Renewable Energy Integration and the Impact of Carbon Regulation
Options for Carbon Regulation of the European Car Industry
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Transcript of Options for Carbon Regulation of the European Car Industry
Options for Carbon Regulation of the European Car Industry
Alex Veitch
Transport Strategy Manager
Energy Saving Trust
LowCVP Conference: Policy Challenge
The case for regulation
• Long-term carbon regulation for the car industry is required
• Individual companies should be regulated, rather than associations
• Flexibility can be built-in to the regulation
• Emissions trading should be viewed with caution
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ACEA JAMA KAMA Target
Voluntary agreement progress
Source: EC Monitoring Report 2005, T&E 2006
Target year is 2008 for ACEA; 2009 for JAMA & KAMA
T&E figure
Structural issues
• Association approach is flawed• Free riders• No control over members’ production and
marketing strategies• Companies could leave the association• Lack of transparency: No official reporting of
EU wide company average
The case for regulation
• A popular step: 70% of people support mpg regulation*
• Industry certainty: Long-term regulatory framework to drive innovation
• Global competitiveness: Stay ahead of regulation in China, Japan, US
* 70% agreed with the statement: “Car makers should be legally required to make cars that get high MPG (miles-per-gallon)” Mori for EST 2005, Base 1,001
Target: Model Range or Sales Weighted?
• Model range– Simpler for manufacturers to administer– Risks tokenism - low-numbers of low-carbon
cars actually sold
• Sales weighted average – Drives marketing toward low-carbon models– Sales weighted is already lower than model-
range, so better deal for manufacturers
Average CO2 emissions: Best selling car companies in the UK 2005
Source: EST analysis of SMMT data
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Sales-Weighted
UK Average (all cars sold)
Model Range
Regulation option: Max CO2 limit
• Outlaws inefficient products– Transforms the market – Has worked for white goods
• However…– Small “tail” of high CO2 cars– No flexibility for niche producers
Car sales in the UK: CO2 distribution
Source: SMMT
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Regulation option: Company Average
• Similar to U.S. CAFE standards– Simple structure, companies have ownership– Uniform target is tough for niche producers
• Refinements for provide flexibility– Percentage reduction target – Company target based on its model range
Internal trading
• Provides some flexibility– Enables high CO2 producers to purchase credits
from low CO2 producers rather than alter their model range
• However, limited market– Could be a small number of companies earning
credits– Risk of “hamstering” – could require a regulator
to intervene
External Trading
• Requires analysis of actual carbon emissions rather than a fleet-average figure
• This changes the calculation of the impact that each company has on the climate
Average vs. Total Company Emissions
Source: SMMT data, with assumed vehicle lifetime of 200,000km .
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External Trading
• Flexibility: In addition to making lower carbon cars, manufacturers could:– Reduce sales – Influence driving behaviour – Influence purchase decisions– Buy credits on the market
• Problems– Quantifying carbon savings from advice activities
Conclusions
• Strong case for carbon regulation of the car industry, placed on individual companies
• Targets and structure of regulation– Sales weighted target better than model range– Percentage target could provide flexibility
• Caution on emissions trading– Internal trading - insufficient flexibility– External trading - difficult to quantify savings
from advice activities
Options for Carbon Regulation of the European Car Industry
Alex Veitch
Transport Strategy Manager
Energy Saving Trust
LowCVP Conference: Policy Challenge