Ford Issues Climate Change Report
20 December 2005
|From BICC: Ford has room to improve on its fuel economy to mitigate CO2 emissions.|
Ford Motor has issued a report directly addressing the business implications of climate change, carbon dioxide emissions and global energy concerns.
The report also outlines some of the resulting product directions Ford will take, including greater use of direct injection and downsized gasoline engines, diesel micro-hybrids in Europe, and a greater use of hybrid and non-hybrid “PowerPacks”—engine and transmission modules—across its brands.
Although other automakers (Ford included) issue environmental and sustainability reports, with this report—the Business Impact of Climate Change (BICC)—Ford becomes the first openly to outline and to discuss its view of the different factors contributing to the complexity of the climate change problem as well as potential solutions.
A shareholder resolution filed in November 2004 by the Interfaith Center on Corporate Responsibility (ICCR), Ceres (a coalition of investors and environmental groups and founder of the Investor Network on Climate Risk) and others was subsequently withdrawn in March 2005 when Ford announced it would publish this report.
Concerns about climate change—along with growing constraints on the use and availability of carbon-based fuels—affect our operations, our customers, our investors and our communities. The issue warrants precautionary, prudent and early actions to enhance our competitiveness and protect our profitability in an increasingly carbon-constrained economy.
The relevant long-term challenge facing society today and in the future is to stabilize the concentration of GHGs in the atmosphere at a level that prevents dangerous human-induced interference with the climate system.
...while we are proud of our accomplishment in reducing CO2 from our operations [15% reduction since 2000] and have benefited from the energy cost savings that go with it, we recognize that only about 10 percent of the lifetime GHG emissions from a vehicle occur during its production. The remaining 90 percent attributed to each vehicle is emitted when the customer is using it—when it burns gasoline or diesel fuel from fossil sources.
[...]This means that addressing lifecycle GHG emissions depends on engaging consumers on their purchase decisions, driving behavior and their choice of fuels.
[...]Finally, early, affordable steps to reduce GHG emissions and improve fuel efficiency may delay the need for drastic and costly reductions later. Lack of agreement on long term solutions cannot be used as an excuse to avoid near term actions.—BICC
Ford sees the opportunities to reduce in-use GHG emissions defined (or limited) by three inter-related factors:
The embedded carbon content of the fuel available to consumers.
The carbon efficiency of vehicles.
The purchase decisions and driving behavior of customers, including vehicle miles traveled.
Ford notes that because customer and policy priorities differ around the world, its approaches to markets vary accordingly. Europe’s regulatory focus on CO2 reduction, for example, has Ford participating in the ACEA effort to voluntarily reduce CO2 emissions. (The ACEA effort seems likely to fail, and Europe is gearing up for more stringent mandated reductions. Earlier post.)
Ford links its investment in hybrid production in the US to a (slowly) growing consumer demand for more fuel-efficient vehicles, and links its support for an ethanol infrastructure in the US (earlier post) to calls for less dependence on imported oil.
Each of these initiatives results in lower CO2 emissions, but emerges from different market and policy priorities.
In an appendix at the end of the report, Ford addresses the contradiction inherent in its support for the court challenge against California’s GHG regulations by embracing the industry argument that the regulations amount to state-level fuel-efficiency regulations.
Ford supports the reduction of vehicle CO2 emissions and is working aggressively toward the development and implementation of real, market-based solutions. However, the entire automobile industry is united in opposition to the AB 1493 rules because they constitute state fuel economy standards.
California, of course, disagrees.
Ford views its approach to climate change through three primary business drivers:
Market share. “Over the past decade, the US market shows that few customers choose cars based on specific concerns about climate change and GHG emissions. Even fewer are willing to pay the incremental cost of ‘green’ automotive technologies or accept trade offs of other attributes (safety, performance, features, styling). However recent research indicates that this might be changing.”
Shareholder Value. “We see early signs that investors and analysts are paying increasing attention to the impact of climate change on the companies and industries they cover.”
Ford also notes four main characteristics of the global automotive bear significantly on how it responds to climate change:
A long product lifecycle.
Conflicting regulatory, market and technological signals. The picture varies by geography, market segment, and demographic profile.
The Well-to-Wheels measurement of the GHG footprint of the in-use phase of light duty vehicles. The upstream fuel production process also needs to be factored in. This becomes much more of an issue as synthetic fuels, some biofuels, and some sources of hydrogen enter the picture.
Long product development times and major capital investments. “The long time frame and heavy financial commitment...highlight the need for more certainty—stable and predictable pricing signals and policy frameworks.”
Product. On the product side, Ford has already announced its plans to expand its capacity to build hybrid electric vehicles to 250,000 units per year by 2010, as well as a commitment on flexible fuel vehicles.
Ford says that it will expand its application of existing technologies that deliver fuel economy benefits including variable valve timing, fuel shut off, direct injection gasoline engines, clean diesel, and six-speed transmissions.
The company is also increasing its investment in a portfolio of technologies that deliver improved fuel economy and lower GHG emissions, including:
Weight stabilization and reduction
Gasoline engine downsizing, combined with Direct Injection Spark Ignition (DISI) and pressure charging
Hybrid gasoline powerpacks, shared among the brands
Clean diesels and the technology to allow them to run on biodiesel above 5% blends
In Europe, diesels with partial (micro) hybrid technologies such as engine stop-start, regenerative braking, parallel lithium-ion batteries or super-capacitors.
Hydrogen Internal Combustion Engine (ICE) demonstration fleets
Hydrogen fuel cell research and demonstration fleets
At the portfolio level, the mix of vehicles we sell will continue to be dictated by the marketplace, but we believe that the trend towards more fuel efficient vehicles, such as cross-over vehicles and smaller SUVs will continue. In addition, by utilizing common platforms, we will be able to offer greater fuel economy across a wide range of product designs. Specifically, we will be better able to apply weight reductions achieved in one model to other models without compromising safety, quality or performance.
Correction. In the prior version of this piece, I had noted that Ford did not address its support of the court challenge to the California greenhouse gas regulations. That was incorrect; the last page of the report is an appendix stating the company’s stance on the issue. The piece above is corrected to reflect that. —MM
Um anyone else notice that suvs of 2006 get BETTER milage then minicompacts and subcompacts and minvans?
Or for that matter that midseize cars are better then compact and that compact are better by far then sub and minicompact cars?
Or that the average large ford car gets better gas milage then thier midzise compact or mini cars?
Odd aint it?
Posted by: wintermane | 20 December 2005 at 11:32 AM
wintermane - this is for US Ford cars only. Also the SUV with 30mpg I assume is the hybrid model that is in very limited production.
Cars like the Honda Jazz (Fit) - 40mpg Combined, and Honda Civic - 32mpg combined easily beat these cars. Cars you don't even get like the VW Golf diesel get 40.5mpg
Posted by: Ender | 20 December 2005 at 04:24 PM
Ya but still what the hell car is being sold as a minicompact thats getting 12 mpg? Something is.
Posted by: wintermane | 20 December 2005 at 08:10 PM
I find it amazing that Ford spends all of this time and money to issue reports based upon this still unproved notion that climate change is upon us, and that we are going to have all sorts of new energy sources that in reality are nothing more than thermodynamic sinks, all the while this once great company is speeding towards inevitable financial collapse. However, this is not unexpected as the current Henry Ford seems to be pale in comparison to Henry Ford I in that he has little of the business sense of the founder of the Ford Motor Company. In essence, a spoilt rich brat.
In a few years Ford will be forced against the wall and I suspect there will be little tolerance for such things. Ford is bleeding money, as I believe they make money on only 3 basic lines of vehicles:
1) F150 Pickups
3) Panther Platform (Crown Victoria/Grand Marquis/Lincoln Towncar)
Once Ford returns to a Depression-era footing (where each division makes only one or two basic vehicles at most), I doubt we will see anymore reports as those not involved in the actual production of cars will likely be in the unemployment line.
Posted by: Dave Zeller | 23 December 2005 at 09:57 AM
Actually, I have to say that the reason I think Ford is being dumb about this is the exact opposite. They've already proven, in the minds of the people who care about climate change, that Ford doesn't share their concerns. For that matter, they've trained the public not to think of them when it comes to cars; all the commercials are about Ford trucks. Nobody will buy this car because people who are interested in this kind of car don't trust Ford.
(By the way, the only reason anybody can say "Climate change is not scientifically proven" is because the only way to completely and unambiguously scientifically prove that the climate will change is to wait for it to change. Even then, people who don't want to believe can always claim that there was something else contributing to it, and without a few other identical Earths to experiment with you can't do anything about it. Either we work with what we've got - a good model that does seem to work - or we shut our eyes and say, "What I don't know can't hurt me." Of course, it didn't work so well for the blind guy crossing the street, but who's to say it won't work for us?)
Posted by: Zaz | 10 January 2006 at 07:54 AM