Speech: Lewis Booth at the European Petroleum Industries Europia Conference, London, February 15, 2006
The following are remarks given by Lewis Booth, executive vice president, Ford Motor Company overseeing Ford of Europe and Premier Automotive Group, at the European Petroleum industry’s Europia conference in London, Feb. 15, 2006
Good afternoon ladies and gentlemen. I am delighted to have this opportunity to address you today. Alongside the auto industry, you are one of the groups with the power and influence to effect positive change for our environment.
At Ford, we recognize that climate change is one of the biggest global challenges facing society today. This is because climate change has the potential to impact economic and social systems as well as the environment.
We also believe it is the biggest challenge facing the auto industry.
It is our view that we need to act today to safeguard the future. We need to intensify our efforts and act with urgency.
A growing body of scientific evidence indicates that man-made CO2 emissions are starting to influence the world’s climate significantly, bringing disruption to mankind and other species. If we are to stabilize climate change and avert a potential catastrophe, we need to stabilize concentrations of atmospheric CO2 at acceptable levels.
The debate continues, but experts broadly agree that we need to stabilize long-term CO2 concentrations at 550 parts per million, perhaps even lower.
Reaching this target represents a significant challenge for all of us.
For over 200 years, since the industrial revolution, we have disturbed the natural carbon cycles by burning fossil fuels and CO2 emissions have accumulated in the atmosphere.
18% of man-made CO2 emissions are caused by transport.
Just under two-thirds of transport CO2 emissions come from road traffic.
Approximately one-half of the road traffic CO2 emissions are due to passenger cars.
Action must be taken in all sectors of course if we are to meet this challenge. But, at Ford, we recognize a responsibility to do something about it.
This has to go far beyond paying lip service to sustainability. We must address the environmental effects of our products through design, manufacture, use, and disposal.
The scale of the challenge means that it’s not enough to introduce two or three new “environmental” products and leave it at that.
We need fundamentally to reassess the way we do business, putting sustainability at the heart of everything we do.
That requires nothing less than a complete and radical change of mindset “ and not only for Ford but for the whole motor industry. And importantly also for our customers.
But even with this new mindset, there is a limit to what we can achieve on our own.
As I want to explain today, we believe that the challenges of sustainable mobility can only be properly addressed by an Integrated Approach: that is, a partnership of all stakeholders which includes:
- the automotive industry
- the fuel industry,
- and consumers. The truth is we are all part of the problem and we must accept we are all part of the solution. An Integrated Approach to reducing passenger car CO2 emissions has been strongly endorsed by the CARS 21 High-Level Group of which I was a member, alongside Bill Bonse-Geuking of EuroPIA and other leaders of our industry… representatives of trades unions, NGOs and users “ and representatives of the European Member States and MEPs “ under the Chairmanship of Gunter Verheugen, Vice President of the European Commission.The purpose of CARS 21 was to make recommendations for the regulatory framework of the European automotive industry, and I quote, “which enhances global competitiveness and employment while sustaining further progress in safety and environmental performance at a price affordable to the consumer.”I believe CARS 21 has made a valuable contribution to shaping future policy-making in Europe. It has endorsed an approach to the environment which involves all major stakeholders, which includes you. And that is very significant.So let me set out how we at Ford Motor Company believe each stakeholder can play its part.I’ll start with the automotive industry itself because we clearly have a central role to play.
The industry has taken significant steps in improving the CO2 efficiency of our products.
At Ford Motor Company we see this not only as being socially responsible but a business necessity.
Let me quote Bill Ford:
“tackling environmental and social issues is not something a company does after it is profitable; it must be something we do to be more profitable.”
It is our absolute conviction, however, that there is no single solution, no “silver bullet” which alone will deliver the environmental benefits we need.
To meet the CO2 challenge, we must move ahead with a range of technological solutions simultaneously.
This will also ensure that we are able to offer consumers a range of products that meet their specific needs and circumstances. And make no mistake, it will ultimately be the consumers who decide.
We recognize that hybrids have their place within this portfolio of solutions, but at the same time, we must accept they are not the only answer.
They deliver excellent benefit’s in lower speed stop/start traffic, but they are not as beneficial for the driver who does high motorway mileage.
In the USA and Japan, on the other hand, where diesel penetration is limited, gasoline hybrids are more likely to be the stepping stone to the long term hydrogen economy “ and it is an area we are pursuing aggressively.
This diversity of customer needs within and across markets is why we at Ford are investing in a portfolio of solutions across our brands and across regions to improve CO2 performance.
The result is a period of unprecedented technological innovation. Indeed, innovation “ in matters of the environment, safety, and design – is the compass by which we are setting our direction for the future. Bill Ford is inspiring this fundamental development in our approach and driving our mindset change.
Carbon reduction is the focus of much of our R&D activity. We have already made significant strides. For instance “ our 1998 Ford Escort (1.8 TCi) had CO2 emissions around 185 g/km “ today’s comparable Ford Focus (1.8 TDCi) is at 137 g/km “ an improvement of 26%, and one that would have been some 8 percentage points better had it not been for additional regulatory and market changes.
In 2004, we launched the world’s first SUV hybrid, the Escape Hybrid, in the USA. Expansion of our hybrid offering is now an important part of our overall Innovation strategy which embraces our recent commitment to producing up to 250,000 hybrids per year by 2010.
We are developing affordable hybrids specifically for the European market, especially diesel micro-hybrids which seem well-suited to the European driving environment and builds on the widespread acceptance of diesel technology.
Along with Ricardo, Valeo, Gates, and the UK Department for Transport we were part of the HyTrans project to develop an economical hybrid solution for a commercial vehicle – the Ford Transit. Tests show that this application of micro-hybrid technology should be able to achieve fuel savings of between 9 and 21% for real-world delivery applications “ a great result, relatively easily achieved without going to full hybrid technology.
At Ford, we continue to develop advanced clean diesel, hydrogen-powered internal combustion engines, and fuel cell vehicles. And we are currently testing the acclaimed Ford Focus Fuel Cell Vehicle in fleets around the world.
In addition, we are leading the way in flexible fuel vehicles, vehicles capable of running on E85 bio-ethanol, or petrol, or any mixture in-between.
We have been building flexible fuel vehicles for over a decade, and perhaps it’s not commonly known but the Ford group is Europe s leading provider of bio-ethanol flex-fuel vehicles.
Our product line-up includes Ford Focus and C-Max, Volvo S40 and V50: 80% of all Ford Focus sales in Sweden today are Flexi-Fuel. Here in the UK, we are actively involved with a group of partners to introduce bio-ethanol in Somerset starting in March this year “ our commitment is to supply 40 Ford Focus FFVs.
Beyond the powertrain, there are many other areas in which automotive technology can contribute to carbon reduction – for example, the use of new materials and technologies to reduce vehicle weight… low friction tires… improved aerodynamics. Our extensive work to introduce aluminum body structures in the Jaguar brand has resulted in class-leading CO2 emissions for the XJ series.
In fact, we already investing in a portfolio of solutions across our brands and across regions to improve CO2 performance.
These solutions include:
- clean diesel,
- Advanced direct injection gasoline,
- Weight stabilization and reduction,
- AFV and FFV vehicles and developing superior AFV technologies
- Hybrid power packs and research into plug-in hybrid technology.
- Hydrogen ICE and hydrogen fuel cells you can imagine the R&D investment that goes with all this work to reduce carbon emissions is a very big number…certainly in the billions, not the millions, and it will only grow in the future. Many of our competitors and suppliers are also investing heavily. But there is only so much we can achieve without the help of others outside our industry.An integrated approach involving all stakeholders will allow improvements in CO2 performance faster and much more cost-effectively than an approach which focuses uniquely on car technology, important as that is.So let me turn to the contributions of some of the other stakeholders, starting with the fuel industry.It is absolutely clear that the solution to carbon emissions from road vehicles will come from advances in CO2 performance of fuels as well as vehicle technology.So far our conversations with the oil industry indicate there is still some considerable way to go before the oil industry fully accepts and endorses the integrated approach of which I have spoken because of the concerns around the financial implications to the industry and to the consumer.
But the fact is that without the whole-hearted involvement of the fuel industry we cannot move forward far enough or fast enough. We need the fuel industry to extend the availability of low carbon fuels from sustainable sources “ and we need it to do so now and rapidly, not ten years from now. In the short term, implementing what is already targeted in the Bio-fuels Directive would provide a significant increase in the availability of low carbon fuels that could deliver a CO2 saving equivalent to 20g/km on vehicle technology.
We share the excitement around the potential of second-generation biofuels (wood/ lingo-cellulosic) which not only promise to achieve “well-to-wheel” CO2 emissions not far short of those of the hydrogen fuel cell.
We also believe that biofuels that are backward compatible – in other words, they can be used by the existing car park “ are more attractive than present ethanol blends.
But the oil industry needs to invest in developing and marketing such fuels if we are to move on from E85 and low blends of biodiesel.
And we would also like to play our full part with the oil industry and the European standardization body to promote the introduction of new, innovative low CO2 footprint fuels whilst ensuring quality products for our mutual customers.
Let me now turn to the part that the government can play in this integrated approach.
There is a great deal that policymakers can do at all levels, international, national, and local.
We would like to see more R&D support for vehicle technologies and alternative fuels.
We would like to see greater investment in improved road and traffic management infrastructure in order to reduce traffic congestion, which is a major generator of CO2 emissions. More effective traffic light synchronization is a good example of a change that would lead to big reductions.
There is also a role for the government in educating the public on how to drive in an environmentally-friendly manner, and I’ll return to this later.
Let’s also ensure that governments seek a harmonized way forward on CO2 taxation that is based on the carbon performance of the fuel, and that avoids distortions in the market and the perversities around tax thresholds.
A fragmented tax environment leads to enormous product complexity and cost, and in the long run, will distort our ability to achieve the CO2 reductions necessary.
Undoubtedly financial incentives can influence consumer behavior in a manner that is positive for the environment. We see, for example, the dramatic impact in Sweden of government initiatives to promote biofuels. It is important that incentives are agreed and applied consistently and in a harmonized way across all countries. As I mentioned just now, individual market initiatives, whether regulatory or fiscal, can be disruptive from a planning point of view and lead to market distortions.
First, it is critically important that policy and incentives should be “technology-neutral”. That is, incentives should not favor one technology over another. Instead, they should target the outcome, not the solution. As I have described, we are now seeing the emergence of varied carbon-reducing technologies in passenger cars, each meeting distinct needs or usage. For the government to promote one technology over another would lead to market distortion and could stifle both innovation and customer acceptance.
There must be a level playing field. Fiscal incentives should be focused on the end and not the means. That is, on the total well to wheel CO2 performance and not a specific technology. The consumer must be allowed to decide on the solution that is most suited to their needs. Allowing the market to decide should ultimately lead to more economical vehicles and fuels, which in turn will lead to the more rapid uptake of new low emission solutions.
Second, any government intervention must be long-term and consistent. Political timescales are too short for the long planning and investment cycles of our industries. We have in the past seen incentives create an artificial market which lacks the maturity to sustain itself when the incentives are prematurely removed. I’m thinking, for example, of the history of the LPG vehicle market in the UK, which stalled when it was suggested that the fuel duty might be increased. We need stability and a balanced framework.
Finally, let me turn to consumers.
Ultimately it is the consumer’s choice of vehicle and their driving behavior that determines how much CO2 is emitted into the environment.
The UK auto industry recently voluntarily introduced a color-banded fuel efficiency label for cars “ so that now consumers have got the same sort of easy-to-understand information about the environmental performance of their cars as they have, say, for their washing machine or fridge.
A person who drives in an energy-conscious way “ by avoiding unnecessary bursts of acceleration, changing gear correctly and anticipating braking “ can enjoy much better fuel consumption.
We would like to see the automotive industry, the fuel industry, and governments working in partnership to raise awareness of this. Indeed we welcome the Secretary of State recent announcement of the greener driver scheme for van drivers which encourages safer, cleaner, and cheaper driving through the provision of advanced driver training.
There is no doubt in my mind whatsoever that there must be a consistent and coherent implementation of policy across all countries. Consistent implementation of the integrated approach to the reduction of carbon emissions will allow us to achieve much more in a shorter timeframe and at a significantly lower cost than if each party were to pursue it’s own agenda in isolation, however well-intentioned they might be.
So let me summarise. Global warming exists and we all share a responsibility to do something about it, basing our actions on the best scientific knowledge available.
The challenges are considerable but they are not insuperable, and there is an enormous amount we can achieve if we act together in an integrated manner.
At one level meeting, the challenge of climate change is nothing more than prudent management.
We all have to ensure that our businesses are sustainable by making products that continue to meet the changing needs of the 21 st century.
That’s a responsibility we owe to our shareholders and our employees. But at another level, all of us have the opportunity to do something about the future of our planet and work to arrest the momentum of climate change “ and that’s a responsibility we owe to future generations.