Driving ahead: The case for metrics
A single piece of data has helped to transform the European motor industry. But, says Ramon Arratia, it isn't a complete solution
Surprisingly, the European motor industry is fast becoming a sustainability success story, thanks to European legislators. This is all down to the use of a 'magic metric' - a single piece of data that has the power to galvanise legislation at all levels. The magic metric in question is grams of carbon dioxide per kilometre (gCO2/km) - a measure of the greenhouse gas emissions generated when a car is driven (often referred to as tailpipe emissions).
The use of this metric has created a level playing field that promotes strong competition and innovation to redesign products to reduce their environmental footprint.
The right metric should come from Life Cycle Analysis
Car manufacturers rarely saw themselves as being accountable for the full environmental impact of their product, beyond their manufacturing operations. Yet, according to the European Environment Agency, around 77% of the environmental impact of a car comes in this 'use' phase. Indeed, for a long time the industry had no incentive to design vehicles that would use less fuel and thereby emit less CO2 into the atmosphere. In the voluntary, 'let the market solve the problem' era, CO2 emissions from road transport in Europe rose by 29% between 1990 and 2007. The EU had to take action because cars are responsible for around 12% of total EU carbon dioxide emissions.
In 1999, the EU introduced the Car Labelling Directive, which mandated that a label on fuel economy and gCO2/km must be on a car or displayed clearly near each new model at the point of sale. Today, this has extended to car advertising, which must state the magic metric. This has created consistency and transparency while enabling the consumer to get used to the metric. Even my mum knows that 200g is too much and 99g is quite all right.
The Car Labelling Directive encouraged a change in consumer habits, but the real difference has come from legislative pressure on the manufacturers. In 2009 a EU-wide regulation came into force that required each car manufacturer to decrease average tailpipe emissions across its portfolio to 130gCO2/km by 2015 and 95gCO2/km by 2020. There are significant financial penalties for each gCO2/km missed. The impact of this approach has been almost immediate. In 2009 EU emissions decreased by 5%, with a further 4% in 2010.
The enabling power at multiple levels
The magic metric also enabled smart regulation beyond Brussels:
Car purchase tax: In France the Bonus/Malus scheme means that customers choosing to buy a heavily polluting car pay extra tax on the price of that car, while those who buy a more fuel-efficient car receive a reduction in the price. The tax penalty ranges from €200-2,600 per car, and the incentive reductions range from €200-5,000+.
Company car tax: In the UK tax is higher, on a sliding scale, for company cars that produce higher emissions. A petrol car that generates less than 75gCO2/km attracts a tax rate of 5%; one that produces 235g will be taxed at 35%. Average CO2 emissions from company cars were around 15g/km lower in 2004 than would have been the case if the regulation had not come into force.
Congestion and parking charges: In London, cars that emit 100gCO2/km or less and meet the Euro 5 standard for air quality are exempted from the city's congestion charge. In many towns in the UK, such as York, Salford, and Milton Keynes, one can qualify for discounted parking if you have a low-carbon vehicle.
Procurement policies: Essex County Council in the UK has a fleet of 850 vehicles, 74% of them cars. It has set an emissions cap of 160g CO2/km for any new delivery and the average today is 135g CO2/km. Many companies today have similar policies.
This magic metric isn't a complete solution, yet the example of the car industry is demonstrating its transformative power. Three key elements must be in place to effect change in this way: a measurable metric that relates to the biggest life cycle impact of a product; a transparent way of communicating this metric to consumers, and a regulatory framework (at EU, national or local level) that pushes consumers to make the right choice.
So why hasn't this approach been adopted for other industries too? The answer is that it will be. It's already being adapted for use for buildings, energy-using products and power suppliers. So be prepared.
Ramon Arratia is sustainability director, Europe, Middle East and Asia, for flooring company InterfaceFLOR. Ramon blogs at Cut The Fluff.