What is the link between car fuel consumption and climate change?
The amount of CO2 a car emits is directly related to the amount of fuel it consumes. A petrol car that emits 130g CO2 per kilometer, as tested on the EU’s standardised test procedure, would consume approximately 5.6 litres of petrol to travel 100km. Diesel contains more energy per litre; a diesel car with the same emissions would use 5 litres of fuel.
The European Environment Agency estimates that cars are responsible for 14% of the EU’s total CO2 emissions; they represent 50% of transport emissions, the largest single source.
What are the main benefits of more fuel efficient cars?
Lower oil imports, lower fuel bills, lower emissions and high-tech investment and jobs in Europe.
How much does Europe spend on imported oil for cars?
Every year, at current oil prices, Europe imports approximately €250 billion worth of oil, one third of it for cars. The total figure is roughly the same amount as the Greek, Irish and Portuguese bailouts combined, but we do this every year. Cars are the single biggest consumer of oil in the EU. In times of austerity, importing EUR 250 billion of oil every year is a massive waste of money that could be invested within the continent developing and mass manufacturing advanced fuel efficiency technologies.
If Europe used less oil, would that have an impact on the oil price itself?
Yes, Europe is one of the world’s biggest oil consumers. If we used half as much, it would cause global oil demand to drop, which would lead to lower oil prices on the world market. Which means even more savings for drivers and businesses. The International Energy Agency says that if the world cut its oil use by only 8%, oil prices would come down by 16%. The lower price effect triples the savings compared to lower consumption alone.
Is Europe, and its member states committed to cutting transport emissions?
Yes. In 2009 (and confirmed as recently as February 2011) the EU’s 27 heads of state agreed that the Union should reduce overall emissions by 80-95% by 2050, compared to 1990 levels.
The European Commission’s white paper on transport of March 2011 calculated that in order to meet that overall objective, transport would have to cut emissions by at least 60% by 2050 compared with 1990 levels (which is a 70% reduction compared with today’s levels).
Have existing fuel efficiency standards worked?
Yes. Before legally-binding standards were introduced, between 2000 and 2007, emissions of the average new car (as tested on the standard test procedure) dropped by just 1.2% per year, on average. But since legislation was first announced in 2007 (it was formally agreed in 2009), the rate of progress was 4% per year, on average. By the end of 2010, Toyota, Peugeot-Citroen and Fiat had virtually already met their targets for 2015; other carmakers were on track to reach their targets by the deadline.
Click here to see an animated chart showing the progress of different manufacturers in cutting CO2.
Do fuel efficient cars save people money at the pump?
Yes. If the average car emitted 95g CO2/km (the EU target for 2020), the average driver in Europe would save EUR 500 a year, based on today’s pump prices and 16,000 annual kilometres.
Who buys new cars?
The vast majority of car buyers do not actually buy new cars. Analysis of one of the EU’s largest car markets, the UK, shows that 3 out of 4 car purchases each year are on the second-hand market. A three-year old car has typically lost two thirds of its value but still has more than two thirds of its lifetime mileage ahead of it. So even if fuel efficient technologies did add modestly to the cost of a vehicle, the cost would be very limited for most ordinary people, and would in any case be recouped in fuel savings.
Would fuel efficiency standards boost the market for electric cars?
Fuel efficiency legislation is the most effective tool to guarantee a market for high tech, low-CO2 technologies and to spur investment in research, development and manufacturing.
Stricter fuel efficiency standards will still lead to improvements in conventional petrol and diesel cars. But deep cuts are most likely to be achieved by a gradual electrification of drivetrains, including full-electric cars. This requires billions of investment. Carmakers will only make that investment if they have certainty that the investments will not be in vain, and if all their competitors make them too.
CO2 standards are the best tool to offer such investment security for carmakers and, importantly, their suppliers. Subsidies, for buyers of electric cars, or for research (especially when government resources are so constrained) cannot deliver the same level of investment security as strict fuel efficiency standards would. Simply put, the future of the electric car, depends on progressively tighter standards for fuel efficiency, to ensure the necessary technology investments.
What does the industry say?
Fuel efficiency standards will make cars unaffordable
“For many consumers, cars could become unaffordable.”
Acea commenting on EU plans to introduce fuel efficiency standards for the first time, 2007
False. Cars have got cheaper. In 1998-9 the car industry agreed a voluntary target of 140g/km, to be achieved within 10 years. Studies in 2001 and 2006, based largely on data supplied by the car industry, claimed that the average car would become more expensive as a result, by up to EUR 2400. The target was achieved in 2010, and over the period 2002-2010, according to EU figures, cars got cheaper by 13% in real terms (allowing for inflation).
Factories will close
“If this decision is taken, we will be forced to close our factories in which class C, E and S are made.”
Erich Klemm, Daimler board member, FT Deutschland, Jan 28, 2007
Not true. In 2007 when fuel efficiency standards were being debated, the industry repeatedly warned of job losses and factory displacement if the EU went ahead. Daimler, who warned that it would have to shut factories (see above) made €4.5 billion in net profit in 2010.
Jobs will be lost
“Opting for (vehicle fuel efficiency standards) only will lead to … a loss of jobs and relocation of production outside Europe.”
ACEA press release, Jan 26, 2007
Jobs will be created. Fuel efficiency targets create new high-tech jobs by steering investment towards developing these readily-available technologies for the mass market. According to McKinsey and Company, the global market for automotive powertrains will more than double by 2030 to EUR 460 billion, creating 420,000 new jobs worldwide. In July 2011, the German engineering association estimated that there was a shortfall of engineers in Germany of around 77,000, an all-time high. In 2011, BMW announced it was hiring 800 people to develop efficient hybrid and electric vehicles, while Volvo, similarly was set to recruit 1200 R&D jobs.
World-leading fuel efficiency legislation also allows European carmakers to exploit a competitive edge. Emerging economies can definitely out-compete Europe on costs, but European carmakers have the edge on quality of which fuel efficiency is now a crucial element.
In contrast, sticking to old-fashioned and inefficient petrol and diesel engines, will lead innovation in Europe to stagnate while other economies such as the USA and Japan push ahead. Both America and Japan have recently agreed tight fuel efficiency standards covering the period until 2025.
