Operational Energy and Greenhouse Gas Emissions

Ford has been a leader in facilities-related greenhouse gas (GHG) and energy-use reductions, public reporting of our GHG emissions and participation in GHG-reduction and -trading programs.

In 2010, we adopted a goal to reduce our facility carbon dioxide (CO₂) emissions by 30 percent by 2025 on a per-vehicle basis. This CO₂ goal, which is also based on our stabilization commitment, complements our longstanding facility energy-use reduction targets. The U.S. Environmental Protection Agency (EPA) awarded Ford a Goal Setting Certificate for this strategy at its inaugural Climate Leadership Awards Ceremony.

GHG Reporting Initiatives

• Ford is officially “Climate Registered” after publishing its complete North American carbon inventory for 2010 with The Climate Registry (TCR), a voluntary carbon disclosure project that links several state-sponsored GHG emissions-reporting efforts, including the California Climate Action Registry and the Eastern Climate Registry. Ford was the first automaker to join TCR and is one of only two automakers to be officially Climate Registered. As TCR members, we must demonstrate environmental stewardship by voluntarily committing to measure, independently verify and publicly report GHG emissions on an annual basis using the TCR’s General Reporting Protocol.
• We were the first automaker to participate in GHG reporting initiatives in China, Australia, the Philippines and Mexico. Ford’s first report was used as the template for subsequent reporting in Mexico’s program.
• We voluntarily report GHG emissions in the U.S., Canada, Argentina, Australia, Brazil, China, the Philippines and Taiwan.
• Since 2005, GHG emissions from our European manufacturing facilities have been regulated through the EU Emission Trading Scheme. These regulations apply to five Ford facilities in the UK, Belgium and Spain.
• The EPA issued a final rule on September 22, 2009, establishing a national GHG reporting system. Facilities with production processes that fall into certain industrial source categories, or that contain boilers and process heaters and emit 25,000 or more metric tons per year of GHGs, are required to submit annual GHG emission reports to the EPA. Facilities subject to the rule were required to begin collecting data as of January 1, 2010, and to submit an annual report for calendar year 2010 by September 30, 2011. Many of our facilities in the U.S. were subject to the reporting requirements and submitted reports as required. Our proactive approach and early action on GHG reporting globally have prepared us for this new requirement.

Our participation in these reporting, emissions-reduction and trading schemes has played an important role in accelerating our facilities’ GHG emissions-reduction activities.

Performance

Ford reduced its overall global energy consumption by 42.4 percent in 2011 compared to 2000. For 2011 alone, we reduced overall global energy consumption by 3.6 percent compared to 2010 and energy consumption per vehicle produced by 10 percent compared to 2010. Also in 2011, we improved energy efficiency in our North American operations by 2.6 percent indexed against our 2010 baseline year. This energy efficiency index is adjusted for typical variances in production and weather and is tracked against the baseline year to measure cumulative improvements in energy efficiency.

We reduced our facilities-related CO₂ emissions by approximately 48 percent, or 4.5 million metric tons, from 2000 to 2011. During this same period, we reduced facilities-related CO₂ emissions per vehicle by 36.5 percent. Our total CO₂ emissions decreased from 2010 to 2011 by more than 2.7 percent, while total CO₂ emissions per vehicle decreased by 7.5 percent during that period.

We set – and exceeded – a target to reduce our North American facility GHG emissions by 6 percent between 2000 and 2010 as part of our Chicago Climate Exchange commitment. This program ended in 2011. The Company has also committed to reduce U.S. facility emissions by 10 percent per vehicle produced between 2002 and 2012, as part of an Alliance of Automobile Manufacturers program.

Please see the Climate Change and the Environment data section for more detail.

The EPA again recognized Ford’s energy-efficiency achievements in North America by awarding us the 2011 Energy Star Partner of the Year Sustained Excellence Award, which recognizes Ford’s continued leadership and commitment to protecting the environment through energy efficiency. This is Ford’s sixth consecutive year winning this prestigious award. The Energy Star Partner of the Year award requires organizations to demonstrate proficiency through the management of projects and programs, data collection and analysis and communication actions, including community outreach and active participation in Energy Star industry forums. The Sustained Excellence level is achieved by illustrating notably consistent actions and continued improvements. Among the achievements recognized by the award is a 40 percent improvement in the energy efficiency of Ford’s U.S. facilities since 2000, equivalent to the amount of energy consumed by 110,000 homes.

Energy Management Initiatives

Ford has achieved these efficiency improvements and energy-use reductions using the variety of initiatives described in this section. We regularly look for new technologies, approaches to the identification and definition of potential projects, funding mechanisms and means to implement plant energy-efficiency projects.

Since 2007, we have been using a utility metering and monitoring system to collect electricity and natural gas consumption data for all Ford plants in North America. We use this near-real-time information to create energy-use profiles for these plants and to improve decisions about nonproduction shutdowns and load shedding, which involves shutting down certain pre-arranged electric loads or devices when we reach an upper threshold of electric usage. We are currently expanding that system to other utilities and to provide greater analytic abilities.

During 2010, we began planning to expand this system to a global scale and to provide energy-consumption data down to the departmental level. Our Kansas City Assembly Plant and Cologne Assembly Plant served as the pilot sites for this Global Departmental Level Metering (GDLM) effort. The system is now implemented at these two sites, and they are in their final stages of testing. We are now working on the global rollout of this approach. Linked with production, other data sets and access to maintenance and control systems, this will greatly improve data analysis and the time required to make system changes.

Ford continues to use energy performance contracting as a financing tool to upgrade and replace infrastructure at its plants, commercial buildings and research facilities. Through these contracts, Ford partners with suppliers to replace inefficient equipment, funding the capital investment over time through energy savings. Projects have been implemented to upgrade lighting systems, paint-booth process equipment and compressed air systems, and to significantly reduce the use of steam in our manufacturing facilities. Since 2000, Ford has invested more than $226 million in plant and facility energy-efficiency upgrades.

During 2010 and 2011, for example, we packaged 17 buildings in the Dearborn, Michigan, area into one performance contract to upgrade to more-efficient lighting. The project reduced energy use by more than 18.2 million kilowatt-hours – enough to power 1,648 U.S. homes for a year. The project also eliminated more than 11,000 metric tons of CO₂ emissions and cut annual costs by more than $1.3 million. In 2012, we began exploring another lighting performance contract for other facilities in the Dearborn area and additional opportunities at several manufacturing sites. Opportunities are also being explored for updating and/or commonizing building automation controls and mechanical systems, using this approach. We are investigating the replication of performance contracting for energy reduction for other regions of the world.

In addition, we are replicating Ford’s state-of-the-art paint process that eliminates the need for a stand-alone primer application and a curing oven system. This technology, called “Three-Wet,” reduces CO₂ emissions by up to 40 percent and volatile organic compound emissions by 10 percent compared to either conventional high-solids solvent-borne or waterborne systems. In addition to these environmental benefits, this process maintains industry-leading quality and reduces costs. For example, Three-Wet reduces paint processing time by 20 to 25 percent, which correlates to a significant cost reduction. The paint formulation contains new polymers and other additives to prevent running and sagging during the application and curing processes. Ford’s laboratory tests show that this high-solids, solvent-borne paint provides better long-term resistance to chips and scratches than water-borne paint systems. The process is delivering reduced costs per vehicle because it allows the elimination of a stand-alone primer spray booth and oven, and the attendant energy costs required to run them.

Ford began implementing this technology in 2007 in the U.S. Since then, we have expanded implementation across our global operations when we build new facilities or refurbish existing ones.

We are continuing implementation of a new parts washing system developed in partnership with our supplier ABB Robotics. Conventional parts washing systems remove dirt chemically by spraying parts with high volumes of water and detergent at low pressure. The new system, in contrast, cleans parts mechanically by moving them in front of specialized high-pressure nozzles with a robotic arm. This new robotics-based system represents a significant leap forward in energy efficiency that also improves quality, flexibility, productivity and cost. It saves energy in part because, unlike previous systems, it does not require any heat. It also uses a much smaller water pump. We are now using this technology at plants in the U.S., Romania and Germany. We have incorporated the technology as standard for all engine and transmission final wash applications, ensuring that the energy and cost savings will be realized by all future vehicle programs. We intend to expand the use of this technology in future programs in North America and are pursuing the use of this technology in China, India and Brazil.

We are also continuing the development of a system, called “fumes to fuel,” that reduces the CO₂ emissions associated with our paint shop emissions-treatment process. In traditional paint shop emissions treatment, the volatile organic compound (VOC) emissions from solvent-based paints are captured and destroyed in a regenerative thermal oxidizer using natural gas as a fuel. In our “fumes-to-fuel” system, a paint emission concentrator concentrates VOC emissions by approximately 2,000:1. In this super-concentrated state, the VOCs themselves can be burned as a fuel source, significantly reducing the amount of natural gas necessary to destroy them. By reducing the need for natural gas, the paint emission concentrator system has the potential to reduce CO₂ emissions by 80 to 85 percent, compared to traditional abatement equipment. We are also investigating opportunities to use the super-concentrated VOCs as a fuel source for both an internal combustion engine and a fuel cell, which could be used to provide additional power to the paint shop. For more information on the fumes-to-fuel system, please see the Facilities-Related Emissions section.

Other efforts to improve the energy efficiency of Ford’s plant operations include:

• Aggressively curtailing energy use during nonproduction periods
• Updating facility lighting systems by replacing inefficient high-intensity discharge fixtures with up-to-date fluorescent lights and control systems
• Installing automated control systems on plant powerhouses and wastewater treatment equipment to increase energy and process efficiency