Home > Subjects > Business > Analysis of Car Industry in Europe

Analysis of Car Industry in Europe

Table of Content

  • Executive summary
  • Introduction
  • Part A
  • Part B
  • Conclusions and Recommendations
  • References
  • Appendix

Executive Summary

This is the essay “Car Industry in Europe analyses the current status of the car industry in Europe and discusses in particular various aspects of the industry’s sustainable development in reference to the different environmental aspects. It addresses the various (specific) requirements the car industry needs to establish itself in the EU, particularly with regard to emission standards. It reviews the different Euro standards of emissions and continuous progress in the direction as well as the present emission norms, which has to adhere by the car industry in Europe. It also reviews all the protocols and steps to achieve the emission standards by EU and how it affects the present status of car industry and its requirements. The essay also looks at various technical measures to be taken by the automobile industry to improve the condition of more CO2 emitting vehicles towards less CO2 emitting ears. It also emphasizes how these measures improve the overall environment in the EU, especially the level of CO2 emissions that is to be achieved in a timely manner. Finally the essay recommends various measures on how the EU lawfully enforces these regulations to improve the overall GHG emissions situation. It also emphasize on how customers and car industry could be benefited by applying and adhering environmental standards for sustainable growth & development.


The European is at the forefront of international efforts to combat climate change and must deliver the reductions in greenhouse gas emissions to which it has committed under the Kyoto protocol. The greenhouse effect is one of the better-understood features of the atmosphere. In January 2007, the European Commission proposed “The EU pursues the goal of a 30 per cent reduction in GHG emissions by developed countries by 2020 in the form of international negotiations (compared to 1990 levels)”. To prevent inequalities, and in the interests of economic and social justice, all industries will contribute to the reduction effort.

Cars are an important part of the everyday lives of a large number of Europeans; the automobile industry is a significant source of employment and growth in many regions of the EU. Nevertheless, the use of vehicles has significant impacts on climate change, with around 12 percent of total EU CO2 emissions, the biggest greenhouse gas, coming from passenger car fuel consumption. Although significant improvements have been made in vehicle technology, particularly in terms of fuel efficiency, which also means lower CO2 emissions, this has not been sufficient to neutralize the effect of increased traffic and car size. While the EU as a whole has lowered its greenhouse gas (GHG) emissions by just under 5 per cent over the period 1990-2004, the emissions of CO2 from road transport increased by 26% keeping in view of the above situations in June 2006, European Council therefore unanimously reconfirmed that “In line with the EU Strategy on CO2 emissions from cars/light the average CO2 emissions of the new car fleet should be 140 g CO2/km by 2008/09 and 120 g CO2/km by 2012. ‘ The European Parliament called for ‘ a policy of strong measures to reduce transport emissions, including mandatory CO2 emission limits for new vehicles in the order of 80-100 g CO2/km for new vehicles to be accomplished in the medium term by emissions trading between automakers.

In view of the above developments in implementing environmental norms and standards by EU, car manufacturers around the globe may face specific problems as well as adhering norms laid down by EU. Often, the automotive industry is seen as one of the most global of all industries. With globalisation, the car industry is undergoing rapid changes (Carlson 2004). Rapid changes also change the structure and attractiveness of the market. The emerging markets (ASEAN countries, India China, Brazil & Eastern Europe) are leading in the growth rate of car sales compared with the US, Western Europe and Japan. Europe’s growth rate is around 3 percent, which is lower, and poses threats to the car industry’s survival in Europe. Presently the car industry is focusing their strategies in the emerging market due to cheap production costs especially due to cheap labor. “Corporate strategies in regard to globalization vary depending on the starting point of individual firms but there seems to be a large measure of convergence towards

  1. Building vehicles where they are sold.
  2. Designing vehicles with traditional global under body platforms while retaining the ability to adapt body trimming rates and ride features to a wide range of local conditions “(Sturgeon & Florida, 1999).

Political forces and WTO regime plays major role in opening of markets worldwide. Change in regulations of the market due to government policies and economic facilities such as FDI, taxation rates, infrastructure facilities, cheap labor, technically competent manpower etc., plays an important role for the car manufacturers to relocate their production and assembly lines in developing countries. Apart from many other factors ecological/environmental factors are one of the major factors, which have visible impact on car industry. Pollution, emissions norms, sustainable environmental policies has dominated the industry. CO2 emission and fuel consumption, alternative fuel such as bio fuels are the major areas of concern for car industry. Different countries have different norms for emissions and pollutions and car companies have to fulfill these norms accordingly (Madhavan, 2000).

[sociallocker id=”35370″]

Part – A

Cars have a high significance for the lifestyle of Europeans. That is why more than 15 million vehicles are sold in Western Europe every year, making automotive the most important industry in Europe. All the carmakers in this critical area are competing for market shares. But economic slow down and the decline in consumer demand have hurt automotive sales. Competition in already very fierce and is expected to increase. Many manufactures have to fight with cost pressure and declining margins. The concentration already very high: only six corporate groups make 70% of all car sales worldwide. The block exemption (regulation of new car sales and servicing) is expected to end in Europe this year. This will increase competition, especially from Asian manufacturers. New players like classical retailers or Internet traders will inter the market to sell new cars. Analysts expect the automotive manufacturers to move into after sales, service and markets like financing, warranty, used cars and fleet management to generate new revenue streams and better margins. The newer trends in Europe car market have been quite evident. Mid range cars are losing ground. Consumers are looking for lifestyle oriented products and prestige brands. High fuel prices in Europe forced manufactures to make diesel cars and are booming over last couple of years. Europeans like their cars fast and the average power of car engines has increased by 25% in the lass 10 years. But due to Kyoto protocol in 1997, which fixed targets for 39 developed nations to limit or reduce their greenhouse gas emissions by 2012. The limits and reductions were designed to reduce total emissions from the developed nations to a level at least 5% below 1990 levels. The national target varies however the EU nations set their target at 8% below 1990 levels. The prevailing conception of national sovereignty, countries cannot be bound to meet their targets unless they decide to sign the treaty that commits them to do so. To assist countries in reaching their targets the Kyoto protocol accepted the principle of “emission is trading.” Society decides to reduce net emissions and formulates rules that permit a mixed portfolio of effort sequestration and emission reductions (as foreseen in the documents of the IPCC or Kyoto Protocol). Thus, suppose a hypothetical emitter, nominally a coal-burning electric power plant, is obliged under a tradable permit regime to meet binding emission constraints (Hanley, Shogren, and White, 1997).  But some skeptics like Bjorn Lomborg (2001) writes “Despite the intuition that something drastic needs to be done about such a costly problem, economic analysis clearly show that it will be far more expensive to cut carbon dioxide emissions radically than to ply the cost of adaptation to the increased temperature. Lomborg (2001) is right to raise the question of costs. In one of the most competitive industry i.e. car industry, in one of the most developed region i.e. Europe, cost factor plays an important role in shaping car industry in Europe. Lomborg (2001) does claim that the Kyoto protocol will lead to a net loss of $150 billion. So developing a car in Europe adhering to stricter environmental conditions and norms, car companies facing a thought task. These norms play an important role in costing a product and ultimately increase the cost of the product reducing competitive product pricing. But to adhere with the norms laid down by EU about environment and emission standards, car industry is facing certain problems. European emission standards are sets of requirements which define acceptable exhaust emission limits for new vehicles sold in EU Member States. The emission standards are established in a series of directives from the European Union which stages the gradual introduction of increasingly strict standards. Emission of NOx, HC, Carbon monoxide and particulate matter are regulated for most vehicle types including cars. For each vehicle type, different standards apply, compliance in determined by running the engine at a standardized test cycles. Non-compliant vehicles cannot be sold in EU, but these standards do not apply to vehicles already on the roads. No use of specific technologies in mandated to meet the standards, though available technology in considered when setting the standards.

Emission standards for passengers cars has started way back in 1992 when Euro I has been implemented and thereafter in almost 4 to 5 years another standard norms for emission comes into force. Since the Euro II stage, EU regulations introduce different emission limits for diesel and gasoline vehicle. Diesel has more stringent CO standards but is allowed high NOx. Gasoline vehicles are exempted from PM standards through the EURO IV stage (EURO V proposal introduces PM standards for lean burning gasoline cars). European emission standards and tables refer to new type approvals.

European Emission Standards for Passenger Cars  (CategoryM1*), g/km

Tier Date CO HC HC+NOx NOx PM
Euro I July 1992 2.72 (3.16) 0.97 (1.13) 0.14 (0.18)
Euro II, IDI Jan. 1996 1.0 0.7 0.08
Euro II, DI Jan. 1996a 1.0 0.9 0.10
Euro III Jan. 2000 0.64 0.56 0.50 0.05
Euro IV Jan. 2005 0.50 0.30 0.25 0.025
Euro V (proposed) Sept. 2009 0.50 0.23 0.18 0.005
Euro VI
Petrol (Gasoline)
† Euro I July 1992 2.72 (3.16) 0.97 (1.13)
Euro II Jan. 1996 2.2 0.5
Euro III Jan. 2000 2.30 0.20 0.15
Euro IV Jan. 2005 1.0 0.10 0.08
Euro V (proposed) Sept. 2009 1.0 0.075 0.06 0.005b
Euro VI
* Before Euro V passenger vehicles > 2.500 kg were type approved as Light commercial vehicles N1 – I

Euro III and EURO IV conformant for automobiles, signifying the fulfillment emission norms, have become the hallmark of environment friendly vehicle. These legislative norms on vehicle emission control evolved in Europe. These developed countries had the necessary lead-time to develop the infrastructure needed in terms of clean fuel and lube oil supply, proper roads and traffic regulations and periodical vehicle maintenance programs. They were all turned to reap the full benefits envisaged by the stringent norms. These norms as formulated were mainly structured for the liquid fuels of petroleum origin, such as petrol and diesel oil, and address limits for regulating the exhaust discharge of carbon mono oxide (CO), unburned hydrocarbon (UHC), oxides of nitrogen (NOx) and smoke and particulates for diesel vehicles. These norms need continuing review whenever alternative fuels are used.

The Euro norms would only be effective after controlling the pollution from these major sources i.e. road transport. The priority will be the development of fuel efficient and clean vehicles for mobility of the common public. Development of alternative fuels from renewable sources such as alcohols must take the priority over the imposition of Euro standards. The European commission proposed a comprehensive new strategy to reduce CO2 emissions from new cars and vans sold in the European Union. The new strategy, together with an overhaul of EU fuel quality standards, further underlines the Commission’s determination to ensure that the EU fulfills its greenhouse gas emission target Kyoto protocol and beyond. The plan would allow the EU to achieve its long-established goal of reducing average CO2 emissions by 2012 to 120 grams / km, a reduction of about 25 per cent from current levels. The Commission also calls on manufacturers to sign an EU code to encourage the car industry to compete on the basis of fuel efficiency instead of size and power of good practice on car marketing and advertising. The current EU CO2 emission reduction plan for cars is focused on voluntary commitments by the automotive industry, consumer information (car labeling) and tax incentives to promote purchases of more fuel- efficient cars. European manufacturers have said that by 2008 they will reduce average emissions from their new cars to 140 gm CO2/km, while by 2009 the Japanese and Korean industries will do. However the strategy brought only limited progress towards achieving the target of 120gm CO2/km by 2012. The European commission reviewed the strategies and concluded that voluntary commitments have not succeeded and the target could not be achieved with in time frame without revising the present strategy of voluntary commitment and commission has to evolve some compulsory measures through legislative powers.

  1. A regulatory framework work to minimize CO2 emissions from new cars and vans is being introduced by commission by the end of this year or by mid 2008 at the latest. That will provide ample lead-time and regulatory clarity for the automotive industry.
  2. Average emissions from new cars sold in the EU-27 would be required to reach the 120 gm CO2/km target by 2012. Improving vehicle technology would need to reduce average emissions to no more than 130 gm / km, although additional measures would lead to a further reduction in emissions of up to 10 gm / km; thus reducing the emissions to 120gm/km. Other complementary steps include increasing the performance of car products with the greatest impact on fuel consumption, such as tyres and air conditioning systems, and a gradual reduction in carbon emissions content of road fuels, notably through greater use to bio fuels.
  3. Support the research efforts aimed at further reducing emissions from new cars to an average of 95 gm CO2/km by 2020.
  4. Policies to encourage the purchase of fuel-efficient vehicles, especially by enhancing labeling and encouraging Member States to impose car taxes to base them on CO2 emissions from cars.
  5. The EU code of good practices on car marketing and advertising to promote more sustainable consumption patterns. The commission is inviting manufacturers to signup to this by mid 2007.

The request from the commission for a new plan, set out in a letter, is one of the first concrete actions to enforce the 2006-Energy Efficiency Action Plan. It is also a direct follow up to the communication on combating climate change to 2020 and beyond presented by commission as part of the energy and climate change package of measures launched on 10th Jan 2007. The Communication is submitted to the Council of Ministers and the European Parliament. Environmental regulation typically involves a negotiation process in which there is room for maneuver concerning whether a breach has happened, the nature of the breach, what standards apply, whether there are mitigating factors, what changes (and their costs) should be made and within what timeline. Terms such as ‘ best possible method ‘ and ‘ best available methodology which does not require unnecessary costs ‘ (BATNEEC) (Richardson et al., 1984, Gouldson and Murphy, 1998) well-established in the U.K. Context, articulate the difficulty and expense of meeting regulatory standards and give a sense of the role of negotiation in environmental regulation. So before proposing the legislative framework the commission will consult widely with stakeholders on its design and undertake a thorough impact assessment.

Now to adhere the EU policies, car manufactures have to evolve sustainable development policies and adopt corporate social responsibility to include society as a whole and particularly environment. The relationship between business and society has undergone many changes throughout from its inception. Eberstadt (1977) researched these transitions from ancient Greece to modern times and concludes that today’s corporate responsibility campaign is an attempt to restore a 2000-year past old tradition of business being connected to community. Overtime awareness has arisen about the effects of industry and its interplay with social and environmental concerns, along with parallel growth in socio-regulatory pressures. Eco efficiency is truly a far-reaching concept. It can help developed countries to improve their resource productivity encourage developing countries to reach their full potential without depleting their material resource heritage and provide government with the essentials to develop innovative and pragmatic policies that energize and enable society to become sustainable (DeSimone & Popoff, 1997). This convergence of business and public interest has led business to slowly regain its formerly displaced social focus and assume increased responsibility for social and environmental well-being and consideration. Globalization and environmental implications of MNCs’ have been resisted by societies or communities. Therefore it becomes increasingly important for organizations to attempt to be proactively responsive to social and environmental issue in order to ameliorate to social concerns (Panwar et al., 2006). In the process of sustainable development the concept of ecological transition which has many similarities with a well-known demographic transition provides us to analyze various countries on the basis of per capita income and pollution flows (Goldin & Winters, 1995). It is not easy to define sustainable development universally. Basically sustainable development is a process of achieving human development in an inclusive, connected equitable, prudent and secure manner “(Gladwin et al., 1995). Therefore, sustainable enterprises contribute to sustainable development by providing so-called triple bottom line at the same time economic, social and environmental benefits (Elkington, 1994).

For most organizations, the prudent approach to entrepreneurial sustainability remains difficult to reconcile with the objectives of increasing shareholder value will requires organizations to sacrifice profits and shareholders value in favor of the public good (Friedman, 1970). Hart & Milstein (2003) development sustainable value framework having 4-quadrants consists of sustainability vision, clean technology, pollution prevention and product stewardship (See Appendix-1). Every organization has to adopt environment policies as general strategy and taken a more pro-active stance on environmental issues, pursuing a policy of active co-operation with local environmental authorities (Starkey & Welford Ed., 2000). Zadek (2004) proposed a 4-stage maturity model (see Appendix-2) with different organizational stages dealing with social and environmental issues through the organizational business. The fourth stage in the organization emerges with institutionalization of social and environment issues and some system, legislations or business norms have been established. By adopted as system, the issues related to social & environmental aspects embedded in the system and act as normal parts of a business excellence model.  So for sustainable development, environmental aspect must be included and EU should frame separate policies for it. GDP growth may not be consistent with sustainable development, unless due consideration is given to the importance of the endowment of environmental capital and environmental quality as an incentive for investment. The process of cohesion involves restructuring in key economic sectors, including industry, transport, energy and agriculture, where policies must incorporate an environmental dimension and overcome technological and infrastructural weaknesses. While there is little evidence that the cohesion countries face a disproportionate cost burden under EC environmental legislation, their industries that suffer a competitive disadvantage if certification of the environment is granted a widespread contractual requirement (Barrass et al., 1997).  Many people in Europe have now become aware of the need for protecting and using natural resources more efficiently. Innovations can improve our environment and economy. Every individual, Business, communities and associations now make effort to recycle waste, save energy to buy green products etc. EU policies have led to sustainable development and steady improvements of environment. EU put the environment at the heart of decision-making process on every issue from transport of energy, from industry to farming. EU environmental policy had adopted a document called the “European strategy for sustainable development” at the Gothenburg (SE) Summit of European leaders in 2001 and highlighted the environmental dimension of the Lisbon Strategy. For Gothenburg, sustainable development goals to succeed, it requires the active participation of all stakeholders, including EU institutions, members states, private and the non governmental sectors and local authorities. In 2002 during Johannesburg world summit on sustainable development the EU lent its considerable weight to meaningful action to meet clear, measurable targets according to firm timetable. Other measures have also been taken across the EU to fall in line with various international conventions, including the 1997 Kyoto protocol. Lisbon summit in 2000, called for a more integrated approach to policy making in which economic, social and environmental objectives are achieved at the same times. The aim of Lisbon strategy was to make the EU “the most competitive and dynamic knowledge based economy of the world by 2010. Innovations and new technologies especially green technologies are trying to deal with environmental threats. Environmental technology Action Plan (ETAP) was created by the union, at the end of January 2004, with the aim of stimulating both development and deployment of technologies, which in the words of the commissions communicating, “reduce pressure on our natural resources improve the quality of life of European citizens and stimulate economic growth”. Environmental technologies are not only valid in meeting challenges facing the environment, but also represent a potential boon for EU competitiveness as European research in effectively rolled out into new technologies. Environmental technologies range from recycling systems for wastewater in industrial processes, to energy efficient car engines, to soil remediation techniques. ETAP identified three actions with sixth framework programme:

  1. Strengthening research on environmental technologies, supporting demonstration and replication of promising techniques.
  2. Establishing technology platforms for some promising technologies, so as to improve the coordination research through private and public partnerships (2004-07). The platforms currently decided are: Hydrogen & fuel cells (2004); photovoltaic (2004); water supply and sanitation technology (2005);
  3. Networking testing centers so as validate the performance of new technologies in view of improving the confidence of purchases (from 2004 on).

So emphasis of EU is mainly on emission reduction technologies development and in this innovation public private partnership has to be strengthen. To reduce emission and production of GHG several studies has been done be keeping in view the national or regional interests as well as industrial profitability. Any of the strategy of reducing GHG will require universal participation considering of historic responsibility “the polluter pay principal” strategy may prove effective. Continuing efforts are aimed at global cost benefit analysis (CBA) on the enhanced greenhouse effect. Nordhaus (1994) presents an optimization model and supported the US position in international negotiations against emissions reduction. Cost effectiveness takes a given policy and assesses its associated costs e.g. the costs associated with achieving 60% reductions in CO2 emissions. This is meant to be less controversial because costs of pollution reduction are supposed to be easily observable in the market place unlike the benefits of avoiding damages. Emissions Control costs are highly dependent upon such vagaries as energy forecasting and instruments design. Category of cost and benefits are defined by the policy position. In the market place one person’s cost is another person’s benefit. Road transport generates about one-fifth of the EU’s CO2 emissions from passenger cars, which account for around 12%. While significant improvements have been made in vehicle technology in recent years, especially in terms of fuel efficiency, which means lower CO2 emissions have not been sufficient to neutralize them effect of traffic increase and car size rise. While the EU-25 reduced overall emissions of greenhouse gases by almost 5% between 1994 and 2004 and but CO2 emission from road transport rose by 26%. EU adopting various strategies to achieve Kyoto protocol targets by saving energy and encourage technological innovations.


Jose Manuel Barroso, President of the European Commission, said: “This strategy is the most ambitious approach ever and the most ambitious approach to developing a low carbon economy in the world is vital for averting climate change. This will take efforts from all industries, but will also open up huge opportunities for the EU automotive industry. Technical improvements contribute positively towards improvement in environmental conditions. As we are already experiencing that our main emphasis is on reducing emission of GHS up to a minimum agreed level under Kyoto protocol.

Keeping in the mind car industry in EU has to fulfill the norms laid down by the Europe commission through various standards and legislations. To reduce CO2 emissions, car manufacturers have to review and adopt certain technical measures in terms of their potential contribution to CO2 reduction in passenger cars and their costs. The measures, which have been identified by the European commission and can be regarded as complementary options in the context of a so-called integrated approach includes following technical measures (See Appendix-3).

  • Technical options to reduce fuel consumption at the vehicle level.
  • Application of fuel efficient air conditioning system
  • Options to reduce vehicle and engine resistance factors
  • Options for application of alternative fuels based on fossil energy
  • Increased application of bio fuels.
  • Possible to include N1 vehicles into the commitments.
Technical Options to Reduce Fuel Consumption at the Vehicle Level:

To reduce fuel consumptions means manufacturers have to produce more and more fuel-efficient vehicles. Our target of CO2 emission for new vehicles (Cars) is to reach 120 gm CO2/km by 2012. To reduce the level of CO2, wide range to technical modification required. Making cars more fuel efficient requires list of measures (See Appendix-4) like improvement in engines by reducing friction or downsizing etc. or using Hybrid variety of start up functions, full hybrid or improved aerodynamic body medium weight reduction or other measures like low rolling resistance tyres or low friction engine oil. The EU-funded “Super Light Car” project analyzed data on CO2 emissions and vehicle weight reduction to investigate potential future body designs using new approaches body construction uses lightweight mixtures and composite materials.

Application of Fuel-Efficient Air Conditioning Systems:

The EC has introduced a number of measures for raising passenger car greenhouse gas emissions in the next decade. The EC aims at reducing greenhouse gas emissions from mobile AC System are a ban on high GWPR 1349 as a refrigerant for all mobile AC system as from 2011. As a result of this legislation, the auto industry is challenged to develop new system, which use low GWP refrigerants as an alternative to R134a. CO2 based system (R744) will be dominate alternative and in response to EU existing policy, these system will gradually enter the market after 2008. Both the existing R134a systems and the future R744 systems have room for improvement with respect to energy efficiency and the resulting indirect CO2 emissions associated with use of these aircos. Using fuel-efficient air conditioner system shows that for EU-15, a total GHG reduction of 1.0 M tonne/ year could be achieved in 2012 growing to 2.7 M tonne/year in 2020.

Options to Reduce Vehicle and Engine Resistance Factors:

Low rolling resistance tyres and tyre pressure monitoring system showed important CO2 reduction potential which was approximated at 3% and 2.5% respectively. Low viscosity lubricants presents their CO2 reduction potential was found at 2.5% and their CO2 abatement costs were estimated at approximately 180E/tonne for low oil prices and 50E/tonne for higher oil prices. Important issues that are presented regarding these technologies are the absence of the necessary standardization and legislative framework that will support their introduction in the market and possible inconsistencies in relation to the vehicle type approval test. Promoting these technologies the total reduction potential associated with the increased use of low resistance tyres is estimated for EU-15 at 2.4 M tonne/year in 2012 growing to 5.3 M tonne/year in 2020. Similarly low viscosity lubricants use estimated GHG reduction at EU-15 level of 2.0 M tonne/year in 2020.

Application of Alternative Fuels Based on Fossil Energy

Reducing CO2 emission form passenger cars by means of natural gas depend strongly on the price of oil and the costs of natural gas at the filling station as well as on the origin of the natural gas. Natural gas passenger cars, CO2 emission reduction compared to petrol vehicles is about 17% Including benefits of natural gas vehicles (and possibly also other alternative fuels, specifically biofuels) in a monitoring scheme accompanying legislative or other policy measures aimed at reaching a defined CO2 emissions reduction. As natural gas can also be applied to petrol vehicles in order to reach an overall goal of CO2 emission from 140 gm/km to 120g/km by 2012.

Options to Promote Application of Biofuels:

Bio-diesel and bioethanol are actually the most commonly available biofuels as transportation fuels. Biofuels provide benefits in terms of CO2 mitigation compared to fossil fuels. Those biofuels grown in Europe typically offer around a 50% GHG reduction, although the benefits of ethanol imported from Brazil are typically much greater (around 80% reduction). The current framework for biofuels policy sets indicative goals for the 2010 amount of biofuels. The additional replacement of 1% of fossil fuel use by the use of biofuels in estimated to result in an overall GHG emission reduction for EU-15 of 3.1 to 4 M tonne/year.

Possibilities to Include N1 Vehicle Into the Commitments:

To include light commercial vehicles into passenger car category have potential to reduce CO2 emission of new N1 vehicles compared to the business as usual baseline has been made for EU-15. For a 2012 reduction target of 15gm/km, the overall GHG reduction potential grows from 1.2 M tonne/year in 2012 to 2.2 M tonne/year in 2020. So it has been quite evident that technologies and technical improvements at different levels have potential to benefit environment by improving the emissions standards and by reducing CO2 emission in the environment especially.

Conclusion and Recommendations

Five percent of the world population lives in European union where about 15% of global green house gases are generated. Road transport and power generation Mainly generate greenhouse gasses that cause temperature rise and disturbance and climate: methane and nitrous oxide carbon dioxide (CO2) as well as so called fluorinated gases. European must take a lead in reducing emission. This means first meeting its target to reduce emission by 8% over 1990 by 2008-12 as agreed in Kyoto, Japan. European commission proposes an integrated energy and climate change package to cut emission for the 21st century. The European Commission is proposing an ambitious package of steps to create a new European energy policy to combat climate change and improve energy security and competitiveness in the EU. The package of reforms sets a range of greenhouse gas emission and renewable energy goals targets and aims to create a viable internal energy market and to improve effective regulation. The commissions believe that this should lead to a 30 percent reduction in emissions from developed countries by 2020 when an international agreement on the post-2012 framework is reached. Commission proposes that the EU commits now to cut greenhouse gas emission by at least 20% by 2020. Moving through various protocols and voluntary impositions EU leading the world to a new industrial revolution and development of a low carbon economy. Europe faces real challenges. There is a greater chance that global temperatures would increase by more than 50 C in current projections during this century; energy and transport policies will contribute to EU emissions increase by around 5% of 2030. So EU has to modify and implement its energy use and transport policies so that EU could achieve atleast Kyoto protocol levels.

Keeping in view of the above objectives European parliament and council reaffirmed the EU objective that global surface tem. Should not rise by more than 20C and for that EU has to depend on sustainable use of energy and improve energy efficiency and management, particularly in transport sector. Road transport in 2nd largest GHG emitting sector in EU and is the sector whose emission keeps rising and jeopardizes the progress made by other sectors. So need for a rebalancing of the effort taken up by the different sectors and their ability to reduce CO2 emissions must be assessed. A wide-ranging notion of cost effectiveness play an important role. It is widely perceived that efficiency measures in Road transport are more costly than other sector is wrongly perceived. Road transport sector can be cost effective. So consumer should be award that they could get vehicle with newer technology. Road transport is not included in the scope of the EU greenhouse gas emissions trading system (ETS) established by Directive 2003/87/EC.” Because of principle of direct emission and large administrative cost but could be applied indirectly at the carmaker level. Voluntary commitment undertaken by car manufactures has not made much progress. The EU has to reconsider its voluntary approach and consider the measure including legislative one to ensure the necessary CO2 reductions. Consumers’ information is the area where EU has to issue certain directive. Each carmaker has to display all the information about CO2 emission, fuel consumption etc. In line with the Energy efficiency action plan, commissions approached shall deliver fuel environmental benefits while at the same time create opportunities by encouraging innovation in most environmentally friendly cars and promoting a competitive automotive providing sustainable jobs in the community. Concrete (fiscal) measures may be adopted to drive consumers demand towards fuel-efficient cars: this would foster a more sustainable car market where manufactures can compete on the grounds of environmental performance. Member states of EU must modify their taxation policy accordingly to make the alternative more sustainable. Taxation schemes can in addition be designed in a revenue neutral way that would overall not result in an additional burden for consumers but rather reward buyers of low emitting cars and penalize the purchase of less efficient vehicles. European commission has to pursue EU objective of 120 gm CO2/km by 2012. This can be achieved through a combination of EU objective of 120 gm/km focusing on mandatory reduction and improvements in motor vehicle technology. The include setting minimum standard (efficiency requirements) for air conditioning systems, compulsory fitting of accurate tyre pressure monitoring system, setting maximum tyre rolling resistance limits in EU for tyre fitted on passenger cars, use of gear shift indicators, fuel efficiency progress in light commercial vehicles and increased use of bio-fuels maximizing environmental performance.

So in view of the above recommendation EU has to promote research and development towards CO2 reduction technologies R&D should have objective to improvements in vehicle efficiency which will deliver as much as 40% reduction in CO2 emission for passenger cars for a new vehicle fleet in 2020.

  • Carson, Iain(2004), Perpetual motion, For much of the 20th century, carmaking was the “industry of industries”. Now it has to reinvent itself, The Economist print edition Sep 2nd.
  • Sturgeon, T. and R. Florida (1999), “The world that changed the machine: globalization and jobs in the automotive industry”, final report to the Alfred P. Sloan Foundation (Cambridge, MA, MIT).
  • Madhavan, S. (2000), “Mobility at a price: motor vehicles and the environment in South and South East Asia”, in J. umphrey, Y. Lecler and M Salerno (eds) Global Strategies, Local Realities: The Auto Industry in Emerging Markets (Basingstoke, Macmillan,), pp.95-121.
  • Hanley, N., Shogren, J. & White, B. (1997), Environmental Economics in Theory and Practice MacMillan.
  • Lomborg, B. (2001), The Skeptical Environmentalist: Measuring the Real State of the World, Cambridge University Press.
  • Gouldson, A.and Murphy, J (1998) Regulatory Realities, Earthscan, London Hawkins, K. (1984) Environment and Enforcement: regulation and the social definition of pollution, Clarendon Press, Oxford.
  • Richardson, G., Ogus, A. and Burrows, P. (1982) Policing Pollution, Clarendon Press, Oxford.
  • Eberstadt, N.N. (1977), What history tells us about corporate responsibilities, Business and Society Review (Autumn) In: Managing Corporate Social Responsibility. A.B. Carroll, ed. 1977. Little, Brown and Company, Canada. 351 pp.
  • DeSimone LD & Popoff F (1997), Eco-efficiency. The Business Link to Sustainable Development MIT Press.
  • Panwar, R., Rinne, T. Hansen, E. and Juslin, H. (2006) Corporate Responsibility Balancing Economic, Environmental, and Social Issues in the Forest Products Industry. Forest Products Journal 56, No. 2 5, February.
  • Goldin I & Winters L (1995), The Economics of Sustainable Development Cambridge University Press.
  • Gladwin, T., Kennelly, J., & Krause, T. (1995) shifting paradigms for sustainable development: Implications for management theory and research. Academy of Management Review, 20(4): 878–907.
  • Elkington, J. (1994) Towards the sustainable corporation: Win-win-win business strategies for sustainable development. California Management Review, 36(3): 90–100.
  • Friedman, M. (1970), The social responsibility of business is to increase profits. The New York Times Magazine 13 September.
  • Hart, Stuart L. and Milstein Mark B. (2003) creating sustainable value. Academy of Management Executive, Vol. 17, No. 2.
  • Starkey R & Welford R Ed. (2000), Earthscan Reader in Business and Sustainable development.
  • Zadek S. (2004) The path to corporate responsibility. Harvard Business Review 82(12): 125-132.
  • Barrass, Robert, Sprenger, Rolf-Ulrich, & Triebswetter, Ursula (1997), Cohesion and the environment: policy integration at European level, John Wiley & Sons, Ltd. London.
  • Nordhaus, W. D. (1994), Managing the global commons: The economics of climate change, MIT Press, Cambridge, Massachusetts.
  • Stern Review on the economics of climate change, Accessed from https://www.hm- treasury.gov.uk./independent_reviews/stern_review_economics_climate_change/stern_review_report.cfm on 14th March 2007.
  • United Nations Conference on Environment and Development (1992) The Earth Summit.
  • European Commission (1992), Towards Sustainability: a European Community Programme of Policy and Action in relation to the Environment and Sustainable Development European Commission.
  • European Commission (2001), Environment 2010: Our Future, Our Choice – The Sixth Environment Action Programme of the European Community 2001-2010 (https://www.europa.eu.int/comm/environment/newprg) Accessed on 13th March 2007.
  • Commission plans legislative framework to ensure the EU meets its target for cutting CO2 emissions from cars (7 February, 2007), Brussels, Accessed from https://jpn.cec.eu.int/home_en.php on 13th March 2007.
  • Review and analysis of the reduction potential and costs of technological and other measures to reduce CO2-emissions from passenger cars (2006), TNO final report 06.OR.PT.040.2/RSM, TNO Science and industry, Netherlands, October 31.
  • https://www.wikipedia.com Accessed on 12th March 2007.


Analysis of Car Industry in Europe

Matrix depicting organizational and issue

Maturity stages  (adapted from Zadek 2004)


Car Industry in Europe Summary

Sustainable value framework

Hart & Milstein (2003)


Technical options to improve fuel economy and reduce CO2-emissions of passenger cars

On petrol and diesel in the period between 2002 and 2012

Car Industry in Europe Summary


Carbon dioxide reduction data from the various technologies (IEA 2005).

[IEA 2005] Making cars more fuel efficient: Technology for Real Improvements on the Road,

International Energy Agency and European Conference of Ministers of Transport Joint Report, 2005.

Car Industry in Europe Summary


Related Posts

Leave a Comment