By: Chris Miller
Source: Aftermarket Business
Good news for the auto industry: we’re not the biggest polluters out there, according to a recent study that measures a variety of industries.
Compiled by public health and safety organization NSF International and data provider Trucost Plc, the report, “Carbon Emissions – Measuring the Risks,” finds that the auto industry falls well below other sectors — like retail, industrial goods and services and chemicals — when it comes to the environmental impact and future cost of carbon based emissions.
This is especially relevant for suppliers, as the manufacturing process itself has been reputed to cause a sizeable increase in emissions. Carbon’s effect on the industry is prominent for many leading manufacturers.
“Right now, green is top of mind, especially for the new administration in the U.S.,” says Frank Ordoñez, president of Delphi Product & Service Solutions. “Tighter regulations of carbon dioxide emissions and fuel-efficiency regulations are imminent, which is putting manufacturers under intense pressure to make green a reality on the showroom floor. And despite all of the recent achievements in powertrain technology, there is no ‘one size fits all’ solution, which means we’ll be seeing a variety of technologies showing up in the aftermarket.”
By delving into clean diesel (which Ordoñez notes can deliver up to 40 percent better fuel economy than gasoline and can reduce emissions by about 20 percent) and compressed natural gas, among other systems, manufacturers can focus on addressing governmental mandates while advancing vehicle technology.
“CNG (compressed natural gas) will gain popularity since it is a cheaper, cleaner-burning fuel than standard gasoline that can achieve up to 90 percent in emissions reduction and 40 percent less cost than gasoline vehicles,” Ordoñez adds. “It is also available in the U.S. The technology is not new, but the proper infrastructure is necessary to support its widespread use here. More than 70 percent of U.S. homes have access to natural gas, and with a simple compressor unit installed in the garage, drivers could refuel overnight.”
Manufacturer DENSO also has made a vow to develop eco-friendly products, like diesel particulate filters and a starter generator, which starts the engine and generates electricity that’s used to power the variety of other parts in a vehicle.
Additionally, the company has a plan that aims to reduce the environmental impact of its global production. Other companies, like CARDONE, have long maintained the environmental benefits of remanufacturing products, which conserves carbon dioxide and overall energy use.
Manufacturing is the single leading source of energy-related carbon dioxide emissions in the U.S., according to a report from the U.S. Energy Information Administration (EIA).
But when taking a wider view of our impact on greenhouse gases, carbon dioxide intensity of energy use has remained at even levels, especially when compared to the economic output of the country. The EIA report,
“Emissions of greenhouse gases in the United States,” clarifies: “It is the use of less energy per unit of economic output, not the use of low-carbon fuels, that has kept the growth rate of carbon dioxide emissions equal to about half the growth rate of GDP.”
So, as people tend to use more energy services such as travel, this activity can be offset by more energy-efficient vehicles, appliances and other consumer products.
The foundation for the NSF study is a current government proposal to place a price tag on every metric ton of carbon produced. The industrial goods industry, which emits the highest volume of direct greenhouse gas emissions from operations, could also face the highest increase in costs due to the high amount of carbon-related prices that would be passed along the supply chain.
The food & beverage sector, which has the highest level of emissions from first-tier suppliers, also has the second highest level of “carbon intensity,” a figure devised that measures metric tons of carbon relative to revenue, the report states, adding the chemicals sector has the greatest carbon intensity range.
The automobiles and parts industry, in contrast, ranks third from last in carbon intensity range, according to the report. The NSF study’s authors analyzed an array of S&P 500 companies, including Ford, GM, Genuine Parts, Harley-Davidson, Goodyear Tire and Johnson Controls in the automotive and transportation sector.
Another interesting finding is the importance of factors such as water, as water is three times more significant than greenhouse gas emissions to the environmental impact of the food & beverage sector. Water also has an impact in the chemicals, personal household goods and retail industries. The environmental impact of water usage by companies in general cannot be understated, according to this study’s authors.
The NSF study bases its cost and effect scenario around a proposed carbon credits system, wherein more energy-efficient companies can sell carbon credits to their less-efficient competitors.
Under a current government cap-and-trade proposal, the projected carbon price in 2011 is $15 per metric ton and $26 per metric ton in 2019, which would equate to 5.5 percent and 9.6 percent of earnings, respectively, for those companies in the chemicals sector.
The cap-and-trade system — where a cap is set on carbon emissions, and companies buy and sell permits to emit CO2 — is expected to be introduced in 2012 under a current draft of the American Clean Energy and Security Act of 2009. Also known as the Waxman-Markey Bill, it is expected to go before the Senate for a vote this fall.
Some say cap-and-trade will amount to nothing more than one of the highest U.S. taxes in history, which could reveal itself as a cost increase in manufactured goods across-the-board. The Heritage Foundation found that Waxman-Markey would cost $1,870 annually for a family of four in 2020, and $6,800 for a family of four by 2035.
The cost to companies would be high as well, the NSF report states. However cap-and-trade shakes out, those environmentally conscious companies will be the ones who win out, according to the report, which adds that those companies that are more “carbon-efficient” than competitors could gain an advantage in upcoming years.