Zero Emission Mobility Industry Advisory Group - Bus Workshop - 30 March 2020

The following information summarises the workshop and was issued to attendees before the meeting. N.B. – since this material was written, much work has been taken forward under the auspices of the Bus Decarbonisation Taskforce (BDT) – established following the IAG bus workshop.

View details of Bus Decarbonisation Taskforce activity

Objectives of Workshop

The objective of the bus workshop is twofold:

  1. define a plan to develop a lean and sustainable manufacturing industry for buses (including components), that is competitive on a global scale.
  2. build an understanding of the accompanying opportunities for indigenous markets and sectors as Scotland’s bus sector decarbonises.

This will require certain conditions to be met, including (but not limited to):

  • Relevance and attractiveness of the vehicle platforms being produced, spanning fuel type.
  • Size, capacity, and level of automation/digitalisation.
  • Cost efficiency in both vehicle production and vehicle operation (fuel and maintenance).
  • Having sufficient domestic demand to support short-term investment and production.
  • Availability of finance to support operators to transition to Zero Emission buses.
  • A favourable trade policy.
  • Effective internationalisation.
  • Having a suitable logistics infrastructure to export platforms.

It is anticipated that these conditions will be identified during the workshop and captured as milestones. The workshop will also seek to identify what actions are required to deliver these milestones, and set out an initial plan and roadmap, with clear governance and accountabilities. The workshop will explore the thematic areas in scope for the wider Industry Advisory Group initiative, including R&D and Innovation, Finance and Skills. Certain perceived or actual blockers will not, however, be discussed since they are either already being addressed or would be better addressed in a different forum. This includes:

  • Public attitudes and behavioural change topics, which are being addressed by policy interventions.
  • Re-fuelling/power infrastructure, for which a workshop will be held following the next full IAG meeting.

Background information

The Industry Advisory Group (IAG) on growing Scotland’s automotive sector has been established to explore and advise on the strategic interventions, collaborations and investments required to  substantially grow Scotland’s automotive sector, with the emphasis on sustainable, zero (CO2) emission technologies and business models. At the IAG’s first meeting on 3rd December 2019, it was agreed that a key opportunity for Scotland involves: "Early adoption of green bus technology to enable Scottish Bus Original Equipment Manufacturers (OEMs) and the associated supply chain to secure market position and sustainable growth on a global scale.”

Critical to this is relevance and cost competitiveness on a global scale hence a key question is: “How do we create a globally cost-competitive Zero Emission Public Service Vehicle manufacturing industry in Scotland?”

This workshop has been designed to enable organisations across the bus value chain in Scotland to debate and discuss this question, and to set out how the aforementioned opportunity can be achieved.

Pre-meeting reading - Executive Summary - issued to Members:

This document is a briefing paper to provide delegates with an understanding of the topics to be discussed at the Green Bus Opportunities workshop on 03 March 2020. This document provides background and context in respect of the meeting agenda, and an overview of the potential opportunities and challenges for Scotland in becoming a leader in the production of zero emission buses.

Summary of our analysis

Our analysis is split into two main sections – one providing context for the Scottish green bus industry, and one summarising Scotland’s opportunities and required actions to grow the industry. In Chapter 2 we have completed a literature review to provide a summary of the industry, including recent trends, forecasts, and Scotland’s current capabilities. Our key findings include:

  • Scotland is already making rapid strides in the green bus space with 191 diesel hybrid buses, 18 battery electric, and at least ten 10 hydrogen buses, coupled with electric minibuses at a smaller scale. The Scottish manufacturer Alexander Dennis Limited is a world-leading producer, and is manufacturing electric buses, biogas buses, hydrogen buses, and diesel hybrid buses through partnerships with BYD, Scania, Arcola Energy and BAE Systems respectively.

  • This is in line with an increasing international trend in the green bus market. In the UK more widely, lowcarbon emission bus registrations are steadily increasing with the UK having the highest electric bus market share in Europe. Internationally, China is the market leader – particularly for electric buses – while European cities have set out ambitious policies to introduce green buses.

  • The biggest driver of development and uptake in Scotland is the Scottish government’s policy push to encourage greater bus usage, and its commitment to low emission bus transport. This includes policies such as the second edition of National Transport Strategy, Transport Scotland Act (2019), and the Bus Action Plan.

  • As part of this, several initiatives to roll out specific types of low emission buses have been introduced or planned in Scotland, including the Scottish Ultra-Low Emission Bus Scheme, enhanced Bus Service Operators’ Grant (BSOG) rates for zero-emission buses, and Aberdeen’s ten hydrogen fuel-cell buses funded by a large public-private consortium. As a result, Scotland is spearheading the trialling of hydrogen bus technology and is home to one of the strongest international partnerships in electric buses (Alexander Dennis-BYD Auto). However, there is a further need to leverage and upscale these capabilities so as to allow Scotland to secure its position as global leader in green buses.

  • A cause for concern, however, is the decline in the market for overall new bus and coach registrations – the market fell by 18% in 2019 for a third consecutive year. It is hoped that the government’s recent announcement of £5 billion in funding towards new priority routes for buses and ‘zero-carbon’ buses will arrest this overall decline.

  • However, Scotland’s supply chain and infrastructure for the green bus industry is still limited, particularly when compared to some other countries. Whilst Scotland has begun to develop an electric charging and hydrogen fuelling infrastructure, it needs to encourage the existing battery and fuel cell supply chain to focus on mobility application as well. Although there are existing battery suppliers in Scotland (AGM, Denchi, Dukosi, CCPS, MEPCS, Sunamp, MAHLE, AAM, Capitol (Industrial) Batteries Systems Ltd, and Energy Diagnostics), they primarily supply to other sectors such as military vehicles, heating and stationary power generation. A concentrated and sector-focused supply chain environment is necessary to position Scotland as a global leader in innovation, manufacturing, and application. In this light, the “Innovation in Scotland’s Energy Storage Industry” event held at MSIP Dundee has attracted almost 300 participants from manufacturers and supply chain companies which demonstrates growing appetite in the Scottish market potential.

  • Within the UK, ADL’s main competitors are Wrightbus (which has been selected as a partner by Aberdeen City Council to manufacture the 15 double-decker fuel cell buses as part of the second phase of the Aberdeen Hydrogen Bus Project (the buses for the first phase being delivered by Van Hool)) and Optare. Globally, it faces strong competition from Chinese manufacturers like BYD and Yutong, and a range of ZEM IAG Green Bus Workshop pre-reading Transport Scotland and Scottish Enterprise.
  • European manufacturers like Solaris, VDL and Volvo. Battery supply chains, in particular, are far stronger in other parts of the world – China is home to 73% of global lithium cell manufacturing capacity.

  • From an engineering perspective, the different technologies used in the main types of buses – lithium ion batteries, hydrogen fuel cells, biofuels, and hybrid technology – have different merits and demerits. For example, due to the ability of FCEV to store hydrogen in a tank and its higher energy density, the driving range of an FCEV is approximately 50% longer than that of a BEV. However, hydrogen as a fuel source is significantly less developed than other technologies and therefore much more expensive. Given Scotland’s competitive advantage in developing green buses and its ambition to be a world leader in the field, Scotland might adopt a strategic approach by identifying quick-wins that involve lighter investment in the short run whilst simultaneously developing a comprehensive investment strategy or schemes that will enable decarbonisation via potentially more expensive, but much greener, option in the long run.

  • In a skills context, Scotland has some manufacturing and assembly capabilities – partly due to the presence of ADL – but more has to be done to upskill and reskill the workforce and create a thriving green bus industry.
  • Commercially, the ‘cleaner’ buses – electric and hydrogen – are yet to reach cost parity with diesel buses, and are more expensive than biogas and hybrid buses, and therefore need significant support to enable purchase by operators in the short to medium term. The introduction of clean air zones in Scotland’s major cities, beginning from 2021 in Edinburgh will, however, create an incentive for operators to switch to zero emission fleets in these areas.
  • In Chapter 3 we use the above information to assess the strengths, weaknesses, opportunities and threats (SWOT) for Scotland.

Key opportunities identified for Scotland

  • Leverage existing R&D strengths to catalyse green bus manufacturing – including research programmes in universities like St. Andrews, Edinburgh and Strathclyde.
  • Leverage financing opportunities to create short-medium term domestic demand for Zero Emission buses – e.g. leveraging Scottish Ultra-Low Emission Bus Scheme (SULEBS) and exploring innovative financing strategies with the Scottish National Infrastructure Bank.
  • Consider focusing on niche use cases – e.g. focusing on battery and drivetrain applications in Zero Emission heavy duty vehicles and buses, second and third-life uses of batteries, and fuel cells, and rural use cases for buses.
  • Advocate for a more favourable trade strategy – advocating for better terms of trade given ADL’s partnerships.
  • Explore opportunities to localise production of components for incorporation in vehicles by OEMs (e.g. Alexander Dennis) –assessing what would encourage Scotland’s OEMs to localise a greater part of their value chains to Scotland.

Actions required to realise these opportunities may include:

  • Provision of R&D funding to Scotland’s top institutions specifically to address challenges in deploying various fuel technologies in the context of bus application.
  • Following up on SULEBS grants for 2020-2021 to identify business case requirements for potential funding sources to support the development of electric buses and future funding availability to develop other fuel technologies in the long-run.
  • Establishing working groups with:
    • SNIB to develop innovative financing scheme
    • MSIP to establish use cases for second and third degree use cases and rural hydrogen buses
    • ADL, Scotland Skills Development, MSIP to assess existing capacity and capability and future requirements
    • Developing evidence based value propositions for advocacy with UK Plc and BEIS to not only make business cases for future funding schemes but also position Scotland as a leader in the development of green fuel technology, especially in transport.

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Published Date 30 Mar 2020 Type Topic