Market, Policy and Technological Framework – Europe

The EU is a party to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, and has agreed to reduce greenhouse gas emissions by 8 percent below 1990 levels during the 2008–2012 period. In 1998, the EU agreed to support an environmental agreement with ACEA (the European Automobile Manufacturers' Association, of which Ford is a member) on carbon dioxide emission reductions from new passenger cars. The ACEA Agreement established an emissions target of 140 grams of carbon dioxide per kilometer ("g/km") for the average of new cars sold in the EU by the ACEA's members in 2008. This corresponds to a 25 percent reduction in average carbon dioxide emissions compared to 1995. To date, the industry has made good progress, meeting an interim target for 2003 (165–170 g/km); however, it is now apparent that the industry will not achieve the 140 g/km target for the 2008 model year due to a number of factors, including consumer demand and the challenges associated with implementing various fuel-saving technologies.

In 2005, ACEA and the European Commission reviewed the potential for additional carbon dioxide reductions, with the goal of achieving the EU's objective of 120 g/km by 2012. The discussions have advanced the concept of an integrated approach to further reductions, involving the oil industry and other sectors. In 2007, the discussions suggested a 120 g/km overall target, with a vehicle target of 130 g/km and complementary measures making up the other 10 g/km in emissions reductions. In December 2007, the European Commission issued a proposal to regulate vehicle carbon dioxide beginning in 2012 at a fleet average of 130 g/km, using a sliding scale based on vehicle weight. This provides different targets for each manufacturer based on their respective fleets of vehicles, weight and carbon dioxide output. The proposal also establishes a penalty system as a provision for pooling agreements to share or minimize the burden. This proposal is likely to be finalized by the European Parliament in 2008 or 2009.

Ford will play its part in achieving the required mandatory objective for vehicle CO2 emissions that will eventually be set by the EU. However, while the European auto industry is fully committed to continue reducing CO2 emissions from cars and supports the (overall) EU objective of reaching a level of 120 g/km, the industry believes that the EU Commission's proposal does not offer the proclaimed balanced framework to cut CO2 emissions in the most effective way and to safeguard competitiveness and growth. Only a truly broad and integrated approach involving all stakeholders – transport industries, fuel suppliers, infrastructure providers, consumers and government – can result in larger and more cost-effective CO2 emission reductions from road transport compared to focusing almost exclusively on vehicle technology. The industry will continue to communicate and clarify this message and trusts that the Council and the European Parliament will fully engage in an open debate and reconsider the Commission's strategy.