the last decade, the energy enrichment of hydrogen is still a prominent issue (Letcher, 2012). Currently the use of different, mostly oil-based derivatives is economically cheaper, involves less energy- loss and does not need special infrastructure. However, the urgently needed cost-value ratio surprisingly only applies to the consumer market, most heavy-load vehicles like trucks, boats, buses operating on long distance routes show a way higher potential for hydrogen technology. Hybrid technology is the key factor here, as electrical propulsion is seen as a medium to efficiently cover planned routes (Plötz et al., 2020), while hydrogen is evaluated as the green energy storage medium to overcome both charging infrastructure as well as charging time.
The private sector on the other hand differs tremendously in its requirements, as individuality, speed, and sudden action (or reconsideration) takes a higher role than reliability on transnational routes and interconnected supply chains. Nevertheless, manifested insights in innovation theory point out, that not breakthroughs in technology are the issue, rather the adoption through market mechanics proves to be the dominant selection for economic success
Legislative steps
Due to the decade long commitment into the current combustion-engine based mobility of automotive, fuel and connected industries, the financial evaluation of transitioning (so-called switching costs) into other technologies are immeasurable. Only through constant pressure from social and political institutions these changes can be accelerated (Letcher, 2012), as the negative consequences of maintaining this strategy are long-term and not immediately visible (in their full extent).
Considering the methods, the concept of taxes or tax subsidies for increasing or decreasing the consumption of a certain good is nothing new. This concept can be adapted to sustainability as well, either by reducing (“capping”) the maximum output of the manufacturing or the encouragement of using pollution-reducing methods like emission trade (Sándor Kerekes et al., 2018, p. 150).
Unfortunately, there are multiple issues, both from a general type of view as well as industry-specific ones for the automotive sector. First and foremost, the understanding of innovation theory pointed out by Letcher is not always shared in public administrations (National Research Council, 2008), as instead of long-term innovation, similar to the European automotive sector, short-term gains are preferred instead of long-lasting development (Slawinski & Bansal, 2015). This phenomenon can be witnessed in the planning and execution of energy policies alike; while laudable goals are planned in the upcoming decade, current level energy sources like coal-based energy production, are mainly influenced by political ambitions rather than sustainability in mind (Weimann, 2019).
Secondly, the presented policy toolset is not applicable to economic systems with oligarchic structures, like the automotive sector (Sándor Kerekes et al., 2018, p. 162 ff.). With no “simple” substitute available, the only “real” alternatives for a responsible custom transportation. While this seems preferable from an ecologic perspective, it clashes with both the deciding-methodology of customers[[1]] as well as the partial reasoning behind automotive use: lack of (time- or cost-reasonable) transportation alternatives, individuality, and to a wide extent emotional argument (Transport for London Task force, n.d.). Based on these arguments, it becomes evident, that with rising costs of consumption (i.e., taxes) in the automotive sector tax fuels (Sipes & Mendelsohn, 2001), due to the inelasticity of the product itself (Sándor Kerekes et al., 2018, p. 167f.), cannot cause more sustainability.
Thirdly, choosing the correct framework of regulation, be it the adequate rate of the new tax or similar, requires extensive knowledge from the regulatory authority (Sándor Kerekes et al., 2018, p. 156ff.), a requirement nearly impossible to meet due to the asymmetry of information regarding market mechanics. An ineffective legislation can cause serious damage through unbalanced efforts, as enterprises could form alliances, seeing these new policies as threats and thereby blocking or actively working against these regulations by not adapting innovative technological developments in fear of upcoming tighter regulations. This threat is not tied to theoretical argumentation though, the (numerically speaking) small amount of market participants of European automotive manufacturing led to the use of technology hiding the real emissions, thereby no steps towards actual sustainability were taken.
Lastly, one of the biggest challenges will be the factor of pollution; while steps were taking towards a reduced use of costly and harmful manufacturing resources, modern vehicles, especially the ones focused on electric propulsion, suffer under the tremendous after-market pollution as the rate and quality of retrieving and recycling the increasing valuable processed materials has no legal framework to be guaranteed (Sándor Kerekes et al., 2018, p. 163f.).
Hydrogen as a potential fuel alternative
After the legal and organizational restructuring, caused by the Dieselgate scandal, both the enterprises and the national administrations searched for adaptations to traditional fuels avoiding technologies and mainly focused on electric propulsion. It is essential to point out however, that innovation in its definition is not a planned to execute process, but rather independent research and entrepreneurial behaviour of market participants. This decision of strategy resulted in the narrow focus on one alternative to fuel-based mobility, rather than a complete diversification. As pointed out by (Letcher, 2012, p. 2642f.) one and only, “mainstream” fuel strategies are not pursuable, as individual sectors are defined by their customers and thereby different consumption patterns. The prolonged enforcement of one deciding fuel will lead to inefficiency and the dependency of one technology will make future transitions to alternatives even harder. Furthermore, it can only be supported by the expensive and sub-optimal use of policy methods, similarly to our current oil-favoured society.
Incremental innovation regarding fuel types has been attempted by numerous technologies, like petroleum gas (both in natural and synthetic variants), hybrid technology (plug-in hybrids, gas-hydrogen mixes, hydrogen-based fuel cells, ethanol-gas mixes etc.) or direct use of other fuels (hydrogen-combustion), but either lacked the institutional support or was forced to take over every mobility consumer (private cars, trucks, ships, airplanes) simultaneously.
Therefore, not the idea, whether hydrogen shall be the one alternative to fuel, should be discussed on a wider scale, but rather that missing independent innovation is the main factor prohibiting the actual and externality-free development of sustainability. Considering the base principles of innovation (Malerba & Mani, 2009), the specific roles, competences, and responsibilities of the three main participants of independent innovation are definitive. Crossing these boundaries, by interfering in the un-bias and “planned” innovation cannot be deemed as a successful solution, thereby disregarding the balanced solution of the sustainability triangle.
Conclusion
This paper presented the concept of sustainability, both from an ecological as well as an innovation point of view. In the next step, the understanding of innovation was characterized both by their internal (economic) and external (politico-economic) barriers.
With the rising externalities of climate change the causes and consequences will cause irreversible effects, both on an economic and ecological scale. As this global process is not reliant on local efforts, regulated global eco-strategies must be implemented. These steps need a technological basis, industry-specific legislative frameworks, and a shared and distinct understanding of innovation to reach a more sustainable future. The SDGs proposed by the UN build the corner stones for this effort, but need, from an economic perspective, the technological and entrepreneurial support from corresponding industries, like the automotive industry. Only by allowing the growth of independent innovation, the necessary steps can be taken to a decarbonization and more environmentally aware future. Technologies like hydrogen-based fuels should be taken into account but should not be seen as the one and only method, rather consumer-specific solutions need to be evaluated. These concepts need go through the different processes of economic adoption and should not be interfered by intervening policies that make any alternatives inefficient.
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