Petroleum is getting more and more expensive and scarcer. Emissions of carbon dioxide need to be kept at bay. Meanwhile, global fleets of cars are expected to rise from 740 million cars today – responsible for 18% of emissions – to 1.2 billion cars in 2030 and 2 billion in 2050, according to estimates. These are just two of the factors that led the European Commission to set limits for carbon dioxide emissions on all European vehicles a few weeks ago.


German industry rejects the European regulations for reducing CO2 emissions to 120 grams per kilometer by 2012 on the grounds that they would harm that country’s powerful automobiles, unlike the case for smaller, more efficient cars produced by France and Italy. In a political compromise, auto manufacturers will voluntarily comply with the goal they committed themselves to back in 1998, which involved cutting emissions to 140 grams per kilometer by 2008. Experts are pessimistic about prospects for achieving such cuts.


Over the past month, an intense debate has been carried out in Brussels between those who support legislation on this matter – a position backed by Stavros Dimas, the European environment commissioner – and those who want to continue along the current path. The latter group supports a voluntary compromise for cutting emissions along with other measures such as the development of alternative fuels and related infrastructure. This position is supported by Günter Verheugen, the German official responsible for European industrial policy. Verheugen is trying to defend the interests of his country’s powerful industry. France and Italy, whose automakers manufacture cars that consume less fuel, are both quietly supporting the position of the Greek commissioner [Dimas]. Such a regulation would not hurt Spain because its plants specialize in making cars with smaller engines.


Compliance Goals


Dimas wants to force companies to restrict their emissions to 120 grams of carbon dioxide per kilometer. According to some studies, the average price of a car would rise by 2,450 euros as a result.


The debate has been so intense that Brussels announced on January 29 that it would delay publishing its report on the proposal. Imposing carbon dioxide cuts that vary according to the size of the car promises to be a move that creates divisions among the various member-states of the E.U.


Günter Verheugen, vice-president of the Commission, is the man responsible for its industrial policy. Verheugen issued assurances that Spain and the United Kingdom would be the countries harmed most by this regulation because their markets specialize in small and midsize vehicles. However, experts disagree with that notion. “The Spanish market is characterized by the manufacture of small cars and, as a result, it is much simpler to cut emissions,” says Juan Antonio Moral, professor at the Instituto de Empresa. The problem, he adds, is “at company headquarters. How much this regulation affects Spain will depend on internal policies pursued by companies. However, it is possible to cut down to 120 grams.” Jordi Brunat, a professor at ESADE, notes that costs are the key consideration for subsidiaries of major manufacturers in Spain. Brunat is convinced that this dispute will not affect the Spanish market. “The center for decision making is at the headquarters in France, Germany… .This decision by the European Commission will have neither a positive nor a negative impact on Spain. Manufacturers will move into the Spanish market [or will not], depending on their productivity. If you have to invest in order to achieve a goal of 120 grams per kilometer, then the regulation will have an impact. But this sort of decision is purely economic.”


The problem today is that cars are very heavy and they carry very few people. “The motor has a lot of work to do. If there were public transportation that could complement private transportation, it would cut down carbon dioxide emissions a lot,” notes Brunat. He adds that manufacturers are not going to take on any additional costs that wind up lowering their profitability. “It is a question of competitiveness. This is an economic phenomenon where you have to look for a balance between the public interest and private initiative.”


Verheugen admitted that the new law will raise the cost of manufacturing new cars but he gave no numbers about those costs. However, he assured people that the savings that derive from greater fuel efficiency would [eventually] compensate for that added expenditure.


With this plan by Brussels, Europe will take a “leading” position in the battle with Japan and the United States, said Verheugen. This will permit European industry “to manufacture cars that are safer, better and cleaner.”


Differentiating Cars by Size


Some experts believe that the European Commission’s decision to differentiate between cars on the basis of their size will benefit German manufacturers, whose initial opposition to the reductions meant that the Brussels proposal had to be delayed for several weeks. According to Brunat, “The really sad thing is that Germany is defending its industry and doing what is best for its own car industry. The European Union must commit itself to a very aggressive regulation that is cutting edge. German opposition stems from short-term, local concerns. The European Union must find a solution for the 27 [member states], and not focus on worrying about the big manufacturers.” He believes that if the proposal goes into effect within six months, “it will differentiate cars by size in order to benefit German manufacturers.”


One country that could be more affected by the regulation is France. “France produces cars with smaller motors that are powered by diesel fuel, and use 20% less carbon dioxide than gasoline-powered cars,” explain Brunat. For Moral, the future is in “HCCI (homogeneous charge compression ignition) motors, which use a mix that has little fuel but is rich in air; however, it is not yet very feasible.” Long term, Moral believes that the solution for manufacturers is in “bio-fuels, new motors and hybrids. The goal is for combustion motors to run at a steady speed,” he adds.


Propelled by Hydrogen


So far, hydrogen is the only element that might one day dethrone hydrocarbons from its leading position in the auto world. Other options – bio-fuels, electric cars, liquefied petroleum gas — are complementary solutions but it is unlikely that they will ever replace petroleum. Experts forecast that by 2020 hydrogen cars are going to be the most commercialized [of these new, alternative vehicles]. Moral foresees a much longer-term process unfolding. “The problem is that hydrogen is not a source of energy, and you have to make it.” For Brunat, hydrogen is “the fuel of choice because of its high energy value, and its almost non-existent impact on pollution and global warming.” He adds that “Although there are cheap sources of primary energy, hydrogen is one of the first options as a source of intermediate energy.”


The advantages hydrogen offers are that “in fuel cell technology, it does not create any emissions of water and there is only a minimal loss of energy through the release of heat, which means that it has greater efficiency,” notes Brunat. What are the challenges? Some experts agree that “hydrogen is not found in nature, and the process for obtaining it through the electrolysis of water is very intensive in energy consumption,” says Brunat. “In addition, the storage tanks must be very hard and heavy. The molecule of gaseous hydrogen is so small that it requires very advanced technologies for avoiding leaks. We should also not forget that hydrogen gas reacts so violently with oxygen that it can be considered an explosive.”


Experts say that the key to ending dependency on a sole source of energy is to cut consumption to a reasonable level and set up a balanced energy system. People need to have more information about the implications of each technology. At the moment, people have only a very partial, slanted view, perceiving natural gas as clean energy; understanding the risks of nuclear energy, the good things about bio-fuels, and the potential of wind power…” says Brunat. The broadest consensus among informed sources is not about reducing dependence on fossil fuels “but about practical ways to eliminate it rapidly. This is something that is very difficult for political leaders who deal only with very short-term agendas.”


“The ideal thing, when it comes to hydrogen, would be for each of us to have solar panels in our house so that we manufacture our own energy and we replenish our hydrogen car,” suggests Brunat. Such a situation is far removed from reality. “If we stopped emitting carbon dioxide today, it would take a lot of time for us to recover. That is not happening because we continue to emit pollutants. It is a vicious circle, in which society consumes more and more as it develops [its economy]. Within 200 years, we will all be dismissed [by the population] for having acted irresponsibly. We have to find senior people who can act as mentors for ending this reality.”


Forging a Compromise


As a result of political compromise, it is clear that automakers will not voluntarily reach the goal they committed themselves to in 1998 — namely to cut emissions to 140 grams per kilometer by 2008. The manufacturers made that commitment through Acea, the industry trade organization. “In 1999, manufacturers saw that the European Commission wanted to cut consumption to 140 grams per kilometer by 2008 and to 120 grams by 2015. Things were moving along well until there was a problem stemming from the fact that demand for cars kept growing. So manufacturers backed off from their goal,” explains Moral. “Cars are more and more powerful; they weigh more and they are getting further way from 140 grams per kilometer.”


The agreement, which is voluntary, has permitted auto emissions to be cut to 161 grams. That’s a 13% cut, comparing 2004 with 1994. However, the new goal is far from being achieved in Germany, and all indicators are that German industry will not achieve it. Meanwhile, French automakers Peugeot, Renault, and Citroën along with Italy’s Fiat, are approaching that goal. In addition to this compromise, Brussels approved norms that limit emissions of contaminating particles.


Brunat believes that no one wants to attack this problem head on. It is very hard to achieve a solid consensus because there is a wide range of conflicting interests “and the people who make decisions take such a short-term view; they do not think about long-term benefits. That’s why I am very pessimistic that they will try to do something.”