Climate Action - Assisting business towards carbon neutrality

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Dr Paul Nieuwenhuis, project manager, sustainable automobility, ESRC Centre for Business Relationships, Accountability, Sustainability & Society, Cardiff University

The EU is the first major jurisdiction to propose regulation on car CO2 directly, rather than fuel consumption. Meeting the proposed target of 130 g/km of CO2 emissions from new cars is technically feasible with certain policy measures to bring this about. Many cars on sale in the EU already meet the proposed limit. It is also known from suppliers and manufacturers that more CO2 reducing technologies are due to enter the market before the proposed EU deadline of 2012. But current technology can also deliver major improvements in car CO2 emissions in countries such as China.

BACKGROUND

Chevrolet Volt Concept car 2007 - taking hybrid technology to the next logical step where the  drive is purely electric with the internal combustion engine acting only as a generator.

Cars are a significant source of carbon dioxide emissions and energy use. In the developed nations, emissions from other sources are reducing but those from transport are still rising. In order to tackle this problem a number of countries have attempted to reduce CO2 emissions from cars, either through fuel taxes, restrictions on fuel consumption, or by reducing CO2 emissions directly, such as in the EU.

Many regulators and politicians have unrealistically high expectations of alternative technologies such as fuel cells. Internal combustion (IC) will be the dominant technology for many years to come and even hybrids still use this technology. Any regulatory approach to carbon reduction should therefore consider IC technologies. Car manufacturers must also treat this issue with more urgency, even though the changes needed have the potential to change dramatically the nature of cars and of the industry that makes them.

THE EU CASE

In February 2007, EU Environment Commissioner Dimas proposed a mandatory reduction of average CO2 emissions from new cars to 130 g/km by 2012. This reflected the industry’s inability to meet the voluntary target set in the late 1990s of 140 g/km by 2008. Some manufacturers were on track, and the voluntary agreement had some impact. The Figure shows average new car emissions in different EU member states. Despite reductions in the average figure, we are still some way off the voluntary limit of 140 g/km agreed between  the European Automobile Manufacturers Association (ACEA) and the European Commission.

Much of this reduction in CO2 output was achieved by greater reliance on diesel engines. The better efficiency of the diesel engine more than offsets the slightly higher carbon content of diesel fuel. Although there are health risks associated with diesel emissions, there is little doubt that any further reduction in CO2 emissions will be achieved partly through a further increase in diesel, see Figure  below.

Cars have also become larger and heavier, so attempts to reduce CO2 have in part been negated by weight gain. A typical example is VW’s Golf, which has long been Europe’s best-selling car. The Golf has added weight with each new generation as features were added to enhance its appeal in the market.

HOW LOW CAN YOU GO?

ACEA suggests that reducing CO2 emissions to 130 g/km for new cars is a major challenge, yet the industry currently offers many vehicles that meet this standard. It is therefore far from impossible, see Table 1.

Table 1:  < 140g/km cars currently available in the EU.

The large car market

Cars that currently emit up to about 170g/km can be brought down to 130g/km with reprogrammed engine management systems and low cost powertrain improvements, eg stop-start. Larger cars need more expensive technologies to bring them down to a CO2 emission level which doesn’t distort the industry average and this is where the challenge lies. The result may be a split in the market, whereby small to medium cars will continue to be available at price levels similar to today, while larger cars become more expensive. Although this may unduly affect certain manufacturers, they tend to operate higher margins and could pass on much of this extra cost. These manufacturers could introduce smaller cars which will still need to be premium priced in order for them to survive. BMW’s Mini and Mercedes A and B Class are examples of how this might be done. The skill is in carrying traditional brand values into more compact cars, ie in marketing, not engineering.

There are other advantages. Large luxury cars lose value quickly because used car buyers are less able to afford high running costs. If luxury cars were smaller and lighter, their appeal to the used market would rise, boosting residual values. This impacts on lifecycle costs of luxury cars, making them generally competitive in economic lifecycle terms. This benefits consumers, but also manufacturers, as higher residual values enhance brand appeal.

NEWLY MOTORISED COUNTRIES

Countries such as China and India, with their large populations, are causing concern to environmentalists, not least in view of their growth in motorisation. The Chinese fleet will continue its rapid growth for the next 25 years, potentially reaching 50 million new passenger vehicle registrations per year. However, research carried out at ESRC Centre for Business Relationships, Accountability, Sustainability and Society (BRASS) suggests it is possible, with current technologies, to reduce the CO2 emissions resulting from this growth at relatively little cost. Scenarios covered diesel, minicars and hybrids.

Although all three technology options provide some CO2 reduction benefit, the widespread adoption of hybrid electric technology would reap the greatest benefits. If this could be installed in minicars and powered by a diesel engine as the internal combustion element, even greater benefits would accrue. Estimates suggest that in a mature market, such as the EU, achieving the CO2 emissions target of 120 g/km desired by the Commission would translate into a cost to consumers of around €1,200-€2,000 on the price of an average car. With the expected longer term rise in oil prices, much of this is offset by fuel savings. In a lower cost economy, such as China, costs would be much reduced as Chinese consumers would either benefit from work carried out to meet EU targets, or carried out at lower cost in China itself.

Table 2: Future powertrain developments.

Source: CAIR/BRASS

NEW TECHNOLOGIES NEEDED

There are a number of technologies coming onto the market which will keep conventional IC engines more environmentally competitive, see Table 2. Petrol engines will become smaller, turbocharged and fitted with technologies for greater efficiency. This will make them competitive in fuel consumption, and, in CO2 emissions terms, with diesel but with the advantage of cheaper emissions control than future generations of diesel engine. Improvements in the diesel combustion process are also being developed to avoid expensive and complex after treatment. As a result of widespread outsourcing of product development, much of this expertise now resides with suppliers, rather than car manufacturers, a fact not yet fully appreciated by regulators who still often interface with car manufacturers as the sole representatives of their industry.

Concept cars

At the 2007 Frankfurt motor show, Mercedes showed a concept car which gives an indication of what could be achieved with technologies currently under development. The F700 is a large luxury saloon, but powered by a small 1.8 litre engine. The engine uses a combination of diesel and Otto cycles to produce 258bhp, yet with CO2 emissions of only 127 g/km. This is achieved by combining the IC engine with a hybrid powertrain, while the engine itself has two stage turbocharging and optimised IC technology.

The Chevrolet Volt concept car, shown at the 2007 Detroit show, takes hybrid technology the next logical step: a series-hybrid configuration, whereby the IC engine acts only as a generator. Drive is purely electric, with the option of additional recharging from an external power source, at home. A production version is expected around 2010-2012.

ROLE OF POLICYMAKERS AND CUSTOMERS

Technology is not the whole solution; enabling the take up of those technologies and changing cultures of automobility are equally important. It is possible to restrict car ownership and use as in Singapore, or access to urban areas as in Italy, Norway and London. European cities are trying to get citizens to return to cycling, yet several Chinese cities are trying to restrict cycling. With their new found automobility it may be challenging to engage public support for reversing these policies, though the negative consequences of this rise in car ownership may help build support for such measures, particularly in cities.

Dramatic reductions in CO2 emissions are possible with current and new technologies. Countries leading the technologies – Japan, US and EU – should also lead in regulation to encourage the market. This provides a home market for low carbon technologies, and a competitive advantage to firms pioneering such technologies.

CONCLUSION

Traditionally, the car industry blames the customer for the products it makes. Increasingly it is recognised that the customer is not a car designer or automotive engineer. Ordinary citizens cannot track down lifecycle assessments for every product they buy or use. The customer can only choose from what is offered in the market place. Stuart Hart’s influential article in the Harvard Business Review in February 1997 put the primary responsibility for greening products firmly on manufacturers:

“Like it or not, the responsibility for ensuring a sustainable world falls largely on the shoulders of the world’s enterprises... corporations can and should lead
the way, helping to shape public policy and driving change in consumers’ behaviour”. Hart encourages industry to help shape public policy not in its own short term interests but in the longer term social interests that are implied in the sustainability agenda.

The car of tomorrow will need to address resource depletion, waste generation, congestion and quality of life in the broadest sense. It is likely these cars may well be more likeable and more fun to drive than the often overspecified, overweight cars of today.

Author

Dr Paul Nieuwenhuis joined the Centre for Automotive Industry Research (CAIR) at Cardiff University in 1991 and became one of its two directors in 2006. He is a founder member of the ESRC Centre for Business Relationships, Accountability, Sustainability and Society (BRASS). He has written a number of books on environmental issues and the automotive industry including The Green Car Guide (1992), The Death of Motoring? (1997), and most recently, The Business of Sustainable Mobility (ed. 2006). He also contributed to the Beaulieu Encyclopaedia of the Automobile which won a Cugnot Award from the Society of Automotive Historians.

Organisation

CAIR is one of the leading academic centres in Europe that analyses economic and strategic issues affecting the world automotive sector. BRASS is the leading academic centre in the UK dedicated to analyse issues of CSR and sustainability as they relate to business. Both centres engage in academic research, policy advice and contract research for private and public sector clients.

Enquiries

Dr Paul Nieuwenhuis
Centre for Automotive Industry Research
Cardiff Business School, Cardiff University Aberconway Building, Colum Drive
Cardiff CF10 3EU
Wales, UK
Tel: +44 (0)29 2087 5702
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