Highlighting the role leasing can play in a greener Europe

October 2020

The European Green Deal is taking centre stage for EU policymakers, including circular economy, sustainable finance and mobility initiatives, and the key role to be played by lessors has never been more important.

Green sustainable city

Europe is going green

Transitioning towards a green economy has been a popular topic in the EU for the last year, when the current European Commission took office and put sustainability front and centre of their agenda. The European Green Deal is the cornerstone of this agenda, and is made up of a range of policy actions that span across different sectors.

The Green Deal’s ambitious aim, of reducing the EU’s carbon dioxide emissions by 55% by 2030, has brought with it a number of equally ambitious proposals. Many of these proposals have the potential to have a major impact on the leasing and automotive rental industries. As a result of this renewed focus on sustainability, Leaseurope has continued to highlight the important role the leasing and automotive rental industries can play in enabling the green transition, partially through making greener assets, including vehicles and equipment, more widely available.

Leasing’s role in a circular economy

One of the central elements of the Green Deal is the Circular Economy Action Plan. This plan ultimately aims to ensure assets -and their individual components- are used until the end of their lifecycle. In response to this increased focus on ‘reduce, reuse, recycle’, Leaseurope has continued to highlight that the leasing and automotive rental industries are -by their very nature- circular, since they rely on keeping assets in good working condition for as long as possible and have many avenues for reuse. We have also noted that our sector encourages an important shift among consumers, away from an ownership model to a use model, which massively reduces the amount of wasted resources since consumers no longer dispose of assets once they are finished using them.

Leaseurope position on the circular economy action plan

Sustainable mobility

As well as these broader cross sectoral initiatives, the European Green Deal also includes a number of proposals that are mobility focused, most notably the Sustainable and Smart Mobility Strategy, and the revision of the Alternative Fuels Infrastructure Directive (AFID). The Sustainable and Smart Mobility Strategy essentially aims to increase the uptake of low emission vehicles (LEVs), whilst the AFID revision seeks to improve the availability of recharging and refuelling stations for alternative fuels across the EU. The Leasing and automotive rental industry plays an important role in enabling consumers to use LEVs since the purchasing costs, coupled with the repair and maintenance costs associated with ownership, are often prohibitive. To facilitate this transition, Leaseurope is also pushing the need to make alternative fuel stations more widely available.

Leaseurope position on the sustainable and smart mobility strategy

Leaseurope position on AFID

Defining what is green

A key first step in the Green Deal is to develop a common understanding of what is green, which the Commission has opted to introduce by developing a taxonomy. The Taxonomy Regulation -which was finalised in June this year- sets out an overarching design and criteria to base the taxonomy on. Specifically, it notes that a sustainable activity would need to contribute to the green transition, and this could be through climate change mitigation (reducing carbon emissions for example) and the transition towards a circular economy, or by supporting one of the other criteria listed (there are six in total). Whilst the Taxonomy Regulation itself has been finalised, the list of sustainable activities will be set out through two Delegated Acts, the first of which will be subject to consultation this Autumn.

This new Taxonomy Regulation and its accompanying Delegated Acts will define what is green across the EU, and therefore will have a major impact on the leasing and automotive rental industries. For example, it is likely that much of the EU’s funding will include eligibility criteria requiring an organisation’s activities to be deemed sustainable under the official taxonomy. As the EU makes plans to become the world’s biggest issuer of green bonds, this taxonomy could also become a benchmark in many other business areas. As a result, it is crucial that the potential of leasing to help realise the ambitious goals of the Green Deal is fully understood by policymakers.