ACEA

Reducing CO2 Emissions: Working Together to Achieve Better Results

European automobile manufacturers demand cost-effective policy to cut carbon emissions from cars

The European automobile manufacturers support the EU objective of further reducing average car emissions to 120 grammes carbon dioxide (CO2) per kilometre by 2012. Crucial for the future of the industry, however, is how this target is achieved. Controlling climate change is a complex and global challenge and needs concerted efforts embracing all areas of society. Placing the burden mainly on the car industry, as the European Commission has proposed in its February 2007 CO2 Communication, is the most expensive strategy. It will lead to a diminished level of vehicle manufacturing in Europe with, as yet, unclear economic consequences. The appropriate solution to reduce CO2 emissions from cars and to safeguard jobs and investments in Europe is an integrated approach, combining further improvements in vehicle technology, an increased use of alternative fuels, improved infrastructure and traffic management, a more economic driving style and harmonised CO2-related taxation. This requires a partnership involving the automotive industry, the fuel industry, policy makers at all EU government levels and consumers. A vehicle-related target of 130 grammes CO2 per kilometre by 2012, as proposed by the Commission, is not feasible. The car industry, often called “the engine of Europe”, needs a sound policy framework as a basis for investment decisions and long-term planning security. The Commission’s proposal is not in line with its own “better regulation” agenda, the “Lisbon” agenda and with “CARS 21”, the automotive regulatory project aimed at improving the industry’s competitive strength.

Excessive focus on vehicle technology

The European vehicle industry is committed to reducing CO2 emissions from cars and signed a voluntary agreement in 1998 to contribute to the EU Kyoto protocol objectives. This agreement has, through improved vehicle technology, reduced CO2 emissions from cars by an average 13% (EU monitoring report 2004). The European car manufacturers are thus contributing significantly to reducing CO2 emissions and they will continue their efforts. It is crucial, however, to select the most cost-effective approach to reducing CO2 emissions from cars.

The February 2007 strategy proposal from the European Commission on CO2 emission reductions from cars does not meet this demand. The Commission considers it a self-evident truth that cuts in CO2 emissions from cars will have to be delivered mainly through vehicle technology. This one-sided approach could have severe consequences for European manufacturing and employment levels in the EU. Reducing CO2 emissions through vehicle technology is up to ten times more expensive than similarly, or even more, effective measures such as the increasing use of biofuels, better infrastructure and traffic management, and adopting an economic driving style or “eco-driving” (see text box on costs).

The European vehicle manufacturers cannot and do not want to carry a burden that is neither balanced nor necessary. A strategy that focuses excessively on vehicle technology, with a target of 130 grammes CO2/km by 2012 as the Commission proposes, will lead to a price increase per car of up to € 3000 on average. It will be practically impossible to pass these significant additional costs on wholly to the consumer, because of fierce competition within Europe and abroad. European manufacturers will be forced to look for cost cuttings in their production and this could lead to a relocation of manufacturing outside Europe and a loss of jobs in the EU. For many consumers, cars could become unaffordable. The resulting side effect – an even slower renewal of the existing car fleet on Europe’s roads - is detrimental to improving the environmental performance of road transport.

Integrated approach to CO2

The European car manufacturers advocate a cost-effective approach to cutting CO2 emissions from cars, combining further vehicle technology improvements with efforts from all other relevant parties - the fuel industry, policy makers and car users – and involving CO2-related taxation to influence consumer demand for CO2-efficient solutions (see also text box on the elements of an “integrated approach”).

In such a holistic, comprehensive approach, measures will not only affect new cars, but also existing cars on the roads or, in other words, traffic as a whole. That is essential, as CO2 emissions from new cars have decreased significantly and the majority of emissions are caused mainly by an aging car fleet on Europe’s roads, growing congestion, increasingly dense traffic, a lack of traffic management and a rise in mileage.

Sharing efforts and responsibilities will result in larger, cost-effective CO2 emission reductions from road transport. This has been recognised by several bodies, including the CARS 21 group *, the 2006 EU Energy Efficiency Action Plan and the European Conference of Transport Ministers from January 2007. Balancing environmental and economic interests will keep cars affordable and safeguard jobs and production in Europe, which is key to the future health and wealth of the EU.

Learn from experience

Reducing CO2 emissions is a complex challenge. It is important to learn from previous experiences, in particular the 1998 ACEA Commitment on reducing CO2 emissions from cars. Between 1995 and 2004, this Commitment (see also “what does the 1998 Commitment say?”) has decreased emissions from new cars by 13% through vehicle technology only. But these results could have been larger, had there not been the counter-productive effect of competing EU regulations, a weak demand for fuel-efficiency and consumer preference for larger and safer cars.

Cars have become heavier and larger within their own different model segments, due to regulations on safety and air quality, and due to consumer preferences. Buyers have opted for larger and safer cars, due to factors such as an increasingly dense traffic, changes in lifestyle, demographic trends and driver physique. Further, a majority of consumers do not (yet) want to pay for fuel-efficient solutions: they have not defined this a priority. Several highly CO2-efficient cars, brought into the market in line with the 1998 Commitment, met with very low demand despite considerable marketing efforts. Various CO2-efficient applications, such as the stop-and-go feature, are confronted with hesitance.

Together with EU regulations, in particular on safety and air quality, this has had a huge impact on cars: within car segments, models have increased by an average 16% in weight. Today, cars are an additional 20 cm longer, mainly as a consequence of pedestrian safety measures. For any further CO2 reductions in the future, the results of the current Commitment need to be fully analysed and the counter-productive effects need to be taken into account. This was agreed in the 1998 Commitment and signed by both the industry and the European Commission.

Failed to act?

It is often stated that the automotive industry “failed to act in the past”. This is not supported by facts. The industry invests € 20 billion (4% of turnover) per year in research and development, a great part of which goes to improved fuel-efficiency and other technologies that enhance the environmental performance of cars. Over the last decade, ACEA members implemented more than 50 new, CO2-cutting technologies into their vehicles.

The European car manufacturers are world leaders in many fields of expertise, based on a long tradition of innovation and fulfilling consumer demand. The industry continuously strives to remain at the top. Preserving the environment has a high priority, as have improving road safety and other important areas of development. That is precisely why the European manufacturers form one of the most stable pillars of the EU economy, providing employment to 2 million people and supporting the jobs of 10 million other workers in the EU.

Engine adjustments are hugely complicated and expensive operations. Developing engines and vehicles needs ample preparation, up to 5 years at minimum. New technologies often need even longer to enfold their full market potential. A car in Western Europe is on average 8 years old, and up to 14 years in the news EU Member States. Car fleet renewal is an important tool in cutting CO2 emissions from traffic.

Furthermore, and this is often overseen, the objective of 120 by 2012 was never defined as a target to be reached trough vehicle technology only. To the contrary: the 1998 industry Commitment on CO2 was one of three “pillars” to achieve the overarching EU objective of 120 grammes CO2/km by 2012. The car industry target was 140 grammes CO2/km by 2008 through technological adjustments mainly; while the two other pillars, taxation and information through “labelling”, would help shape consumer demand for fuel-efficiency to reach the 2012 political objective of 120 grammes CO2/km. These last two policy instruments were never properly implemented and did therefore not yield any result, to the detriment of the achievements of the car industry which did deliver significant CO2 reductions. The original strategy reflected the foreseeable technological limits, the need to include the existing car fleet and infrastructure, and the obvious “demand” challenge: cars are bought and driven by consumers.

Cost-effectiveness key

The multidisciplinary CARS 21 group, which convened in 2005 and included the European Commissioners Dimas, Barrot and Verheugen, plus representatives from the car industry, the European Parliament and other stakeholders, concluded that an integrated approach should be implemented to further reduce CO2 emissions from cars. Such an approach would ensure environmental and economic interest are balanced, all relevant actors are involved, and use cost-effectiveness as guiding principle. The CARS 21 recommendations were fully in line with the “better regulation” agenda of the Barroso Commission, aimed at enhancing industry’s global competitiveness and growth in Europe.

The February 2007 CO2 reduction proposal from the European Commission is not in accordance with this goal. To put the burden mainly on the vehicle manufacturers is not only damaging for the EU economy, it denies the complex and global nature of climate change and the important role all other relevant parties can and should play as well.

The EU objective of achieving average car emissions of 120 grammes CO2/km by 2012 is possible if the appropriate measures are put in place and all parties are involved: car industry, fuel industry, policy makers - to adjust infrastructure and introduce CO2-related taxation - and car users. That is the challenge Europe faces.

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