Across Europe, car manufacturers are experiencing tremendous pressure to reduce CO2 emissions from new passenger vehicles sold in the market. In 1998, all European original equipment manufacturers (OEMs) voluntarily agreed to reduce the fleet average of CO2 emissions to 140 g/km by 2008 and 120 g/km by 2012. However, with the 2008 target fast approaching and the EU Commission expecting the Association des Constructeurs Européens d’Automobiles (ACEA) to bring down the industry fleet average of CO2 emission to 130 g/km by 2012 according to the new agreement rather than 120 g/km as agreed earlier, European OEMs - specifically premium car manufacturers - are facing an uphill struggle.

In an attempt to reduce emissions, the EU Commission has proposed a blend of ethanol with gasoline and diesel. It has also advised manufacturers to install gear-shift indicators and tyre-pressure monitoring systems in new vehicles to assist consumers. In the light of these recommendations, it is clear that large-scale technological developments and efforts are required by OEMs to reduce CO2 emissions.

“As a medium-term strategy over the next three to five years, OEMs are expected to introduce micro hybrids, mild hybrids, ethanol, biofuels and LPG into their fleets to reduce CO2 emissions,” notes Frost & Sullivan (http://www.automotive.frost.com) Research Analyst Krishnasami Rajagopalan. “These technologies offer increased fuel efficiency and reduced emissions, which help OEMs reduce their fleet average CO2 emissions.”

In order to meet future CO2 emission targets, an OEM will need to have 40 to 50 per cent of its fleet powered by diesel and 10 to 15 per cent of the fleet running on biofuels or natural gas, or on a hybrid powertrain.

While some volume car makers, such as Fiat, PSA and Renault, have fleet averages of 140g/km to150 g/km of CO2 and are well positioned to meet the ACEA target for 2008, premium car makers, with a fleet average of 160g/km to 190 g/km of CO2 are not likely to be able to achieve the same.

Going forward, reducing emissions below 140 g/km of CO2 will be possible mainly with the help of alternative fuels and hybrids (micro, mild and full). While OEMs are aware of this fact, further development or market acceptance of these alternative fuels and hybrids is restrained by the distribution network, availability and high implementation costs.

“While advancements in engine technology have helped reduce emissions to an average of 160 g/km, hybrids, ethanol, biofuels, compressed natural gas (CNG), hydrogen and fuel cells are necessary to reduce them further,” explains Rajagopalan. “The main priority of OEMs today is to reduce emissions, which will require the help of local governments and fuel suppliers to promote alternative fuels and hybrids in a cost-effective manner.”

An integrated approach involving OEMs, investors, stakeholders, customers, local governments and fuel suppliers is important to reduce emissions below 140 g/km, particularly in the case of premium car makers.

It remains to be seen if any local legislative bodies will impose penalties on OEMs who are unable to comply with the ACEA agreement by 2008. Yet it is quite clear that some OEMs will not meet the agreed limits by 2008 and will likely have to answer to stakeholders, legislative bodies and consumers.