Vehicle Production Rises, But Few Cars Are "Green"
According to Global Insight, global passenger car production in 2007 rose to 52.1 million units from 49.1 million the previous year.1 In addition, production of "light trucks" ran to 18.9 million, up from 17.9 million in 2006, for a combined total of 74.1 million.2 Global Insight projects 2008 total production to reach 75.8 million.3 (See Figure 1.) Including unused production capacity, the world's auto companies are capable of churning out some 84 million vehicles per year. PricewaterhouseCoopers projects that by 2015 worldwide capacity to grow to 97 million units.4
Japan produced the most vehicles in 2007, 11 million, closely followed by the United States with 10.5 million.5 China's production continues to surge, reaching 8.1 million vehicles in 2007. Projected 2008 output of 9.3 million would bring it almost to a par with the United States, whose production is expected to decline to 9.5 million units.6 The next largest producers are Germany (6 million) and South Korea (4 million).7 (See Figure 2.) France, Spain, Brazil, Canada, and Mexico each produced between 2 million and 3 million units.8 At 1.95 million vehicles, India is close to joining the top 10.9
The world's fleet of passenger vehicles is now an estimated 622 million, up from 500 million in 2000 and a mere 53 million in 1950.10 China continues to expand not only its production but also its domestic car ownership. There are now an estimated 43-47 million vehicles on the road there-about as many as the United States had in 1947.11 India's love affair with the automobile is taking off too. And when the country's Tata Motors unveiled the "Nano" in 2008-a no-frills vehicle advertised as the world's cheapest car-it made a splash around the world.12
The transport sector, which relies heavily on cars and trucks for freight movement, is responsible for about a quarter of the world's energy use and has the fastest-rising carbon emissions of any economic sector.13 Road transport currently accounts for 74 percent of the world's total transport-related carbon dioxide (CO2) emissions.14
Improved fuel economy not only limits energy consumption but translates directly into reduced emissions of carbon dioxide. It can also help reduce air pollution from vehicles, although fuel economy and lower emissions of sulfur and nitrogen oxides or particulate matter do not necessarily go hand in hand.15 Lowering air pollution depends on both improvements in engine technology and the production of cleaner fuels (especially those with lower sulfur content). Japan and the United States, followed by the European Union, have the most stringent emission limits.16 China and India are introducing regulations that follow those of the European Union, though with a time lag of several years.17
Hybrid vehicles are generally seen as a key means to achieve higher fuel efficiency, although this technology can be equally applied to boost acceleration and horsepower. In 2007, a total of 541,000 hybrids were produced.18 PricewaterhouseCoopers projects that by 2015 some 2.2 million of these vehicles might be produced.19
Toyota, the company that popularized such cars with the introduction of the Prius in 1997, in 2007 reached the milestone of a cumulative 1 million hybrids produced.20 The company sold half of these vehicles in the United States, where it commands a cumulative 73-percent share of the hybrid market.21 All in all, 2.2 percent of U.S. light-duty vehicle sales were hybrids in the 2007 model year.22 By 2015, hybrids might reach a U.S. market share of anywhere between 5 and 11 percent.23 In Japan, car companies sold close to 89,000 hybrid passenger vehicles in 2006, for 1.6 percent of all cars sold.24
European countries have embraced diesel-powered cars (which account for 50 percent of total sales there), since diesels consume 30 percent less fuel than gasoline engines and emit 25 percent less CO2.25 Worldwide, demand for diesel-powered light vehicles is projected to increase from 16 million in 2007 to 29 million in 2017, resulting in an increase in market share from a current 23.6 percent to 31.5 percent.26 Evolving engine technology and cleaner fuels have rendered diesel passenger cars substantially cleaner than in the past, especially with regard to sulfur dioxide emissions. However, they still emit far more nitrogen oxides and particulate matter than cars that use gasoline do.27
A 2007 report by the International Council on Clean Transportation concludes that Japanese and European factories produce the most-efficient vehicles available today, with new passenger vehicles scoring roughly 40 miles per gallon (mpg) on average.28 The United States is at the bottom of this international ranking, while countries like China, Canada, and Australia are in between and working to increase efficiency in coming years.29
In 1998, European, Japanese, and South Korean companies selling vehicles in Europe entered into a voluntary agreement with the European Commission to lower the amount of carbon emitted by new passenger cars.30 The goal was to reduce the 1995 level of 186 grams of CO2 per kilometer to 140 grams by 2008/2009.31 According to Commission reports, just over 26 percent of European-produced vehicles met the goal in 2004.32 For Japanese- and Korean-made cars sold in the European Union, the numbers were 21 and 29 percent, respectively.33 Because cars have become heavier and more muscular, the industry is not expected to achieve its voluntary aim. In response, the European Commission adopted a proposal forcing manufacturers to produce cars that emit 130 grams per kilometer by 2012 and said it would present further measures in pursuit of a goal of 120 grams.34
The United States has scorned higher fuel efficiency for more than two decades.35 Following the first oil crisis of the early 1970s, sales of the biggest gas-guzzlers-those achieving 15 mpg or less-declined dramatically, from 67 percent of sales in model year 1975 to just 4.5 percent in 1982.36 (See Figure 3.) But the bulk of vehicle sales remains in the interval between 15 and 25 mpg, and the recent popularity of SUVs has even led to reversals of fuel economy gains.37 Just 1.2 percent of all U.S. light vehicles in the 2007 model year could be categorized as truly fuel-efficient-that is, achieving at least 35 miles per gallon, and thus roughly on a par with European carbon limits.38 On average, new U.S. cars in 2007 emitted about 180 grams of carbon per kilometer.39
Leadership in pursuing fuel economy and reducing carbon emissions is essential if the industry is to avoid a head-on collision with climate stability. The motor vehicle industry is a cornerstone of modern economies and an important source of jobs. But a relatively small share of the industry's current output-and thus its employment base-can be considered sustainable. Using the 120 grams of CO2 per kilometer limit as a threshold, about a quarter-million of the automobile manufacturing industry's global workforce of 8.4 million jobs can be considered a shade of green: 150,000 out of more than 2 million jobs in Europe, 62,000 out of 820,000 in Japan, 10,000 out of 250,000 in South Korea, and 13,000 out of 1.1 million in the United States.40
Thailand's government is encouraging efficient vehicle production in an innovative way.41 The government decided in June 2007 to grant tax incentives to auto manufacturers that produce small, fuel-efficient "eco-cars."42 In order to receive tax breaks, a company must, among other things, produce cars that get at least 20 kilometers per liter (47 mpg), generate no more than 120 grams of CO2 per kilometer, and meet Euro-4 air emissions standards.43 The country's 182,000-strong auto industry workforce produced just under 300,000 cars and 896,000 commercial vehicles (mostly small pickup trucks) in 2005.44 Thailand has the potential to become a regional hub of "eco-car" production, with plans to serve markets in other Asian countries, Australia, and Africa.45
Due to a lack of data, calculations on "green" jobs are not possible at the moment for other major vehicle-producing countries, such as China (with 1.6 million employees), Russia (755,000), Brazil (289,000), and India (270,000).46 But China and India are targeting small car production, with China's Chery compact model reportedly achieving a fuel rate of 27 kilometers per liter, equivalent to 63 mpg.47
- Colin Couchman, Global Insight Automotive Group, London, e-mail to author, 20 May 2008.
- PricewaterhouseCoopers, "Autofacts Global Automotive Outlook, 2008 Q2 Release," www.autofacts.com/data.asp, viewed 11 May 2008.
- Couchman, op. cit. note 1.
- Figures for 2008 and 2000 from ibid.; 1950 from Motor Vehicle Manufacturers Association, World Motor Vehicle Data 2005 (Detroit, 2005).
- "Competition for China's Auto Market is Heating up," China Daily, 22 April 2008.
- "Tata 'NANO'-the People's Car from Tata Motors," at www.tatapeoplescar.com/tatamotors; Michael Renner, "Nano Hypocrisy?" e2-Eye on Earth, Worldwatch Institute, 16 January 2008.
- T. Barker et al., "Technical Summary," in Intergovernmental Panel on Climate Change, Climate Change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report (New York: Cambridge University Press, 2007), pp. 48-49.
- Therese Langer and Daniel Williams, Greener Fleets: Fuel Economy Progress and Prospects (Washington, DC: American Council for an Energy-Efficient Economy, December 2002).
- Japan Automobile Manufacturers Association, 2006 Report on Environmental Protection (Tokyo: October 2006).
- Ibid.; "Emission Norms," Society of Indian Automobile Manufacturers, at www.siamindia.com/scripts/emission-standards.aspx, viewed 28 November 2007.
- PricewaterhouseCoopers, op. cit. note 4.
- Toyota Hybrid Synergy View, "One Millionth Hybrid Vehicle Hits the American Road," at www.toyota.com/dyncon/2008/may/road.html?siteid=news_may08h_1.
- U.S. Environmental Protection Agency (EPA), Light-Duty Automotive Technology and Fuel Economy Trends: 1975 through 2007 (Washington, DC: September 2007), p. ii.
- Alan Baum, "Market Penetration of Hybrid and Diesel Vehicles in the U.S. Market, 2004-2015," presentation to the Fuel Economy Technology Trends and Policy Options Forum, Washington, DC, 1 October 2007.
- Calculated from Japan Automobile Manufacturers Association, "Low-Emission Vehicle Shipments 2006," 5 October 2007, at www.jama-english.jp/statistics/low_emission/2006/071005.html.
- European Automobile Manufacturers' Association, "Diesel is Doing a Lot to Reduce CO2 Emissions in Europe," at www.acea.be/index.php/news/news_detail/diesel_is_doing_a_lot_to_reduce_CO2_emissions_in_europe, viewed 22 November 2007.
- Michael P. Walsh, Car Lines, February 2008, p. 49.
- Corinna Kester, "Diesels versus Hybrids: Comparing the Environmental Costs," World Watch, July/August 2005, p. 21; "ACEEE Releases 'Meanest' and 'Greenest' Vehicle Scorecard," Clean Edge News, 26 February 2008.
- International Council on Clean Transportation, Passenger Vehicle Greenhouse Gas and Fuel Economy Standards: A Global Update (Washington, DC: 2007), pp. 8-9.
- European Commission, "Objectives of the Agreements Concluded with the Automobile Industry," at ec.europa.eu/environment/CO2/CO2_agreements.htm, updated 19 January 2007.
- Percentages calculated from Commission of the European Communities, "Commission Staff Working Document: Accompanying Document to the Communication from the Commission to the Council and the European Parliament, Implementing the Community Strategy to Reduce CO2 Emissions from Cars: Sixth Annual Communication on the Effectiveness of the Strategy," Brussels, 24 August 2006, p. 22.
- Ibid., pp. 42, 66.
- European Environment Agency, Climate for a Transport Change, EEA Report No. 1/2008 (Copenhagen: March 2008), p. 23.
- EPA, op. cit. note 22, p. v.
- Calculated from ibid., Appendix C: Fuel Economy Distribution Data.
- Toyota Motor North America, 2007 North America Environmental Report (Washington, DC: 2007), p. 15.
- Author's calculation, based on Commission of the European Communities, op. cit. note 32, on International Organization of Motor Vehicles Manufacturers, at oica.net/category/economic-contributions/auto-jobs, on European Automobile Manufacturers' Association, "Europe Has More Than 250 Automobile Production Sites," at www.acea.be/index.php/news/news_detail/europe_has_more_than_250_automobile_production_sites, viewed 22 November 2007, and on Stacy C. Davis and Susan W. Diegel, Transportation Energy Data Book: Edition 26 (Oak Ridge, TN: Center for Transportation Analysis, Oak Ridge National Laboratory, 2007), Table 10.15. These numbers represent rough estimates only. Due to a lack of detailed data, they do not distinguish between domestic production and imports, which may distort the results.
- Boom and recent slump in demand from "Thailand's Eco-Drive," The Economist, 21 June 2007; Thai vehicle production and employment from International Organization of Motor Vehicles Manufacturers, op. cit. note 40.
- "Thailand's Eco-Drive," op. cit. note 41.
- International Organization of Motor Vehicles Manufacturers, at oica.net/category/production-statistics and at oica.net/category/economic-contributions/auto-jobs, viewed 8 December 2007.
- "Thailand Making Incentives for Eco-Cars," Associated Press, 7 December 2007.
- Employment figures from International Organization of Motor Vehicles Manufacturers, op. cit. note 40.
- Chery fuel economy from "Thailand's Eco-Drive," op. cit. note 41.