Evaluation of the EC Industry Voluntary Agreement

As a result of the VA, fuel economy of new cars in Europe as measured in the official driving cycle has improved considerably since 1995. According to progress reports published by the EC and the industry each year, CO2 emissions of new ACEA cars per kilometer dropped by 12-13%2 be

2 Starting with model year 2002, the EC has established its own monitoring mechanism for vehicle emissions data, so that EC and industry associations publish separate data since then. Although deviations are small, the exact CO2 figures tween 1995 and 2003, i.e., a 1.6% annual improvement. Although both gasoline and diesel cars have become more fuel efficient, the increasing share of diesel car sales has further enhanced the average picture as diesel CO2 reductions were greater. However, as shown in Figure 5, there is still a long way to go to achieve the 2008 target: for ACEA, a 2.8-3% annual CO2 reduction is necessary for model years 2004-2008, while for JAMA and KAMA the required annual reductions up to 2009 are approximately 3.4% and 3.6%, respectively. In view of the progress made so far, the 140 g CO2/km target seems to be "extremely ambitious" for all three industry associations, as the latest report states (EC 2005).

New Car CO2 Emissions (g/km)

New Car CO2 Emissions (g/km)

Model Year

Fig. 5. CO2 emission trends of new cars brought into the EU-15 market by ACEA, JAMA and KAMA during 1995-2003. Source: joint EC-industry progress reports of 2000-2004 (see e.g., EC 2005). For model years 2002-2003, official EU data have been used as these will be the figures that will ultimately be used by the EC for evaluation of the VA

Model Year

Fig. 5. CO2 emission trends of new cars brought into the EU-15 market by ACEA, JAMA and KAMA during 1995-2003. Source: joint EC-industry progress reports of 2000-2004 (see e.g., EC 2005). For model years 2002-2003, official EU data have been used as these will be the figures that will ultimately be used by the EC for evaluation of the VA

Regarding the initial EU target for 120 g CO2/km by 2012, the industry has fulfilled its commitment to introduce some models emitting no more than 120 g/km by 2000. The industry brought to market more than 25 models that meet this requirement, most of which were from ACEA members. Their share in total new registrations rose to about 7% in 2003, exceeding 900 000 cars.

It is interesting to observe how this fuel economy improvement has been achieved up to now. The main driver was the adoption of improved tech-

are somewhat different between data sets, which explains why some numbers are given in ranges in the paper.

nologies that have reduced vehicle mass (related to power output) and enhanced thermodynamic engine efficiency as well as rolling and aerodynamic resistance. The second driver was dieselization: compared to 23% of new cars sold in 1995, the share of diesel car sales climbed to 47.6% in 2003 (EC 2005). A third factor was a slight change in the shares of different car segments. According to an independent analysis performed for JAMA (2003), about 30% of the improvement in ACEA cars is attributable to dieselization (11% for the JAMA fleet) and almost 70% to technical progress (80% for the JAMA fleet). Diesel cars have experienced a faster progress in fuel efficiency than their gasoline counterparts, but part of this achievement may be a result of faster diesel penetration of the small and medium segment after 1995 (Kageson 2005).

ACEA EU-15 New Car Mass (kg) ACEA EU-15 New Car Max. Power (kW)

1995

ACEA EU-15 New Car Engine Size (cm3)

ACEA EU-15 New Car Engine Size (cm3)

1500 H-

1995

1999 2001 Model Year

-Gasoline Diesel ^—Composite

1995

1999 2001 Model Year

2003

1999 2001 Model Year

2003

2003

Fig. 6. Evolution of vehicle attributes of ACEA sales in EU-15 during the VA period. Source: joint EC-industry progress reports of 2000-2004. For model years 2002-2003, ACEA CO2 and fuel consumption data have been used instead of official EU data because the former may be more appropriate for comparison with pre-2002 data. Vehicle mass data for year 2003 have been corrected according to information provided in EC (2005) as official figures appearing in the same report might be erroneous

During the same period, vehicles have become on average heavier, faster and more powerful. Increases in engine size and vehicle mass should mainly be attributed to dieselization: as shown in Figure 6, engine size of gasoline and diesel vehicles has remained essentially constant since 1995

and mass of gasoline vehicles is almost stable since 1999, while the composite figures are still rising as the share of diesel vehicles (which have a lower power/mass ratio) increases. Conversely, demand for more powerful cars has not halted: average power output of both gasoline and diesel vehicles becomes higher every year. It is therefore evident that, like in the U.S., greater reductions in fuel consumption would have been achieved if consumers had not opted for more powerful and theoretically safer cars.

Each year since 2000, the EC monitors the progress towards attainment of the VA targets jointly with the automotive industry. It is noteworthy that, until 2003, the relevant EC-ACEA report ended with the statement that the two parties "have no reason to believe that ACEA would not live up to its Commitment." In the report of year 2004, however, it is stated that "ACEA no longer wishes to confirm the concluding statement made in earlier reports" (EC 2005). Although JAMA still believes that it can achieve the targets, the fact that ACEA (whose sales amount to about 85% of the European market) is not that optimistic anymore provides yet another indication of the difficulties faced by the industry in meeting the targets.

Judging from the information available up to mid-2005, one can conclude that the automobile industry will most probably not achieve the VA 2008/2009 target. Kageson (2005), noting that "only a dramatic change in consumer preferences or a major technological break-through could significantly change the outcome," estimates an average CO2 figure of about 150 g/km for 2008/2009, while Zachariadis (2006), considering the 1995-2002 improvement rate and taking a 52% diesel share, assumes 143 g/km. In view of the overall progress made so far, it seems that the 140 g/km target can be met with some years' delay.

Nevertheless, and irrespective of attainment of the targets, whether the VA should be regarded as a success story remains an open question. Jensen (2003) cites a relevant OECD (2003) report on worldwide environmental VAs and argues that, although current fuel economy improvements are not negligible, the observed technical progress until 2001 would have been achieved anyhow since the VAs came into force in 1999/2000 and because of the time lag between technological development and market introduction of fuel-saving technologies. Furthermore, there are concerns that fuel consumption of specific car segments (e.g., subcompact cars, cars with engine size less tan 1.4 liters, etc.) has not improved substantially since 1995, so that reductions in average CO2 may be much more attributed to a shift in the segment mix than initially thought. An in-depth analysis of data from individual car models would be necessary for an appropriate examination of this issue.

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