Fighting the Climate Pig Image

Porsche AG's storied sports cars have been called many things throughout the decades — well engineered, powerful and expensive. But Greenpeace activists recently branded the German muscle marque along with several others with a new moniker: “Climate Pig.”

Yes, Virginia, global warming really is changing everything. Even the auto industry is being forced to turn green.

The new buzzword is “carbon footprint,” and it is most apparent in the European Union, where lawmakers are attempting to reduce vehicle emissions by regulating grams of carbon dioxide spewed per kilometer, compared with America's effort to mandate stricter fuel economy.

Scientists say CO2 is the main greenhouse gas that along with methane, oxides of nitrogen and hydroflourocarbons increases the atmosphere's ability to trap infrared energy and thus heats the Earth, melting glaciers and raising sea levels.

“The (auto) industry now is in a spin cycle of CO2 and fuel efficiency,” says Nigel Griffiths, group managing director of Global Insight Inc., an automotive research firm. “It's in the middle of this paradigm shift — and it's not just Europe, but global. If you're talking about fuel economy, you're talking about the U.S., China and Japan (as well): 70% of total demand in the world is subject to new fuel-economy standards.”

The European Commission would like to see average CO2 emissions from new cars across the EU fleet capped at 120 g/km (roughly 62 mpg) by 2012. Current average emissions are about 160 g/km. Auto makers would have to achieve 130 g/km through new engine technology, with biofuels and other measures helping to reach the overall target.

However, the European Parliament is proposing 125 g/km by 2015 with no help from other technical means. Additionally, vehicle advertising would have to provide detailed information about CO2 emissions, akin to cigarette warnings. Observers say this latter plan likely would be more acceptable to all 25 member states.

Across the pond, U.S. politicians are wrestling with proposed legislation to tighten corporate average fuel economy. Rather than mandate emissions, they want to dictate how much fuel an engine can burn per mile. The Senate's regulation calls for cars and trucks to achieve a combined average 35 mpg (6.7 L/100 km) by 2022. The House bill keeps cars at 35 mpg but allows trucks an average 32 mpg (7.4 L/100 km) by 2022.

Auto makers insist lumping cars and trucks into a single CAFE standard would cost billions of dollars of upgrades to trucks, threaten jobs and cause plant closings — not to mention kill a cash cow. In a rare show of industry support, the White House is urging Congress to retain the 2-fleet rule in its upcoming energy bill or face a presidential veto.

Arguably, it all boils down to the same thing: lessening greenhouse gases to stave off catastrophic climate change. But if the car companies appear less than simpatico with more stringent emissions and fuel-economy rules, it's due to the belief that they, alone, have been singled out to save the planet.

Yet, with the polar ice caps starting to melt, nearly every vehicle unveiled at September's Frankfurt motor show was cloaked in environmental awareness, as auto makers embraced green — while seeing red.

“We're not just talking about cutting CO2 emissions, we're doing it,” BMW AG CEO Norbert Reithofer insists as he introduces the auto maker's new sport activity vehicle with a hybrid engine that hits the market in 2009. “This isn't just a quick, half-hearted effort,” he tells Reuters. “We've been leading the way for years. (BMW) got an early start, and it's not at all the case that we're being pushed into this by politicians.”

Nearby, Porsche CEO Wendelin Wiedeking defends his company against Greenpeace's fuel-gulping charges, insisting Porsche is a niche player when it comes to emissions and claiming 96.5% of CO2 comes from natural sources, while transportation accounts for only a fourth of man-made emissions.

Porsche, he says, has reduced its vehicle fuel consumption an average of 1.7% per year for the past 15 years. It abandoned an engine for the Cayenne after only four years to substitute the current gasoline direct-injection model, which is 15% more fuel-efficient. And by 2012, the brand's fuel efficiency will be 20% better than it was in 1995.

“Starting next year, all Porsche sports cars will fulfill not only the strict Euro 5 emissions standard coming into force in September 2009 but also Euro 6 not scheduled for validity until September 2014,” he adds. Additionally, Porsche gasoline engines now run on E10 ethanol-blended gasoline and soon will be E85 capable.

While the Germans, with their large premium cars and more powerful engines, likely face the toughest challenge in meeting coming emissions standards, Wiedeking and Reithofer are not alone in their frustration. EU car executives, pushed to the brink with upcoming government directives, all are questioning just how many more technical demands can be made on internal combustion engines.

Similar to their U.S. counterparts' stand on more stringent CAFE standards, the European auto chiefs are united in rejecting the EC's 130-g/km proposal, insisting on a delay of any laws regarding vehicle emissions until 2015.

Griffiths says the industry can get to 130 g/km but not by 2012. In order to do so, he says, everyone would have to cut CO2 output 20%, which is why the EU is looking at eight possible schemes for achieving its target — down from 46 possibilities initially.

Odds are the standards will be segment driven, meaning a company such as Porsche that makes only high-powered sports cars won't have to hit the target regulation in the same timeframe. The best-case scenario puts the industry at 137 g/km by 2012, he adds, noting if all the auto makers can come in below 140 g/km, “the heat won't be so much on the industry.”

For perspective, fleet CO2 output for U.S. light vehicles amounts to about 265 g/km, according to the Association of French Car Manufacturers.

But auto executives see a bigger issue. “I think that car manufacturers in northern Europe (makers of large cars) and southern Europe (small cars) have exactly the same view on this,” Sergio Marchionne, Fiat Auto CEO and head of ACEA, the European automobile manufacturers association, tells journalists in Frankfurt.

“Directing the efforts mainly at car manufacturers by focusing on new technology is not the way to deliver cost-effective environmental gains,” he says: fuel taxes, cleaner fuels and so-called “eco-driving” also would help achieve emissions goals.

Part of the climate-change lexicon, eco-driving refers to motorists who make a conscious effort to conserve fuel by such measures as combining all errands into one trip, observing speed limits and making sure tires are properly inflated.

Even the Japanese Automobile Manufacturers Assn., whose members have carved out a niche with fuel-sipping hybrid technology, is on record as saying Europe's proposed mandate of 120 g/km of CO2 is impossible to meet by 2012. The auto makers, instead, support an integrated approach similar to that being under taken in Japan: greater fuel efficiency through improvements in vehicle technology, traffic flow, road-infrastructure, traffic management and eco-driving.

As with Frankfurt, October's Tokyo auto show set its sights on stressing eco-friendly technologies, with a number of concept vehicles focusing on alternative powertrains, including hydrogen, flex-fuel and plug-in electric.

Ranked as the most-regulated industry in Europe, Marchionne says European auto makers spend E20 billion ($28 billion) annually on research and development, much of which has gone toward achieving notable CO2 emissions reductions.

But critics turn an unsympathetic ear, charging EU vehicle makers have failed to meet voluntary goals required by the 1997 United Nations Kyoto Protocol, an international treaty that sets binding emissions limitations on its 36 industrial signatory nations. The goal calls for an average 5.2% reduction in greenhouse gases by 2012 from 1990 levels.

The EU spews about 14% of the world's greenhouse gases, while the U.S. emits 25%. Although EU countries pledged to cut emissions a combined 8% by 2012, they have fallen behind their target. In 2004, emissions reportedly had dropped a mere 0.9% compared with 1990 levels.

Japan, too, is struggling to meet its Kyoto pledge to cut greenhouse gases 6% by 2012. Emissions reportedly reached 1.5 billion tons (1.36 billion t) in fiscal-2006, which ended in March, a 7.8% rise from 1990, which means the country now must achieve a 14% reduction just to meet its target.

With the Earth's vital signs clearly signaling distress, the EC is putting the pedal to the metal by mandating biofuels — produced from renewable plant matter — make up 10% of the region's vehicle fuel by 2020, in addition to stricter tailpipe emissions.

It also is proposing a project to raise as much as E1 billion ($1.4 billion) to fund the development of hydrogen cars, a technology currently being championed by BMW and Daimler AG. Additionally, there are plans to simplify rules across the region to put hydrogen-power cars on the road.

Long term, European cars are expected to downsize, but “dieselization will be the first avenue of defense” for car makers looking to meet CO2 regulations, Griffiths says. Diesel powertrains already make up 52% of the EU's passenger-car segment, the Association of French Car Manufacturers says.

Although the U.S. did not sign the Kyoto pact, the need for cleaner air and minimizing dependency on foreign oil is no less important. Bush this year said the U.S. — along with other top greenhouse-gas emitters led by China, the EU, Russia, India and Japan — was aiming to work out new emissions caps by next year that would stretch beyond 2012 when the Kyoto pact ends, to be approved by the U.N. in 2009.

In his State of the Union address in January, Bush outlined his goal of cutting America's gasoline consumption 20% over the next 10 years by setting a mandatory vehicle fuel standard that requires 35 billion gallons (133 billion L) of renewable fuel and other alternative fuels to be available by 2017.

U.S. auto makers insist market demand for fullsize pickups and SUVs with powerful engines presents different issues than in most other countries. In addition to pushing flex-fuels, hybrids, clean diesel and lighter-weight materials, some car executives support increasing gasoline taxes as a way to discourage car buyers' appetites for big cars and trucks and reduce emissions.

Such action, they say, would drive consumers toward smaller, more fuel-efficient vehicles.

Beth Lowery, General Motors Corp.'s vice president-environment, energy and safety policy, agrees. “We know the chance of a gas tax — or carbon tax — occurring in the U.S. is slim and none,” she tells Automobile magazine in a recent interview. “But CAFE regulations force new technology at a very early stage, and they don't require the consumer to have to make any different choices.

“What we're talking about is making policy that supports mechanisms that actually work and drive behavior, as well,” she adds. “If we're serious about reducing carbon emissions collectively, all of the industry — and all of the nation — has to decide to do it.”

U.S. auto makers also agree with their European counterparts that focusing solely on powertrain technology is too expensive for the industry and inefficient in addressing the complex issue of global warming. Instead, carbon credits would do far more to even the playing field, they say.

Known as “cap and trade,” the scheme provides a way to reduce greenhouse emissions on an industrial scale by capping total annual emissions and letting the market assign a monetary value to any shortfall through trading. Credits can be exchanged between businesses or bought and sold in international markets at the prevailing market price.

Earlier this year, Ford Motor Co. joined 30 large corporations and environmental groups to form the United States Climate Action Partnership, which advocates a cap-and-trade system.

In a surprise move, Russia, among the auto industry's fastest-growing emerging markets with sales of more than 1 million passenger vehicles in the year's first half, reportedly gave a green light this spring to carbon trading. The country is the single largest supplier of oil and gas to the EU and the world's third biggest emitter of greenhouse gases behind the U.S. and China. U.N. approval is expected next spring.

China has yet to weigh in on carbon trading. But with passenger-vehicle sales climbing 24% through September to 4.6 million units, according to the China Association of Automobile Manufacturers, some expect the government to begin clamping down on greenhouse emissions once the 2008 Olympic Games end in Beijing.

Scientists warn time is not on anyone's side. Over the next 50-150 years, global warming could cause the oceans to rise as much as 39 ins. (99 cm), enough to swallow shorelines and reshape the world. Capping CO2 and other greenhouse gases won't stop this, but it would buy time.

Biofuels, hydrogen, fuel cells, hybrids and solar energy all are likely to play a role in the global auto makers' efforts to help reduce tailpipe emissions.

One thing is certain: The industry's future powertrain technology, vehicle size and design will be based on fuel economy and emissions standards being determined by the U.S., Europe and Japan today.

“We are as committed as the (EC) to achieving 120 g/km (of CO2),” says the ACEA's Marchionne. “That continues to be the single largest point of convergence between ourselves and the Commission. We recognize the need to get there. What's left to discuss is the methodology and the timing.”
— with Dave Zoia in Detroit, James M. Amend and William Diem in Frankfurt

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