COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT - Implementing the Community Strategy to Reduce CO2 Emissions from Cars - First annual report on the effectiveness of the strategy

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT - Implementing the Community Strategy to Reduce CO2 Emissions from Cars - First annual report on the effectiveness of the strategy

I. Introduction

The Community's strategy to reduce CO2 emissions from passenger cars and improve fuel economy [1] was endorsed by the Council in 1996 [2]. It aims at achieving an average CO2 emission figure for new passenger cars of 120 g CO2/km by 2005, and 2010 at the latest.

[1] COM (1995) 689 final

[2] Council conclusions of 25.6.1996

It is based on three main pillars:

1. Commitments of the automobile industry on fuel economy improvements, aiming at achieving an average CO2 emission figure for new passenger cars of 140 g CO2/km by 2008/2009.

2. Fuel-economy labelling of cars [3] which aims at ensuring that information relating to the fuel economy and CO2 emissions of new passenger cars offered for sale or lease in the Community is made available to consumers in order to enable consumers to make an informed choice [4].

[3] Directive 1999/94/EC relating to the availability of consumer information on fuel economy and CO2 emissions in respect of the marketing of new passenger cars

[4] The "Labelling" Directive has been adopted on 13 December 1999; the implementation by Member States is required by 18 January 2001. In June 2000 the Committee foreseen under Article 10 has been established with the objective to formally start work on the reporting format mentioned in Article 9. In addition the Commission services started work on the establishment of an Internet site on fuel consumption and CO2 emissions from passenger cars marketed within the EU. It is planned to establish this site in close co-operation with the manufacturers concerned.

3. The promotion of car fuel efficiency by fiscal measures. In this respect the Environment Council in October 1999 [5] reiterated the need to study the possibility of establishing a reference framework for fiscal incentives [6].

[5] Council conclusions of 06.10.1999

[6] The Commission has started work on fiscal framework measures. For this purpose it established an "Expert Group on Fiscal Framework Measures". The Expert Group's overall objective is to assist the Commission in its work on fiscal framework measures to reduce CO2 emissions from passenger cars within a co-operative effort of all relevant stakeholders such as representatives of the Commission, the Member States, industry and the NGO community. In addition the Commission started technical discussions on the incorporation of the "Enhanced Environmentally Friendly Vehicle" concept into the passenger cars legislation, including fuel-consumption values.

These pillars are supplemented by research activities.

The Council invited the Commission to report about the effectiveness of the strategy regularly [7]. In order to establish a detailed and fully transparent monitoring the Commission intends to submit reports on an annual basis, meeting at the same time related reporting requests expressed by Council [8]. The European Parliament should be informed as well.

[7] Council conclusion of 25.06.1996

[8] Council conclusions of 06.10.1998 and 06.10.1999

This first report covers the progress made with regard to the commitments made by the automobile industry. Future reports will address as well the other parts of the strategy in more detail, including the requirements laid down in Decision 1753/2000/EC [9] as soon as these parts of the strategy are implemented, or significant progress is made. The Commission believes that such a consolidated reporting will allow all interested parties to follow the implementation of the Community strategy in the most efficient way [10].

[9] Decision 1753/2000/EC of the European Parliament and of the Council establishing a scheme to monitor the average specific emissions of CO2 from new passenger cars

[10] Information concerning the Community strategy can also be found on the web site: http://www.cc.cec:8082/comm/environment/co2/co2_home.htm

II. Progress made with regard to the commitments made by the automobile industry

The commitments made by the automotive industries provide the major contribution to the Community's strategy to reduce CO2 emissions from passenger cars and improve fuel economy.

After submission of the commitment of the European automobile industry (European Automobile Manufacturers Association - ACEA [11]) in 1998 [12], equivalent commitments were made in 1999 by the Japanese (Japan Automobile Manufacturers Association - JAMA [13]) and Korean (Korea Automobile Manufacturers Association - KAMA [14]) automobile industries [15].

[11] European car manufacturers in ACEA: BMW AG, DaimlerChrysler AG, Fiat S.p.A., Ford of Europe Inc., General Motors Europe AG, Dr. Ing. H.c.F. Porsche AG, PSA Peugeot Citroën, Renault SA, Volkswagen AG, AB Volvo

[12] COM (1998) 495 final

[13] Japanese car manufacturers in JAMA: Daihatsu, Fuji Heavy Industries (Subaru), Honda, Isuzu, Mazda, Nissan, Mitsubishi, Suzuki, Toyota

[14] Korean car manufacturers in KAMA: Daewoo Motor Co. Ltd., Hyundai Motor Company, Kia Motors Corporation

[15] COM (1999) 446 final

All three commitments constitute equivalent efforts having the following main features:

1. The CO2 emission objective: All commitments contain the same quantified CO2 emission objective for the average of new passenger cars sold in the European Union, i.e. 140 g CO2/km (to be achieved by 2009 by JAMA and KAMA and by 2008 by ACEA).

2. Means of achievement: ACEA, JAMA and KAMA commit themselves to achieving the CO2 target mainly by technological developments and related market changes.

In addition "estimated target ranges" for the average new car CO2 emissions are provided for 2003/2004 [16]. These target ranges, however, are indicative and do not represent an additional commitment by the associations. Nevertheless the Commission attaches special importance to these intermediate targets as a basis for verifying whether the commitments are effective.

[16] For ACEA 165 - 170 g CO2/km in 2003; for JAMA 165 - 175 g CO2 /km in 2003; for KAMA 165 - 170 g CO2/km in 2004.

The commitments of ACEA, JAMA and KAMA must be subject to a thorough, transparent and fair monitoring scheme. For this purpose they are complemented by the joint monitoring mechanism with the associations and the future Community monitoring system [17]. Every year "Joint Reports", one with each of the associations, are drafted and agreed between the parties, and attached to the Commission's Communication to Council and European Parliament (see Annexes).

[17] Decision 1753/2000/EC of the European Parliament and of the Council establishing a scheme to monitor the average specific emissions of CO2 from new passenger cars.

In order to guarantee transparency the Commission services and the three associations agreed on the format of the "Joint Report". The layout of these reports is therefore quite similar and so is the detail of the underlying data that has been provided by the respective association. The associations' data sources are considered as very reliable, and have been used because the official EU CO2 monitoring system will not become operational until 2001/2. Once available this system will allow official emissions data to be used [18].

[18] Article 8 of Decision 1753/2000/EC requires that the monitoring system from the year 2003 onward shall serve as the basis for the voluntary obligations agreed between the Commission and the automobile industry.

The main findings for the reporting period 1995 to 1999 are:

All associations reduced the average specific CO2 emissions of their cars sold on the EU market. ACEA and JAMA show good progress, KAMA is lagging behind (see Table 1).

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Table 1: Average specific CO2 emissions of new passenger cars per fuel type, for each association and the European Union

Under the assumption that the associations continue with the average annual reduction rate in the same range as in the reporting period ACEA would meet the intermediate target rate, JAMA would be slightly above and KAMA would be significantly above. However, it can be expected that JAMA and KAMA will catch up in the coming years.

The average CO2 emissions of new passenger cars decreased as well in all Member States (see Figure 1)

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Figure 1: Average Specific CO2 emissions of new passenger cars in the EU and in Member States in 1995 and 1999 (weighted averages based on the data for diesel and gasoline vehicles forwarded by the three associations)

In order to meet the final target of 140 g CO2/km additional efforts are necessary and the annual reduction rate needs to be increased (on average the reduction rate must be 2 % per year throughout the entire monitoring period; currently ACEA achieves on average about 1,5 % per year, JAMA 1.15 % per year, and KAMA 0.4 % per year). However, it is predicted in the commitments that the associations would increase their reductions CO2 rates with time. Furthermore ACEA points out in its report that the biggest advances on CO2 emission will occur at the time of major product renewal, not at mid-cycle.

The reductions achieved so far are based on technological developments (mainly the introduction of High Speed Direct Injection Diesel (HDI) Engines, to less extent by the introduction of Gasoline Direct Injection (GDI) Engines, Continuously Variable Transmission, "Mini Cars" and Dual Fuelled Vehicles) as well as on other measures. Moreover, ACEA and JAMA introduced passenger cars emitting less than 120 g CO2/km.

All associations increased the diesel share of their fleets within the reporting period (see Table 2).

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Table 2: Trends in Fleet composition for each association and the EU

The diesel share increase was predicted for the short-term, however it is expected that this will be reversed in the longer term with the introduction of Gasoline Direct Injection technology. All associations declared in their respective commitment that they will meet the final target by mainly technological developments and market changes linked to these developments [19].

[19] The three "Joint Reports" do not address the question of measures taken in all details since this issue will be studied in greater detail within the implementation of Decision 1753/2000/EC. This Decision requires the Commission to report to Council and European Parliament by 2003/2004 and 2008/2009 about the reductions achieved by technical and by other measures.

With regard to the assumptions underlying the commitments the associations drew attention to matters as fuel quality and other regulatory measures.

The car industry attributes great importance to the availability of low sulphur fuel to meet dual targets of reduced CO2 and NOx emissions. The associations made their commitments on the basis of the fuel quality requirements laid down in Directive 98/70/EEC, although they expect that better fuel qualities might be available in the market in the future [20]. The Commission notes the importance that some parties attribute to lowering the current legislative maxima for the sulphur content of petrol and diesel in Community legislation. In order to consider the issue further the Commission has launched a consultative exercise to seek views from stakeholders. It is expected that this will be completed by the end of this year and before the pending amendment to Directive 98/70.

[20] The associations expected that some gasoline (e.g. Super-Plus 98 octane) and some diesel plus with a maximum sulphur content of 30 ppm are provided in 2000 on the whole EU market in a sufficient volume and geographical cover; in 2005 full availability of fuels on the whole EU market which satisfy the following: gasoline with a maximum sulphur content of 30 ppm and of a maximum aromatic content of 30% and diesel with a maximum sulphur content of 30 ppm and a cetane number of minimum 58.

The car industry ACEA anticipates that the End-of-Life Vehicle (ELV) Directive will have adverse implications for the fuel efficiency of cars, as it may limit in its opinion the use of certain light materials and technologies, while burdening significantly the companies. The Commission does neither expect repercussions of the ELV Directive on the CO2 commitment nor significant adverse repercussions on the industry's economic situation.

KAMA drew special attention to the ongoing restructuring process, associated budget cuts and the reduction of technical and scientific staff that has negative repercussions on KAMA's capabilities to develop the necessary new CO2 efficient technologies and to introduce new models on the EU market.

III. Other related measures

The Commission services are assessing some additional measures related to the measurement of CO2 and fuel consumption, as defined in Directive 80/1268/EEC:

(a) With regard to the extension of the scope to light commercial vehicles (category N1)

(b) In the field of CO2 emission values for alternatives fuels (other than LPG and NG, which are already included in the type approval system) and alternative propulsion systems

(c) With regards the definition of mass in Directive 70/156/EEC.

IV. Conclusions

The implementation of the Community's strategy to reduce CO2 emissions from passenger cars and improve fuel economy shows significant progress. Two of the three main pillars (commitments of the car industry and fuel-economy labelling of cars) are in place, intensive work on the third (fiscal measures) is underway. The first set of "Joint Reports" shows that the ACEA and JAMA are on the way to match the interim targets. KAMA has to increase its efforts significantly. In order to meet the final target of 140g CO2/km all three associations have to increase their efforts, which is also foreseen in the Commitments. Based on the attached reports the Commission has no particular reason to believe that any of the associations would not live up to its commitment. To achieve the Community strategy target of 120g CO2/km, it is important that the Community continues its work in developing and implementing the two pillars for consumer information and fiscality.

ANNEX

1) Monitoring of ACEA's Commitment on CO2 Emission Reduction from Passenger Cars (1995-1999), Joint Report of the European Automobile Manufacturers Association and the Commission Services, Final version of 10. 07. 2000

2) Monitoring of JAMA's Commitment on CO2 Emission Reduction from Passenger Cars (1995-1999), Joint Report of the Japan Automobile Manufacturers Association and the Commission Services, Final version of 11. 07. 2000

3) Monitoring of KAMA's Commitment on CO2 Emission Reduction from Passenger Cars (1995-1999), Joint Report of the Korea Automobile Manufacturers Association and the Commission Services, Final version of 11. 07. 2000

The annexes are available only in English.

Monitoring of ACEA's commitment on CO2 Emission Reduction from Passenger Cars (1995-1999)

Final version

10. 07. 2000

Joint Report of the European Automobile Manufacturers Association and

the Commission Services

Joint Monitoring by European Commission and ACEA of Environmental Agreement on CO2 Emission Reduction from Passenger Cars

ES SUMMARY OF PROGRESS IN DELIVERING THE AGREEMENT

E1 Trends in specific emissions of CO2 (g/km) (averaged over all newly registered passenger cars for the EU and for Member States: 1995-1999)

On an EU-wide basis, ACEA's CO2 emissions have decreased steadily, achieving in total reductions of more than 6% over the reporting period. From a new car average of 186 g/km in 1995, ACEA's CO2 emissions reduced to 174 g/km in 1999. In each year since 1995 sizeable cuts have been achieved, culminating in a 2% reduction from 1998 to 1999.

ACEA CO2 figures by fuel-type show that, between 1995 and 1999, new gasoline-fuelled cars reduced average CO2 emissions by 4.3%, and for diesels there was a reduction of 8.5%. This corresponds to respectively 180 g/km and 161 g/km in 1999. In 1998 and 1999, the market share of diesel cars showed some expansion, as technically-advanced new direct-injection (DI) diesels came to market. A short-term increase in the market share of diesel cars is in line with expectations.

In broad terms, this EU performance was replicated in all the Member States (See Annex). Also at Member State-level, many markets showed greater interest in diesels as new direct injection models became available (see Annex).

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Figure 1: EU Trends of ACEA's fleet in specific average emissions of CO2

E2 Trends in specific fuel consumption by fuel type (l/100km) (averaged over all newly registered passenger cars for the EU and for Member States: 1995-1999)

Between 1995 and 1999, new gasoline-fuelled cars and diesels cars have reduced their average fuel consumption from 7.9 l/100km to 7.5 l/100km and 6.6 l/100km to 6.0 l/100km, respectively.

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Figure 2: Trends of ACEA's Fleet in specific average fuel consumption by fuel type

Trends in specific fuel consumption in the Member States are presented in the Annex.

E3 Trends in physical fleet characteristics (mass (kg), engine capacity (cm3), engine power (kW)) averaged over all newly registered passenger cars in the EU (Optional) (1995-1999)

Car physical characteristics have drifted upwards. Average engine capacity has remained nearly constant between 1995 and 1999 (+2.7%), whereas average car mass and engine power have increased by 8% and 12.7% over the reporting period. Mass increases have resulted from a range of factors such as: car safety improvements; other automotive regulations; the increased diesel car share; and customer-driven vehicle utility enhancement.

E4 Technical developments introduced to reduce CO2 emissions (including introduction of new technologies e.g. direct injection, low (less than 120 g/km) emission cars, and alternative concepts)

The efforts of ACEA manufacturers to reduce CO2 emissions are illustrated by: fuel consumption improvements associated with technical advances at new model introductions (by more than 15% for individual models); the launch of direct injection engine technologies; and their on-going development of alternative-fuelled vehicles.

E5 Brief overall assessment on progress in relation to the target

ACEA's member average specific emissions have decreased by 6% over the reporting period. To date, the main technological achievement is linked to the introduction of direct injection engine cars onto the EU market since 1998, including Diesel Direct Injection (1998) and Gasoline Direct Injection (1999) models. The market share of diesel engines increased within the reporting period. ACEA members have launched some models emitting less than 120 g/km

ACEA's 1995 to 1999 CO2 performance is consistent with the achievement of the 2003 indicative target range 165 g/km-170 g/km.

Note: The reference 186 g/km in 1995 is based on data available at the time of the discussions for the agreement; further refinements by AAA led to a rounded figure of 185 g/km.

1. MONITORING OF TECHNOLOGICAL DEVELOPMENTS AFFECTING THE AGREEMENT

1.1. Agreement Initiatives (optional)

1.1.1 R&D

In view of the long-term dimension of climate change, the development of new breakthrough technologies will be essential. In support of this effort the industry (ACEA/EUCAR/CLEPA) launched, in 1998, a joint CO2 R&D Programme, to identify, develop and demonstrate new technologies and system concepts enabling reduction of CO2 emissions from vehicles. With wide participation from across the sector's research base (car manufacturers, suppliers, research establishments, and universities), project proposals were specified in each of the Programmes main areas of R&D (Powertrain, Materials and Manufacturing, Systems Efficiency, Mobility, System Assessment and Demonstrators).

The duration of the Programme is from later 1998 until 2004. Its expected overall budget is of the order 300M Euro.

In 1999 more than 30 CO2 research project proposals, with a total budget of more than 200 M Euro, were submitted for funding to the First Call of the EU's Fifth Framework Programme (FP5), mainly under Key Action 3 of the Growth programme. Of these 15 were granted funding; they have a total project budget of about 80M Euro with an EU funding of 30 M Euro. The granted projects mainly focus on the Powertrain and Materials research area.

Sections 1.2 and 4.5 also cover ACEA technological developments and research programme activities.

1.2. Technological developments

1.2.1. Description of technological developments and their fuel efficiency characteristics (new technologies, alternative concepts)

1.2.2. Availability of New Technologies in the EU and Member States

1.2.3. Availability of alternative concepts passenger cars in the EU (optional: in Member States)

1.2.4. Availability of low emission passenger cars (e.g. emitting less than 120 g/km)in the EU (optional: in Member States)

European car manufacturers are continuing to gear research and product and process development towards attaining the 140 g CO2/km target by 2008.

The efforts of ACEA manufacturers to reduce CO2 emissions are illustrated by their new model introductions, which allow the latest technical advances to be brought to the market place. These new model and technology programmes show significant improvements in fuel consumption performance; typically fuel consumption reductions in excess of 15% are the norm (new models in 1998 compared to near equivalents in 1995; see Figure 3 below). It should be noted that advances of this magnitude can only occur at the time of major product renewal, not at mid-cycle.

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Figure 3: Improvement in Consumption Performance of New Models Introductions

ACEA's Commitment states that European manufacturers have high expectations of certain technologies, in particular those associated with Direct Injection gasoline and diesel engines. These are considered two of the most promising routes to achieve the central commitment; assuming that their cost-effectiveness can be addressed, ACEA will aim at a high share of new cars being equipped with these fuel-efficient technologies. Statistics available so far do not allow trends to be quantified.

During the 1995-1999 period, ACEA manufacturers were involved in the product development phase of Direct Injection (DI) gasoline engine technology, and only one Gasoline Direct Injection model was actually launched into the marketplace in 1999. In contrast, new Direct Injection diesel models were being launched by almost every ACEA manufacturer, and came to market particularly in 1998 and 1999. According to ACEA these new DI diesels had the drive-quality and performance of their gasoline alternatives, but with superior fuel consumption. These differing rates of DI technological developments/market presence, with DI diesel currently ahead, account for the recent increase in diesel's overall market share.

Over the 1995 -1999 period almost all ACEA member companies were involved in the on-going development, promotion and launch of alternative-fuelled vehicles (AFVs). Available statistics only cover sales of "Other Fuel" cars, however this category is thought likely to be made up virtually exclusively of AFVs. On this basis, AFV sales by ACEA members have grown from less than 500 units in 1995, to over 13,000 units in 1999; even so, the market share of these cars only amounted to 0.1%. However these statistics understate AFV activity in two respects; firstly, to date most AFVs have been after-market fitments, and therefore not recorded under "Other Fuel"; and secondly AFVs that are dual-fuelled generally get recorded under gasoline or diesel.

Even though the volume growth in AFVs is considered directionally significant, ACEA notes that technical progress is hampered by widely diverging national policies, discouraging manufacturers from advancing more strongly into AFVs, as well as by an inadequate fuelling infrastructure.

1.3. Description of market trends in physical fleet characteristics (mass (kg), engine capacity (cm3), engine power (kW) in the EU and Member States)

Car physical characteristics have drifted upwards. Engine capacity has remained virtually constant between 1995 and 1999 (+2.7%), whereas car mass and engine power have increased by 8% and 12.7% respectively. Over the 1995-1999 period, mass increases have resulted from a range of factors such as: car safety improvements; other automotive regulations; the increased diesel share; and customer-driven vehicle utility enhancement. Safety improvements have affected the whole car structure from the floor-pan upwards, and have been driven by: legislative requirements (such as front and side-impact requirements); motorists' association tests (like Euro NCAP); and consumer wants and expectations, along with competitive considerations.

However, the capacity and power of car engines varies considerably from one EU country to another, reflecting the differing economic and geographic conditions in the various markets (See Annex).

2. STATISTICAL MONITORING (1995-1999)

2.1. Listing of all (M1) newly registered passenger cars (model level) in the EU

See Table 4 in Annex [1].

[1] Table 4 presents a list of M1 vehicles covered by the Commitment potentially registered as N1 in some Member States ('grey areas').

2.2. Trends in specific emissions of CO2 (g/km) (averaged over all newly registered passenger cars by fuel type in the EU and Member States)

As shown in Figure 1 (recall chapter E1) ACEA's average specific CO2 emissions have decreased from a new car average of 186 g/km in 1995 to 174 g/km in 1999. In each year since 1995 sizeable reductions in average specific emissions were achieved. In total between 1995 and 1999 ACEA's average specific CO2 emissions were cut by more than 6%.

In broad terms, this EU performance was replicated in the Member States, with reductions in every country (see Annex). The variation between the highest and lowest country in CO2 terms has narrowed over the period.

New gasoline-fuelled cars showed an average CO2 emission reduction of 4.3%, and diesel cars a reduction of 8.5% over the reporting period. This corresponds to respectively 180 g/km and 161 g/km in 1999. In 1998 and 1999, the market share of diesel cars showed some expansion, as technically-advanced new DI diesel models came to market.

This short-term diesel share increase was widely anticipated, as explained in the Commission's 1998 Working Paper (SEC (98) 1047) on the ACEA Agreement. In this document, a "short-term increase in diesel share" is acknowledged, reflecting consumer benefits of the new generation, fuel-efficient Direct Injection diesels, currently being introduced. However, a reversal of this market trend is also anticipated in the Working Paper.

2.3. Number of newly registered passenger cars (by fuel type in the EU and Member States)

EU total registrations of new passenger cars marketed by ACEA's members have increased by 22% over the monitoring period.

The number of gasoline passenger cars sold increased from 7,518,525 vehicles in 1995 to 8,241,064 vehicles in 1999 (+9%) and represents about 65.8% of total sales by ACEA members (against 73% in 1995). The number of diesel passenger cars sold increased from 2,462,752 in 1995 to 3,886,904 in 1999 (+57.8%), and represents 31% of total new registrations (see Figure 4) [2].

[2] The rest consists of statistically unidentified vehicles and 'Other Fuels'.

The number of cars equipped with other fuel types have rapidly increased but remained relatively small in 1999 (13,013 cars)

ACEA's market share of total EU passenger cars (gasoline + diesel) was 88.4% in 1995, and 84.6% in 1999.

New registrations in Member States are shown in the Annex.

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Figure 4: Number of Newly Registered Passenger Cars by ACEA [3]

[3] 'Other fuel' not represented.

ACEA's CO2 related fleet composition has moved over the reporting period towards more fuel-efficient vehicles. The share of cars emitting more than 180 g/km has decreased by 15 %, from 46 % to 32 %of the total. The share of cars emitting between 161 g/km and 180 g/km has decreased by 6.6 % from 32.8 % to 26.2 %. The share of cars in lower categories 141-160 g/km, 121- 140 g/km and 101-120 g/km has increased by 15 %, 7 % and 0.7 % respectively. Globally the share of the cars emitting less than 160 g/km has increased by 23 %, from 19 % to 42 % (see Figure 5).

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Figure 5: ACEA's Fleet Composition per CO2 Category in Shares of Total

2.4. EU trends in physical fleet characteristics (mass (kg), engine capacity (cm3), engine power (kW)) by fuel type averaged over all newly registered passenger cars; and relationship to CO2 emissions)

There is an upward drift in physical characteristics' averages at EU level (See Figure 6).

Average total automobile mass was 1,101 kg in 1995 and increased by 8% over the reporting period (1,190 kg in 1999). Gasoline automobiles' average mass has increased by 6% from 1,068 kg to 1,133 kg in 1999 within the reporting period. Diesel automobiles' average mass has increased by 8.8% within the reporting period, from 1,204 kg in 1995 to of 1,310 kg in 1999. No data on average mass of 'Other Fuels' is available. The overall trend in average mass shows an increase over the 1995-1999 period, both for gasoline and diesel cars.

Total engine capacity has increased by 2.7% within the monitoring period, from 1,654 cm3 in 1995 to 1,699 cm3 in 1999. Gasoline engine capacity has increased by 0.95% over the reporting period, from 1,564 cm3 in 1995 to 1,579 cm3 in 1999. Diesel engine capacity has increased by 1.2% over the reporting period, from 1,928 cm3 in 1995 cm3 to 1,952 cm3 in 1999.

Total engine power has increased by 12.7% over the reporting period, from 63 kW in 1995 to 71 kW in 1999. Gasoline engine power has increased by 9.2%, achieving 65 kW in 1995 and 71 kW in 1999. Diesel engine power has steadily increased by 16.7%, i.e. from 60 kW in 1995 to 70 kW in 1999.

While the physical characteristics averages have increased over the period, average specific CO2 emissions dropped by 6% over the reporting period (see Figure 6B). According to ACEA this indicates that technical improvements compensated the trends in physical characteristics. In Figure 7 below the evolution of the ratios of average specific CO2 emissions to mass, power and cylinder capacity is given, as presented by ACEA.

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Figures 6: Market Trends in physical ACEA fleet characteristics

Figure 6B: Trends in physical fleet characteristics and specific CO2 emissions

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Figure 7: Trends in average specific CO2 emissions per kg, kW and cm3

2.5. Trends in new technologies in the EU and Member States supported by data when possible (optional) (e.g. % or number of total newly registered passenger cars which are direct injection)

Almost every ACEA member has launched new Direct Injection (DI) diesel models on the EU market, and these came to market particularly in 1998 and 1999. In addition the first European Gasoline Direct Injection (GDI) model was put on the market in 1999.

2.6. Trends in alternative concepts passenger cars in the EU and Member States supported by data when possible (optional) (e.g. % or number of total newly registered passenger car)

Nothing to report. See Section 1.2 above.

2.7. Trends in low emission passenger cars in the EU and Member States supported by data when possible (optional) (e.g. % or number of total newly registered passenger cars which emit less than 120 g/km)

As can be seen in the Annex, in 1999 ACEA members sold over 88,000 cars which emitted 120 g/km CO2 or less; and this amounted to a 0.7% market share. In 1995 sales of such cars were virtually nil.

2.8. Data methods (Monitoring Decision annexes II & III), data sources, and data confidence levels

ACEA has utilised in this report CO2 statistics supplied by the French-based association AAA (Association Auxiliaire de L'Automobile). AAA is an independent organisation under public mandate, whose business is to develop and sell data to clients. In France they are official providers of automobile statistics to the government agencies. They have devoted their resources to the development of a database to monitor CO2 emissions. They use official data sources in the Member States for car registration data. AAA's CO2 database covers, in a consistent manner, over 90% (90-92%) of the EU and the rest are unknown figures (data for Finland and Greece are not available), and is widely regarded as one of the most reliable data sources currently available. The uncertainties incorporated into the figures shown in this report due to the incompleteness of the data set cannot be numerically quantified. However, they are estimated to be small. It can be assumed that they do not influence the overall result of the monitoring.

ACEA has a high-level of confidence in the AAA data provided. However, 1995 figures should be taken as indicative and broadly correct, given the 9% "across the board" adjustment applied to "old" cycle data (as described in Section 2.9).

ACEA has used the above data-source because the official EU CO2 monitoring scheme will not become operational until 2001/2.

2.9. Description of measurement issues for CO2 Emission Factors (pre and post 1995)

Another important data issue is the change that occurred in the official test-cycle that measures new car fuel consumption/ CO2. Official car CO2 data is now being established according to Directive 93/116/EC, which replaced the «old» Directive 80/1268/EEC. This «new» test cycle was implemented, in large part, as from 1.1. 1997. Amongst other changes, the «new» cycle includes for the first time a cold start period, and consequently higher specific fuel consumption/specific CO2 emissions values result. In ACEA's Commitment, a 9% correction has been agreed upon.

According to ACEA it is important to emphasize the point that the 9% adjustment has been applied "across the board" to 1995/old cycle figures. For greater accuracy differing rates of adjustment (non-linear) should have been applied, e.g., for large/small cars and for gasoline/diesel.

2.10. Other Issues

The ACEA Commitment signed in July 1998 covers specified car companies, including Daimler-Benz. Subsequently the Daimler-Chrysler group was formed. Although Chrysler was not included in the original commitment, ACEA has however stated that it is prepared to include Chrysler and it is agreed that:

*All M1 passenger cars marketed by DaimlerChrysler within the EU will be fully incorporated in the monitoring of ACEA's commitment on CO2 emission reductions from new passenger cards, as endorsed by the Commission's recommendation 1999/125/EC.

The full incorporation of all DaimlerChrysler passenger cars does not entail any change to the target value for 2008 and the intermediate target range for 2003.3. KEY ASSUMPTIONS TO THE AGREEMENT

3.1. Availability of Enabling Fuels

3.1.1. Description of state of assumption

3.1.2. Statement on whether assumption is up-held or compromised

3.1.3. If necessary: Statement on implication for agreement and justification

ACEA 's commitment specifies that: « Given the outstanding importance of improved fuels for the CO2 reductions ACEA assumes the full market availability of fuels with a sufficient quality to enable the application of technologies needed for the industry to achieve its CO2 commitment during the life-time of this Commitment».

ACEA acknowledged in the Technical Annex to the Commitment the conciliation on Directive 98/70 on the Quality of Fuel and upholds its 140 g/km commitment. However, ACEA, at the time it took its Commitment, and given the outstanding importance of improved fuels for CO2 reductions, assumed that fuels of better quality might be available on the market. In this respect ACEA specified in its commitment that a maximum sulphur content of 30 ppm should be provided throughout the Community in 2000 (some gasoline and some diesel only) and 2005 (full availability of diesel and gasoline).

Within the reporting period such low sulphur fuels were not available in the majority of European countries; only in Scandinavian countries and the UK does some availability exist. ACEA believes that European manufacturers have now reached a stage where the development of new after-treatment technologies is being delayed by the presence of sulphur in fuels. In addition, ACEA has recently explained to the Commission services that new fuel-efficient lean-burn engine technologies need to use after-treatment systems (NOx traps, particulate filters and conventional catalysts) to meet CO2 and tailpipe emissions at the same time. Therefore «Zero Sulphur Fuel» (less than 10 ppm sulphur) will be required as sulphur contaminates after-treatment systems and significantly reduces their efficiency.

The Commission services notes the importance which ACEA attributes to fuel quality but considers that the provisions of Directive 98/70 on fuel quality are being complied with. With respect to «Zero Sulphur Fuel» the Commission services are currently studying the need of such fuels and the possible repercussions of its production and distribution to other industrial sectors. The Commission services intend to report on the results of this investigation by the end of the year 2000.

3.2. Distortion of Competition - link to 4.7.1

3.2.1. Description of state of assumption

3.2.2. Statement on whether assumption is up-held or compromised

3.2.3. If necessary: Statement on implication for agreement and justification

ACEA was the first Association to finalize a car CO2 Agreement, and based its Commitment on a "Distortion of Competition» assumption, in order to ensure a level playing field.

ACEA strongly stresses that the competitive environment is very sensitive to CO2, with technical and economic factors being significantly affected by even small variations in fuel average performances.

3.3. Promotion of CO2 efficient technologies

3.3.1. Description of state of assumption

3.3.2. Statement on whether assumption is up-held or compromised

3.3.3. If necessary: Statement on implication for agreement and justification

As indicated earlier, ACEA members have high expectations for certain technologies, in particular those associated with DI gasoline and diesel engines, which are two of the most promising routes to achieve the central commitment of 140 g CO2/km in 2008. ACEA's commitment was therefore based on the assumption of an unhampered diffusion of car CO2 efficient technologies into the market. Consequently it is fundamental that any measures which might hamper the diffusion process of CO2 efficient technologies are taken into consideration in the monitoring procedure.

ACEA states that the beneficial effects of Direct Injection (DI) technology can be seen from ACEA's 1995-1999 CO2 improvement performance. For gasoline cars, where only one DI model was introduced, a 4.3% average specific CO2 emission reduction was achieved over this period. Whereas the equivalent figure for diesel cars was 8.5%, reflecting the launch of new DI diesels. These new models were launched particularly in 1998 and 1999, and diesel average specific CO2 emissions were cut by 2.9% and 3.6%, respectively, in these two years (6.4 % in total).

In the context of this assumption, ACEA is concerned about Dutch tax measures on diesel cars that were announced in 1999. From the start of 2000 the purchase tax (BPM) was raised for all diesel-fuelled vehicles by the fixed amount of Fl 2000 (Euro 1000). Also car or fuel tax measures have been implemented or announced in a number of other Member States (e.g. France, Sweden and Britain) that penalize diesels. ACEA will be closely assessing such measures and if necessary ask that they be taken into account when monitoring ACEA's progress towards achieving its Commitment. ACEA would draw the attention of public authorities to the fact that, in ACEA's view, they compromise the "unhampered diffusion" assumption, with likely adverse consequences for the Commitment. ACEA considers that, at the very least, EU and national authorities are responsible for promoting contradictory messages across Europe.

3.4. Acceptance of innovation

3.4.1. Description of state of assumption

3.4.2. Statement on whether assumption is up-held or compromised

3.4.3. If necessary: Statement on implication for agreement and justification

Nothing to report.

4. OTHER ISSUES

4.1. New Measures affecting CO2 - and link to 3.3 (diffusion issues)

4.1.1. Description

4.1.2. Comment on impact of the issue and on implication for agreement

Nothing to report, see comments in Section 3.3.

4.2. New regulatory measures

4.2.1. Description

4.2.2. Comment on impact of the issue and on implication for agreement

ACEA anticipates that the End-of-Life Vehicle (ELV) Directive will have adverse implications for the fuel efficiency of cars, as it may limit in its opinion the use of certain light materials and technologies, while burdening significantly the companies.

The Commission does not expect repercussions of the ELV Directive on the CO2 commitment.

4.3. Fiscal Measures

4.3.1. Description

4.3.2. Comment on impact of the issue and on implication for agreement

Fiscal measures hampering the diffusion of CO2 efficient technologies into the market are outlined in Section 3.3; also Section 1.2 refers to the discouraging effects of divergent national Alternative-Fuelled Vehicles (AFV) policies (which include fiscal incentive measures).

More generally, as stated in its Commitment, as long as the commitments are being honoured ACEA assumes they provide complete and sufficient substitute for additional fiscal measures in pursuit of the CO2 objectives of the Commitment.

Moreover, ACEA explained that it does not find such instruments relevant in the light of its ambitious CO2 objective, and the fact that, in 2003, ACEA will review the potential for additional CO2 reduction towards 120 g/km by 2012.

ACEA members consider that prescriptive fiscal interventions are likely to further fragment the internal market, severely damage manufacturers' competitiveness (particularly by causing the misallocation of scarce industry resources), reduce their product diversity and generally undermine the business viability of whole sections of the European industry. These negative consequences would detract from CO2 reduction efforts (by cutting margins, investments and R&D), and have major adverse effects throughout the EU economy.

The Commission draws attention to Community target of 120 g/km, to be met by 2005, and by 2010 at the latest. It gives reference to corresponding Council Conclusions and Resolutions of the European Parliament. The gap between the target of the Commitment (140 g/km) and the overall objective of the Community strategy (120 g/km) has to be closed by other measures. The Community strategy clearly specifies consumer information and fiscal measures as additional instruments to be applied. The Council invited the Commission to report about the possibilities of establishing a reference framework for fiscal incentives. Recently the Commission established working groups to study fiscal measures. ACEA agreed to provide a technical contribution to the study by participating in the working groups that have been set up.

4.4. Breakthrough technologies - and link to 3.3 (diffusion issues)

4.4.1. Description

4.4.2. Comment on impact of the issue and on implication for agreement

Nothing to report, see comments in Section 4.5.

4.5. Research Programmes

4.5.1. Description

4.5.2. Comment on impact of the issue and on implication for agreement

In view of the long-term dimension of climate change, the development of new breakthrough technologies will be essential. To support this process the industry (ACEA/EUCAR/CLEPA) launched, in 1998, a joint CO2 R&D Programme, to identify, develop and demonstrate new technologies and system concepts enabling reduction of CO2 emissions from vehicles. With wide participation from across the sector's research base (car manufacturers, suppliers, research establishments, and universities), project proposals were specified.

The Programme's main areas of R&D are:

-Powertrain: Development of traditional combustion engines, hybrid electric and fuel cells vehicles, transmissions, exhaust gas after treatments,...

-Material and Manufacturing: Aiming at light weights material solutions and cost efficient manufacturing.

-System Efficiency: Dealing with electronics and control systems of the vehicle, efficiency of peripheral systems, energy recovery,...

-Mobility: Concentrating on vehicle control, transport telematics and the overall efficiency of road transports with the view on its impact on CO2 emissions.

-System Assessment: Evaluation of the technical development, considering in particular Life Cycle Assessment and Recycling.

-Demonstrators: Assessing and proving R&D achievements using a range of demonstrators (e.g. virtual, vehicle sub-systems, road operational vehicles).

The duration of the Programme is from later 1998 until 2004. Its expected overall budget is of the order 300M Euro; industry is already making sizeable contributions, additional funding is needed from EU and national R&D programmes. In support of this research initiative, and its funding requirements, the industry has established a CO2 R&D Programme Organisation and Office; arranged an Information Day in Brussels (200 participants, including CEC); and held meetings with representatives of relevant "Key Actions" in FP5 (IST, "Growth", City of Tomorrow, Energy).

In 1999 more than 30 CO2 research project proposals, with a total budget of more than 200 M Euro, were submitted for funding to the First Call of the EU Fifth Framework Programme (FP5). Of these 15 were granted funding; they have a total project budget of about 80M Euro, - the funding from the EU is in the range of 30 M Euro. The granted projects mainly focus on two research areas. The first one is Powertrain - notably dealing with internal combustion engine (I.C.E.), aftertreatment and fuel cell systems. The other main area is Materials -- with the focus on low weight material and technologies for fibre reinforcement and hydro forming.

For year 2000, the CO2 R&D Programme will continue to submit proposals to the FP 5. Technology R&D projects, e.g. dealing with Engine, Material, Manufacturing, will be one type of proposals. The other type is characterised as Technology Platforms and Demonstrators of different Powertrain systems. Integration of components and subsystems, and Verification of complete system (Powertrain, Vehicle) are the keywords for these proposals.

In the future, aspects of deployment and infrastructure (e.g. for fuel cell vehicles) also have to be investigated and solved for quick and successful exploitation of the R&D results.

ACEA draws attention to the important role RTD has to play in car CO2 emission reductions. ACEA expects more support and co-operation from Community and national research programmes to ensure effective delivery of sustainable CO2 reductions

The Commission services explained that the Commission will continue to provide significant opportunities for near and longer term RTD and demonstration on key technologies related to CO2 reduction. Within the «European Research Area» (ERA), the research effort of the European Community for CO2 reduction both at European and national level should be reinforced and co-ordinated.

4.6. Other measures - telematics, infrastructure, education

4.6.1. Description

4.6.2. Comment on impact of the issue and on implication for agreement

ACEA highlights that it co-organised (jointly with ECMT and OICA) a Conference on "Smart CO2 Reductions" in Turin. It proved to be a highly productive, consensus building process between government, industry and experts on "Smart" (non-product) vehicle CO2 emission reduction measures. Prime examples of these "Smart" measures are: incentives for park renewal; encouragement for correct vehicle maintenance; driver education and training schemes; telematics and infrastructure optimisation; and better integrated land use and transport planning. It was the conclusion of both government and industry participants at the Conference that such non-product measures have a very significant potential to deliver CO2 reductions, and deliver them quickly and often cheaply.

In spite of our new car reduction efforts, and the massive contribution they will make to EU CO2 reduction, ACEA manufacturers have always stressed the potential contribution of non-product measures. By acting, without delay on the European car fleet as a whole, these measures can generate immediate CO2 reductions. ACEA believes that by creating an ethos of support for CO2 reduction across society, non-product measures can have a much wider, multiplier impact than just their first-order, direct effects.

ACEA explained that during the monitoring period the European automotive industry has also been active on:

*Education: eco-driving training schemes has been introduced by a number of ACEA manufacturers, and the Industry Associations in Britain and German have published "greener" driving brochures.

*Telematics: ACEA and EUCAR, along with their member companies, have had extensive involvement in the development and promotion of intelligent transport systems (ITS) to: provided road/traffic information, facilitate route guidance, enhance intermodality and so on. The European industry's involvement in Conferences aimed at promoting this area of technology will include extensive participation in the World ITS Congress in November 2000 in Turin.

The Commission services draw attention to the fact that the internalisation of transport externalities and congestion charging are measures among the Commission's transport policy.

4.7. Economic situation of the car industry (This includes, for KAMA only, a report on hampering measures)

4.7.1. Description

4.7.2. Comment on impact of the issue and on implication for agreement

ACEA indicates that the economic situation of the European car industry, as reflected in its financial performance, competitiveness and employment situation, needs to be strong and healthy to provide the opportunity to focus resources on its CO2 reduction Commitment as this goes far beyond any "business as usual" scenario. ACEA highlights that ACEA car manufacturers operate in a complex environment, and have to manage resources to meet a range of competing societal and customer demands, not just CO2 abatement. ACEA believes that such demands, e.g., safety improvements, often detract from fuel efficiency gains.

ACEA believes that new "external" developments can also adversely affect the industry's economic situation, and consequently the ability of European manufacturers to meet their CO2 Commitment. In ACEA's view the proposed End-of-Life Vehicle Directive is a case in point (see also Section 4.2).

For the reporting period, the Commission services have no evidence of negative impacts on the economic situation of ACEA's member companies associated with the CO2 commitment. The Commission does not expect significant adverse repercussions of the ELV Directive on the industry's economic situation.

5. CONCLUSIONS

5.1. Progress Statement on Delivering the Agreement

ACEA's 1995 to 1999 CO2 performance is consistent with achieving the 2003 indicative range, and in line with the overall ACEA Commitment.

5.2. Statement on Expected Future Progress of the Agreement

There is strong evidence to support ACEA's claim that its manufacturers will continue to focus significant research, product and process development towards attaining the 140g CO2/km target by 2008.

According to ACEA, possible threats to the achievement include:

1. The non-full market availability of fuels with a sufficient quality to enable the application of technologies needed for the industry to achieve its CO2 commitment.

2. New legislative measures that either impose «mutually exclusive» demands to CO2 reduction, or undermine the European industry's financial viability.

3. The introduction of measures which might hamper the diffusion of the CO2 efficient technologies.

However, up to now none of these issues hampered the improvement of fuel efficiency.

Data Annexes Data Annexes (1995-1999) attached to the report

B1 : SPECIFIC FUEL CONSUMPTION AND EMISSIONS OF CO2 AVERAGED OVER ALL NEWLY REGISTERED PASSENGER CARS FOR EACH DIFFERENT FUEL-TYPE, FOR THE EU AND EACH MEMBER STATE

B2 : THE DISTRIBUTION OF CO2 EMISSIONS IN THE NEW PASSENGER CAR FLEET FOR EACH DIFFERENT FUEL TYPE, FOR THE EU

B3 : THE DISTRIBUTION OF AVERAGED MASS, POWER AND ENGINE CAPACITY OF NEW PASSENGER CARS FOR EACH FUEL TYPE FOR THE EU-15 AND EACH MEMBER STATE

B3a. The Distribution of New Passenger Cars: by Average Mass (kg) [4]

[4] Curb weight of vehicles.

B3b. The Distribution of New Passenger Cars: by Average Engine Power (kW)

B3c. The Distribution of New Passenger Cars: by Average Engine Capacity (cm3)

B4 EU LIST OF M1 VEHICLES POTENTIALLY REGISTERED AS N1 (BY MODEL) IN EACH MEMBER STATE

>REFERENCE TO A GRAPHIC>

Monitoring of JAMA's commitment on CO2 Emission Reduction from Passenger Cars (1995-1999)

Final Version

11.07.2000

Joint Report of the Japan Automobile Manufacturers Association And the Commission Services

Joint Monitoring by European Commission and JAMA of Environmental Agreement on CO2 Emission Reduction from Passenger Cars

ES SUMMARY OF PROGRESS IN DELIVERING THE AGREEMENT

E1 Trends in specific emissions of CO2 (g/km) (averaged over all newly registered passenger cars for the EU and for Member States: 1995-1999)

In the EU, averaged specific CO2 emissions of passenger cars sold by JAMA Members showed a decreasing trend within the reporting period. Specific CO2 emission (g/km) levels of Japanese cars have tended to decrease by an average of roughly 1% each year and fell from 196 g/km in 1995 to 187 g/km in 1999, achieving a 4.6% reduction as compared with 1995. (See Figure 1).

The average CO2 emission levels of gasoline-fuelled cars recorded a decrease from 191g/km in 1995 to 181g/km in 1999 achieving a 5.2% reduction as compared with 1995.

The average CO2 emission levels of diesel cars recorded a decrease from 239g/ km in 1995 to 221g/km achieving a 7.5% reduction as compared with 1995.

In 1997 passenger vehicles using other fuels were introduced, with higher specific CO2 emissions than gasoline and diesel cars, but have not influenced the trend otherwise, due to their decreasing specific CO2 emissions (-17%) and low sales volume (0.1% of total fleet in 1999).

Trends in Member States are presented in the Annex.

>REFERENCE TO A GRAPHIC>

Figure 1. EU Trends of JAMA's fleet in average specific emissions of CO2

E2 Trends in specific fuel consumption by fuel type (l/ 100 km) (averaged over all newly registered passenger cars for the EU and for Member States: 1995-1999)

Gasoline passenger cars, which occupied most of JAMA's sales volumes in over the reporting period, consumed about 8 l/ 100 km in 1995. Over the reporting period, their average fuel consumption has decreased to achieve 7.5 l/ 100 km in 1999. Diesel cars consumed an average of 9 l/ 100 km in 1995, and achieved an average fuel consumption of 8.2 l/ 100 km in 1999. 'Other fuels' introduced in 1997 with an average fuel consumption of 10.1 l/ 100 km, have improved their fuel consumption over the 3 past years, with fuel consumption being less than diesel engines at the end of the reporting period.

Total fuel consumption did not differ much from that of gasoline passenger cars due to the small sales volume of diesel cars and other fuels (see Figure 2).

Trends in Member States are presented in the Annex.

>REFERENCE TO A GRAPHIC>

Figure 2. Trends of JAMA's fleet in average specific fuel consumption by fuel

E3 Trends in physical fleet characteristics (mass (kg), engine capacity (cm3), engine power (kW)) averaged over all newly registered passenger cars in the EU (Optional) (1995-1999)

General trends in physical characteristics show an increase over the reporting period, notably in mass (+ 7.1%). This is mainly due to increasing gasoline car weight (+ 6.3%) and increased diesel car sales (+ 117%) over the reporting period, which resulted in an overall increase in the average vehicle mass, the engine capacity (+ 0.8%), and the engine power (+ 1.4%).

E4 Technical developments introduced to reduce CO2 emissions (including introduction of new technologies e.g. direct injection, low (less than 120 g/km) emission cars, and alternative concepts)

The main new technologies introduced since 1995 include the gasoline and diesel direct injection engines. The Lean-Burn Engine and Continuous Variable Transmission Technology (CVT) have already been introduced and are continuing to be used on cars sold on the market. Development efforts are being sustained with a view to marketing hybrid cars and other technologies.

E5 Brief overall assessment on progress in relation to the target

JAMA fleet's average specific CO2 emissions fell from 196 g/km to 187 g/km over the reporting period. Japanese automobile manufacturers have produced passenger cars achieving lower specific CO2 emission levels since 1995, achieving a 4.6% decrease in average CO2 specific emissions. JAMA's fleet average shows a constant trend downwards, despite the trend upward for passenger cars with diesel and other fuel engines and despite the increase in car weight. In this respect it should be mentioned that the reporting covers a period before the Environmental Agreement with the Commission on CO2 reduction from passenger cars was in place.

The composition of JAMA's fleet has slightly changed over the reporting period, with the share of diesel cars increasing. While gasoline cars accounted for 89.6% of the fleet and diesel cars for 10.4% in 1995, diesel cars share increased to 15.6% and gasoline cars share decreased accordingly to 84.3%. The share of cars using other fuels is not yet significant (0.1% in 1999).

An important achievement before the 2003 review is the launch on the EU market of gasoline cars emitting an average of 120 g/km in 1999. Although sales remain small (5,544 vehicles in 1999), this shows a positive effort made by JAMA. To achieve the CO2 emission targets agreed upon in the commitment by 2003 and 2009, Japan automobile manufacturers will further explore various technologies namely Direct Injection (DI), hybrid vehicles and Continuous Variable Transmission Technology (CVT).

1. MONITORING OF TECHNOLOGICAL DEVELOPMENTS AFFECTING THE AGREEMENT

1.1. Agreement Initiatives (optional)

1.1.1. Research & Development

Sections 1.2 and 2.5 cover JAMA technological developments and research activities.

1.2. Technological developments

1.2.1. Description of technological developments and their fuel efficiency characteristics (new technologies, alternative concepts)

1.2.2. Availability of New Technologies in the EU and Member States

1.2.3. Availability of alternative concepts passenger cars in the EU (optional: in Member States)

1.2.4. Availability of low emission passenger cars (e.g. emitting less than 120 g/km)in the EU (optional: in Member States)

Description

JAMA has committed itself to achieving a 140 g/km emission target by 2009 and JAMA's members are continuing CO2 emission reduction R&D toward this goal. Ongoing efforts are made to make technological improvements successively available to the market. Technological developments achieved by JAMA's members within the reporting period include lean burn engines, Direct Gasoline and Diesel Injection engines and Continuous Variable Transmission Technology (CVT). Other current research developments include hybrid vehicles.

Availability of these new technologies

The CO2 emission reduction technologies made available by JAMA to the market are shown in Figure 6 in Section 2.5. A direct injection gasoline model has been on the market since 1997 and it steadily achieved greater market penetration by 1999 (3% of JAMA's sales on the EU market in 1999). Similarly, a direct injection diesel car debuted on the market in 1998 and has rapidly penetrated the markets in 1999 (1% of JAMA's sales in 1999). Efforts are also made to diffuse the Lean-Burn engine car available on the market prior to 1995 and the Continuous Variable Transmission Technology (CVT) on the market.

No alternative concept passenger cars have been made available on the EU market between 1995 and 1999.

Japanese manufacturers are currently developing a gasoline-hybrid passenger car to be launched in Fall 2000 in order to meet this requirement.

One low-emission passenger car has been put on the EU market within the reporting period, achieving 120 g/km (launched in 1999). In 2000, a 80 g/km gasoline-hybrid car and another119 g/km car have been put on the market by JAMA member companies. Another 120 g/km gasoline-hybrid model will be launched in Fall 2000.

1.3 Description of market trends in physical fleet characteristics (mass (kg), engine capacity (cm3), engine power (kW) in the EU and Member States)

For Japanese cars as a whole, mass increased by approximately 7.1% in 1999 as compared with 1995. The main factor is the increase in the weight of gasoline-fuelled cars (approx. 6.3%). Engine capacity of Japanese cars showed a shift towards an increase by approximately 0.8% and their engine power presented an increase by approximately 1.4% in 1999 as compared with 1995. CO2 emission levels, however, showed a decrease of approximately 4.6% for Japanese cars as a whole in 1999 as compared with 1995, a sign that the cars available on the market have benefited from CO2 reduction technologies (see Section 2.4 for further details and linkage to CO2).

Trends in Member States are presented in the Annex.

2. STATISTICAL MONITORING (1995-1999)

2.1. Listing of all (M1) newly registered passenger cars (model level) in the EU

See Table 4 in Annex [5].

[5] Table 4 presents a list of available M1 vehicles covered by the Commitment, not the 'grey areas' around M1 vehicles potentially registered as N1 in some Member States.

2.2. Trends in specific emissions of CO2 (g/km)(averaged over all newly registered passenger cars by fuel type in the EU and Member States)

As shown in Figure 1 (recall chapter E1), the average specific CO2 emission levels of Japanese cars over the 1995 - 1999 period showed a decreasing trend. Their average specific CO2 emission levels tended to decrease by an average of roughly 1% each year and fell from 196 g/km in 1995 to 187 g/km in 1999 (marking a 4.6% reduction as compared with 1995).

The averaged specific CO2 emission levels of gasoline-fuelled cars recorded a decrease from 191 g/km in 1995 to 181 g/km in 1999, an approximate 5.2% reduction as compared with 1995.

The averaged specific CO2 emission levels of diesel cars recorded a decrease from 239 g/km in 1995 to 221 g/km in 1999, an approximately 7.5% reduction as compared with 1995.

Although other fuel types are not influential in terms of EU CO2 trend due to a very small sale volume over the reporting period, their average specific CO2 emissions have decreased very significantly in 2 years, from 241 g/km, 200 g/km in 1999 (-17%), falling under diesel cars specific emission levels.

Total average fuel consumption decreased within the reporting period: the diesel fuel consumption decreased from about 9 l/100 km to 8.2 l/100km, and the gasoline fuel consumption from 8 l/100 km to 7.5 l/100km.

Trends in average CO2 emissions in Member States are given in the Annex.

2.3. Number of newly registered passenger cars (by fuel type in the EU and Member States)

The number of gasoline passenger cars sold steadily increased from 1,013,138 vehicles in 1995 to 1,379,723 vehicles in 1999 (+36%) and represents about 84% of total sales by JAMA members. The number of diesel passenger cars sold increased from 117,577 in 1995 to 255,165 in 1999 (+117%), - although remaining small as compared to gasoline cars (see Figure 3).

JAMA's market share of total EU passenger cars (gasoline + diesel) was 9.9% in 1995, and 11.5% in 1999.

>REFERENCE TO A GRAPHIC>

Figure 3. Number of newly registered passenger cars by JAMA's members

JAMA's fleet composition has changed over the reporting period. The share of cars emitting more than 181 g/km has decreased in all upper categories, with the exception of the 201-250 g/km category (+4.3%). The share of cars emitting between 161 g/km and 180 g/km has increased by 3.6% while the share of cars in the 181-200 g/km category has decreased by 13.5%. The share of cars in lower categories 121 g/km and 101-120 g/km has increased by 8.9% and 0.3% respectively (see Figure 4).

>REFERENCE TO A GRAPHIC>

Figure 4: JAMA's Fleet Composition per CO2 Category in Shares of Total (%)

2.4. EU trends in physical fleet characteristics (mass (kg), engine capacity (cm3), engine power (kW)) by fuel type averaged over all newly registered passenger cars; and relationship to CO2 emissions)

Although there is no significant trend in physical characteristics, the overall trend is either upwards or constant (with some very small reductions for some parameters) (see Figure 5).

Average total automobile mass was 1,095 kg in 1995 and increased by 7.1% over the reporting period (1,173 kg in 1999).

Gasoline automobiles' average mass has increased by 6.3% within the reporting period, from 1,056 kg in 1995 to 1,123 kg in 1999. Diesel automobiles' average mass reached the minimum of 1,447 kg in 1997 (against 1,461 kg in 1995) but increased up to 1,507 kg in 1999; i.e. +3.1% within the reporting period. Other fuels cars' mass has decreased by 6% since 1997 (1,284 kg in 1999). The overall trend in average mass shows an increase over the 1995-1999 period, for gasoline and diesel cars.

Total engine capacity has increased by 0.8% within the monitoring period, from 1,621 cm3 in 1995 to 1,634 cm3 in 1999 (with a maximum in 1998, 1,659 cm3). Gasoline engine capacity reached the maximum 1,558 cm3 capacity in 1998 (against 1,543 cm3 in 1995) and decreased to 1,511 cm3 in 1999 (-2.1% as compared with 1995) Diesel engine capacity reached a minimum 2,285 cm3 capacity in 1997 (against 2,298 cm3 in 1995) but remained constant over the reporting period (2,296 cm3 in 1999). The overall trend shows no clear variations in engine capacity over the reporting period.

Total engine power has remained constant around the value of 70 kW (71 kW in 1999), reaching a maximum of 72 kW in 1998 (against 70 kW in 1995). On the whole, there was a 1.4% increase in EU average. Gasoline engine power has remained constant around 70 kW (70 kW in 1995 and 71 kW in 1999), reaching a maximum of 72 kW in 1998. Diesel engine power has steadily increased by 10.6%within the reporting period, i.e. from 66 kW in 1995 to 73 kW in 1999. The overall constancy of average engine power of JAMA's fleet has not been influenced by the upward trend in diesel engine power.

While the physical characteristics increased over the period, average specific CO2 emissions dropped by 4.6% over the reporting period (see Figure 5B).

>REFERENCE TO A GRAPHIC>

Figure 5: Market trends in physical fleet characteristics for JAMA Members

Figure 5B: Relative trends in physical fleet characteristics and specific CO2 emissions

2.5. Trends in new technologies in the EU and Member States supported by data when possible (optional) (e.g. % or number of total newly registered passenger cars which are direct injection)

JAMA's Members have introduced several new technologies on the EU market over the monitoring period (see description in 1.2). Trends in sales vary across technologies, but overall, shares of JAMA total new sales remain small (less than 3%). The shares of cars equipped with gasoline & diesel direct injection engines have increased from 0% to 2.5% and 1% (respectively) since their respective launch in 1997 and 1998. Shares of cars with lean burn engines have decreased since 1997 (launched in 1992) from 4.5% to 2.5% and sales of cars equipped with Continuous Variable Transmission Technology (CVT) have not shown any particular trends.

The trends for each technology, as well as the share of new passenger cars equipped with these technologies in total new passenger car sales by JAMA, are shown in Figure 6 below:

>REFERENCE TO A GRAPHIC>

Figure 6: Trends in New Technologies launched by JAMA on the EU market

2.6. Trends in alternative concepts passenger cars in the EU and Member States supported by data when possible (optional) (e.g. % or number of total newly registered passenger car)

Nothing to report.

2.7. Trends in low emission passenger cars in the EU and Member States supported by data when possible (optional) (e.g. % or number of total newly registered passenger cars which emit less than 120 g/km)

JAMA released its first 120 g/km car on the EU market in 1999. In 2000, JAMA has launched a 119g/km car and a 80 g/km gasoline-hybrid car. Furthermore, JAMA intends to release a 120 g/km gasoline-hybrid model in the autumn of 2000 (see Section 1.2.4).

2.8. Data methods (Monitoring Decision annexes II & III), data sources, and data confidence levels

JAMA has utilised in this report CO2 statistics supplied by Marketing Systems Corporation. Marketing Systems Corporation is a consultancy, whose business is to forecast and sell data to clients. They use official data sources in the Member States for car registration data. Marketing Systems Corporation's CO2 database covers, in a consistent manner, most of the EU market (with some unknown figures) and is widely regarded as one of the most reliable data sources currently available. The uncertainties incorporated into the figures shown in this report due to the incompleteness of the data set cannot be numerically quantified. However, they are estimated to be small. It can be assumed that they do not influence the overall result of the monitoring.

2.9. Description of measurement issues for CO2 Emission Factors (pre and post 1995)

JAMA's CO2 emissions figures have been established according to Directive 93/116/EC, which replaced the old Directive 80/1268/EC. The new test cycle has been fully implemented as from 1.1.1997, and will be applicable for the coming years. Among other changes, the new cycle includes for the first time a cold start period, and consequently values for fuel consumption and CO2 emissions are higher under the new system. The implementation of this new measuring procedure has led to an artificial average increase of 9% of the CO2 emission figures, compared to the previously used Directive, whereas the CO2 emissions from cars in the real world have not changed.

2.10. Other Issues

Nothing to report.

3. KEY ASSUMPTIONS TO THE AGREEMENT

3.1. Availability of Enabling Fuels

3.1.1. Description of state of assumption

3.1.2. Statement on whether assumption is up-held or compromised

3.1.3. If necessary: Statement on implication for agreement and justification

JAMA indicates that the premise on which the achievement of the CO2 emission targets rests is not only the development of technology necessary for improving fuel efficiency but also for upgrading the quality of the fuel products that make this possible. JAMA states that the lean-burn gasoline engine will not become an effective technology without exhaust gas treatment technologies such as NOx catalyst. According to JAMA the same can be said for the diesel engine and it will not be effective until Diesel Particulate Filter (DPF) and NOx catalyst are fitted.

The Commission services notes the importance which JAMA attributes to fuel quality but considers that the provisions of Directive 98/70 on fuel quality are being complied with. With respect to «Zero Sulphur Fuel» the Commission services are currently studying the need of such fuels and the possible repercussions of its production and distribution to other industrial sectors. The Commission services intend to report on the results of this investigation by the end of the year 2000.

3.2. Distortion of Competition - link to 4.7.1

3.2.1. Description of state of assumption

3.2.2. Statement on whether assumption is up-held or compromised

3.2.3. If necessary: Statement on implication for agreement and justification

In the negotiations between JAMA and the Commission on JAMA's CO2 Commitment all key factors of competition were taken into account when determining the intermediate and final reduction levels and timetable needed to undertake a reduction effort equivalent to ACEA's. JAMA is satisfied that the Environment Council of October 1999 concluded that JAMA committed itself to CO2 reduction efforts equivalent to those of other associations.

3.3. Promotion of CO2 efficient technologies

3.3.1. Description of state of assumption

3.3.2. Statement on whether assumption is up-held or compromised

3.3.3. If necessary: Statement on implication for agreement and justification

Nothing to report.

3.4. Acceptance of innovation

3.4.1. Description of state of assumption

3.4.2. Statement on whether assumption is up-held or compromised

3.4.3. If necessary: Statement on implication for agreement and justification

Nothing to report.

4. OTHER ISSUES

4.1. New Measures affecting CO2 - and link to 3.3 (diffusion issues)

4.1.1. Description

4.1.2. Comment on impact of the issue and on implication for agreement

Nothing to report.

4.2. New regulatory measures

4.2.1. Description

4.2.2. Comment on impact of the issue and on implication for agreement

JAMA anticipates that the End-of-Life Vehicle (ELV) Directive will have adverse implications for the fuel efficiency of cars, as it may limit in its opinion the use of certain light materials and technologies, while burdening significantly the companies.

The Commission does not expect repercussions of the ELV Directive on the CO2 commitment.

4.3. Fiscal Measures

4.3.1. Description

4.3.2. Comment on impact of the issue and on implication for agreement)

Nothing to report.

4.4. Breakthrough technologies - and link to 3.3 (diffusion issues)

4.4.1. Description

4.4.2. Comment on impact of the issue and on implication for agreement

Nothing to report.

4.5. Research Programmes

4.5.1. Description

4.5.2. Comment on impact of the issue and on implication for agreement

Nothing to report.

4.6. Other measures - telematics, infrastructure, education

4.6.1. Description

4.6.2. Comment on impact of the issue and on implication for agreement

JAMA believes that measures such as the promotion of trade-in purchase of new cars, presentation of correct and proper car maintenance methods, driver training, optimisation of infrastructure, effective and efficient land use, and efforts to achieve a smoother traffic flow will have a beneficial effect on CO2 reduction. JAMA thinks that such measures should therefore be embraced in a positive manner under government lead and with the co-operation of the industrial sectors involved.

JAMA, for its part, also engages in driver education activities for more environmentally friendly driving in the EU.

4.7. Economic situation of the car industry (This includes, for KAMA only, a report on hampering measures)

4.7.1. Description

4.7.2. Comment on impact of the issue and on implication for agreement

In the European market, JAMA believes that Japanese car manufacturers have lost their competitive price edge to European manufacturers as a result of the combination of a weak Euro and a strong Pound.

While the domestic Japanese market is showing signs of a recovery the situation remains strained.

JAMA explains that the Japanese government is considering the introduction of measures such as the imposition of a green or environment tax to tackle the issue of global warming. JAMA argues that these measures are believed to impact demand trends. The Amended Japanese Energy Saving Act spells out what are seen as stiff target values for car manufacturers. They will have a substantial impact on management.

For the reporting period, the Commission services have no evidence of negative impacts on the economic situation of JAMA's member companies associated with the CO2 commitment.

5. CONCLUSIONS

5.1. Progress Statement on Delivering the Agreement

Japanese automobile manufacturing companies will concentrate on CO2 emission reductions by developing low-emission cars. Although Japanese companies have begun to put more CO2 efficient gasoline cars (emitting 119 g/km) on the EU market in 1999 and have launched a 80 g/km gasoline-hybrid car on the market in 2000, there was no sign of significant CO2 emissions reductions due to these factors during the period 1995 to 1999 due to low sales volumes.

5.2. Statement on Expected Future Progress of the Agreement

The estimated target range of 165-175 g/km in 2003 and the final target value of 140 g/km in 2009 require further serious effort by the Japanese automobile manufacturers. Importantly, and as agreed upon, this target will mainly be achieved by technological developments affecting different car characteristics and market changes linked to these developments. Regarding technological developments, JAMA reiterated that its members would aim at a high share of new cars equipped with CO2 efficient technologies. Japanese automobile manufacturers have agreed to make every endeavour to contribute to the achievement of JAMA's goals.

In order to achieve the targets JAMA believes that the following would be desirable:

1. Improving the quality of the fuels available on the market.

2. Sound development of automobile industry and manufacturers' stable profitability.

3. Adopting measures to diffuse CO2 emission reduction technologies in consideration of a balanced approach with regard to other regulatory requirements.

However, up to now; none of these issues hampered the improvement of fuel efficiency.

Data Annexes

Data Annexes (1995-1999) attached to the report

B1 : SPECIFIC FUEL CONSUMPTION AND EMISSIONS OF CO2 AVERAGED OVER ALL NEWLY REGISTERED PASSENGER CARS FOR EACH DIFFERENT FUEL-TYPE, FOR THE EU AND EACH MEMBER STATE

B2 : THE DISTRIBUTION OF CO2 EMISSIONS IN THE NEW PASSENGER CAR FLEET FOR EACH DIFFERENT FUEL TYPE, FOR THE EU

B3 : THE DISTRIBUTION OF AVERAGED MASS, POWER AND ENGINE CAPACITY OF NEW PASSENGER CARS FOR EACH FUEL TYPE FOR THE EU-15 AND EACH MEMBER STATE

B3a. The Distribution of New Passenger Cars: by Average Mass (kg) [6]

[6] Curb weight of vehicles.

B3b. The Distribution of New Passenger Cars: by Average Engine Power (kW)

B3c. The Distribution of New Passenger Cars: by Average Engine Capacity (cm3)

B4 EU-15 LIST OF ALL M1 VEHICLES (BY MODEL) COVERED BY THE COMMITMENT (1995-1999), AND THEIR MEMBER STATE AVAILABILITY

>REFERENCE TO A GRAPHIC>

Monitoring of KAMA's commitment on CO2 Emission Reduction from Passenger Cars (1995-1999)

Final Version

11. 07. 2000

Joint Report of the Korea Automobile Manufacturers Association and the Commission Services

Joint Monitoring by European Commission and KAMA of Environmental Agreement on CO2 Emission Reduction from Passenger Cars

ES SUMMARY OF PROGRESS IN DELIVERING THE AGREEMENT

E1 Trends in specific emissions of CO2 (g/km) (averaged over all newly registered passenger cars for the EU and for Member States: 1995-1999)

Between 1995 and 1999 average specific CO2 emissions of passenger cars sold by KAMA members on the EU market have decreased slightly from 197 g/km to 194 g/km, overwhelmingly driven by the trend of gasoline vehicles. Before 1997 there has been a small increase in specific average CO2 emissions in the beginning of the reporting period (see Figure 1).

>REFERENCE TO A GRAPHIC>

Figure 1. EU Trends of KAMA's fleet in specific average emissions of CO2

E2 Trends in specific fuel consumption by fuel type (l/ 100 km) (averaged over all newly registered passenger cars for the EU and for Member States: 1995-1999)

Specific fuel consumption (litres/100 km) of gasoline engine and diesel engine is proportional to their CO2 emissions - the lower the fuel consumption, the lower the emissions.

Gasoline passenger cars, which occupied most of KAMA's sales volumes in 1995-1999, consumed about 8.1 l/100 km in 1995, reaching their maximum consumption in 1997 (8.3 l/100 km), which decreased afterwards about 7.6 l/100 km in 1999. Diesel cars consumed an average of 11.6 l/100 km in 1995, achieving their lowest fuel consumption in 1997 (9.2 l/100 km) and increasing slightly afterwards (9.5 l/100 km) in 1999.

Total fuel consumption did not differ much from that of gasoline passenger cars due to the small sales volume of diesel cars (see Figure 2).

>REFERENCE TO A GRAPHIC>

Figure 2. Trends of KAMA's fleet in specific average fuel consumption by fuel type

E3 Trends in physical fleet characteristics (mass (kg), engine capacity (cm3), engine power (kW)) averaged over all newly registered passenger cars in the EU (Optional) (1995-1999)

General trends in physical characteristics show slight variations over the years, mainly due to a recently increasing small (<1000cc) gasoline car sales volume which resulted in an overall decrease in the average vehicle weight, engine capacity, and engine power.

E4 Technical developments introduced to reduce CO2 emissions (including introduction of new technologies e.g. direct injection, low (less than 120 g/km) emission cars, and alternative concepts)

There was no special new technology to reduce CO2 introduced by KAMA members within the reporting period. Most developments have been made to reduce other emissions than CO2 for meeting the low emission vehicle regulations such as EURO-III. Cars with low CO2 emission technology like lean burn engine could not be launched to the European market although they were introduced in the Korean market, due to the stringent emission regulations. KAMA expects fuel-efficient lean burn cars (with de-NOx catalyst) to contribute to reducing CO2 emission in the near future.

E5 Brief overall assessment on progress in relation to the target

Although Korean automobile manufacturers tried to make environment friendly automobiles, their main objective within the reporting period was to meet the standards for regulated emissions (hydrocarbon, carbon monoxide, and nitrogen oxides). In this respect it should be mentioned that the reporting covers a period before the Environmental Agreement with the Commission on CO2 reduction from passenger cars was in place.

Due to the increased sales of small gasoline car sales on the European market, a small decrease in average specific CO2 emissions was accomplished between 1995 and 1999, from 197 g/km to 194 g/km. To achieve the CO2 emission targets agreed upon in the commitment by 2004 and 2009, Korean automobile manufacturers have begun to concentrate on fuel efficient car technologies.

1. MONITORING OF TECHNOLOGICAL DEVELOPMENTS AFFECTING THE AGREEMENT

1.1. Agreement Initiatives (optional)

1.1.1. R&D

Korean automobile manufacturers consider investments into R&D as a key element for meeting the CO2 targets of 2004 and 2009.They have already started new R&D projects aiming at reducing passenger car's CO2 emissions as well as other emissions (see description in section 1.2.1).

Section 1.2 also covers KAMA technological developments and research programme activities.

1.2. Technological developments

1.2.1. Description of technological developments and their fuel efficiency characteristics (new technologies, alternative concepts)

1.2.2. Availability of New Technologies in the EU and Member States

1.2.3. Availability of alternative concepts passenger cars in the EU (optional: in Member States)

1.2.4. Availability of low emission passenger cars (e.g. emitting less than 120 g/km)in the EU (optional: in Member States)

Description

Korean automobile manufacturers are running several programmes to investigate methods to reduce automobile CO2 emissions, in place for several years now. The activities can be divided into 4 major activities: The Engine Programme, the Transmission Programme, the After-Treatment Improvement Programme, and the Car Weight Reduction Programme.

*Engine Programme

Korean automobile manufacturers are developing higher performance and lower CO2 emission engines. There are two different engine concepts being under development. One is the HSDI (High Speed Direct Injection) Diesel engine with common rail system. This technology is one of the most promising alternatives, which has been investigated and already launched to the market by several automobile manufacturers in the world. HSDI will allow a 10% to 20% gain in fuel efficiency as compared to conventional gasoline cars. Another is the GDI (Gasoline Direct Injection) engine technology, which will allow a 10% higher fuel efficiency than conventional gasoline cars. One KAMA member company already completed the development of a GDI engine and is now trying to develop this engine further aiming at smaller cylinder capacities. KAMA expects those passenger cars with HSDI engines and GDI engines to be launched onto the EU market by the end of 2003.

* Transmission Programme

Transmission is one of the major factors affecting emissions. Its efficiency and speed are the main factors to be improved so as to reduce emissions. Korean automobile manufacturers have already reviewed the CVT (Continuously Variable Transmission) concept and are considering its application to passenger cars in the EU. CVT has already been applied to a small car (<1000cc) in Korea and showed its potential to reduce CO2 emissions compared to conventional automatic transmission vehicles (by 3% to 5%).

*After Treatment Improvement Programme

Korean automobile manufacturers are investigating several after-treatment systems to be used in the near future, e.g. 4-way catalyst and photo catalyst systems. These will be applied to different car classes such as small and/or medium size cars that will be launched onto the EU market from 2002 at the earliest.

* Car Weight Reduction Programme

This programme is one of the major measures to contribute to CO2 emissions reduction. Korean automobile manufacturers are developing aluminium bodies and chassis for lightweight vehicles. This activity will consist of extrusion, three-dimensional bending, casting as well as tube hydro-forming. In the case of chassis, the suspension system is a promising area where new technology can be applied.

KAMA is convinced that these programmes will contribute to further reducing specific CO2 emissions.

Availability of these new technologies

There have not been any innovative new CO2 efficient technologies applied to decrease CO2 emissions put on the EU market between 1995 and 1999.

No alternative concept passenger cars have been made available on the EU market between 1995 and 1999.

No passenger car offered by KAMA's members on the EU market between 1995 to 1999 met the criteria of emitting less than 120 g CO2/km. In order to meet this requirement Korean manufacturers are currently developing a diesel passenger car with common rail technique, hybrid electric vehicles (HEV) and fuel cell cars.

A KAMA member company launched the mini-car model with manual transmission in the EU in 1997, with two models having engine capacities of less than 800cc and emitting 150 to 160 g/km.

1.3. Description of market trends in physical fleet characteristics (mass (kg), engine capacity (cm3), engine power (kW) in the EU and Member States)

There has been no significant market trend with regard to the physical fleet characteristics within the reporting period, even though most parameters have decreased in general (see Section 2.4).

2. STATISTICAL MONITORING (1995-1999)

2.1. Listing of all (M1) newly registered passenger cars (model level) in the EU

See Table 4 in Annex [7].

[7] Table 4 presents a list of available M1 vehicles covered by the Commitment, not the 'grey areas' around M1 vehicles potentially registered as N1 in some Member States.

2.2. Trends in specific emissions of CO2 (g/km)(averaged over all newly registered passenger cars by fuel type in the EU and Member States)

As shown in Figure 1 (Recall chapter E1), the average specific CO2 emissions of passengers sold by KAMA's members on the EU market increased from 197 g/km in 1995 to 203 g/km in 1997. After 1997 it decreased to achieve 194 g/km in 1999. That means that there were only slight CO2 emission reductions of about 1.5 % achieved by KAMA's members on the European market within the reporting period. Specific CO2 emissions from gasoline automobiles, which occupied most sales volumes, reached a maximum in 1997 and decreased afterwards due to the small car (<1000cc) sales increase. Diesel cars with higher CO2 emissions due to its heavier weight had the minimum CO2 emission in 1997 and increased afterwards slightly.

Although the thermal efficiency of diesel engines is better than that of gasoline engines, their fuel efficiency was lower for diesel than for gasoline engines, due to the larger size of diesel vehicles. The overall trend in total fuel consumption shows a small decrease from 1997 onwards, mainly driven by the decrease in gasoline fuel consumption.

Trends in average CO2 emissions do differ across Member States (see Annex).

2.3. Number of newly registered passenger cars (by fuel type in the EU and Member States)

The number of gasoline passenger cars sold steadily increased from 148,643 in 1995 to 379,666 in 1999. In particular, the sales volume share of small size engine cars has increased since 1998, which contributed to lower CO2 emissions. The number of diesel passenger cars sold increased from 2,723 in 1995 to 34,286 in 1999 - although remaining small as compared to gasoline cars - which slightly affected the increase of CO2 emissions (see Figure 3).

KAMA's market share of total EU passenger cars (gasoline + diesel) was 1.5 % in 1995, and 3.1 % in 1999.

>REFERENCE TO A GRAPHIC>

Figure 3. Number of newly registered passenger cars by KAMA's members

KAMA's fleet composition has changed over the reporting period. The share of cars emitting more than 181 g/km has decreased (or remained constant) for all the upper categories, with the exception of the 251-300 g/km category (+4%). The share of cars emitting between 161 g/km and 180 g/km has increased by 6.3% while the share of cars in the 181-200 g/km category has decreased by 16.5%. The share of cars in the lowest category 141-160 g/km has increased by 7.5% (see Figure 4).

>REFERENCE TO A GRAPHIC>

>REFERENCE TO A GRAPHIC>

Figure 4: KAMA's Fleet Composition per CO2 Category in Shares of Total

2.4. EU trends in physical fleet characteristics (mass (kg), engine capacity (cm3), engine power (kW)) by fuel type averaged over all newly registered passenger cars; and relationship to CO2 emissions)

Average total automobile mass was 1,057 kg in 1995 and decreased by 3.6% from 1995 to 1999. The average mass reached a maximum of 1,109 kg in 1998 and decreased afterwards (1,096 kg in 1999).

Gasoline automobiles reached the maximum average mass of 1,074 kg in 1997 (against 1,043 kg in 1995) and decreased to 1,039 kg in 1999, i.e. decreased by 0.4% within the reporting period. Diesel automobiles average mass reached the minimum of 1,630 kg in 1997 (against 1,789 kg in 1995) but increased to 1,731 kg in 1999; i.e. decreased by 3.2% within the reporting period. The overall trend in average mass shows very low variations in mass over the 1995-1999 period.

Total engine capacity has steadily decreased from 1,589 cm3 in 1995 to 1,416 cm3 in 1999 (with a slight increase in 1996). Gasoline engine capacity reached the maximum 1,583 cm3 in 1996 (against 1,568 cm3 in 1995) and decreased to 1,328 cm3 in 1999. Diesel engine capacity reached the minimum 2,316 cm3 in 1998 (against 2,735 cm3 in 1995) and increased to 2,396 cm3 in 1999. The overall trend shows some reasonable variations in engine capacity over the reporting period, mainly due to a more significant drop in gasoline engine capacity since 1995 (-15%) and a 12% lower (but stabilised) diesel engine capacity.

Total engine power reached the maximum 71 kW in 1997 (against 67 kW in 1995) and decreased to 61 kW in 1999 i.e. decreased by 9% over the reporting period. Gasoline engine reached the maximum 71 kW in 1997 (against 67 kW in 1995) and decreased to 60 kW in 1999, i.e. decreased by 10.4% over the reporting period. Diesel engine power has slightly increased by 4.5% within the reporting period i.e. from 66 kW in 1995 to 69 kW in 1999.

While the average mass increased over the period, CO2 emissions fell. Capacity and power characteristics, however, fell faster than CO2 emissions.

>REFERENCE TO A GRAPHIC>

Figure 5A: Market trends in physical fleet characteristics for KAMA Members

Figure 5B: Trends in Physical Characteristics and Specific CO2 emissions

2.5. Trends in new technologies in the EU and Member States supported by data when possible (optional) (e.g. % or number of total newly registered passenger cars which are direct injection)

Nothing to report.

2.6. Trends in alternative concepts passenger cars in the EU and Member States supported by data when possible (optional) (e.g. % or number of total newly registered passenger car)

Nothing to report.

2.7. Trends in low emission passenger cars in the EU and Member States supported by data when possible (optional) (e.g. % or number of total newly registered passenger cars which emit less than 120 g/km)

Nothing to report.

2.8. Data methods (Monitoring Decision annexes II & III), data sources, and data confidence levels

KAMA has utilised in this report CO2 statistics supplied by the French-based association AAA (Association Auxiliaire de L'Automobile). AAA is an independent organisation under public mandate, whose business is to develop and sell data to clients. In France they are official providers of automobile statistics to the government agencies. They have devoted their resources to the development of a database to monitor CO2 emissions. They use official data sources in the Member States for car registration data. AAA's CO2 database covers, in a consistent manner, over 90% (90-92%) of the EU and the rest are unknown figures (data for Finland and Greece are not available), and is widely regarded as one of the most reliable data sources currently available. The uncertainties incorporated into the figures shown in this report due to the incompleteness of the data set cannot be numerically quantified. However, they are estimated to be small. It can be assumed that they do not influence the overall result of the monitoring.

2.9. Description of measurement issues for CO2 Emission Factors (pre and post 1995)

KAMA's CO2 emissions figures have been established according to Directive 93/116/EC, which replaced the old Directive 80/1268/EC. The new test cycle has been fully implemented as from 1.1.1997, and will be applicable for the coming years. Among other changes, the new cycle includes for the first time a cold start period, and consequently values for fuel consumption and CO2 emissions are higher under the new system. The implementation of this new measuring procedure has led to an artificial average increase of 9% of the CO2 emission figures, compared to the previously used directive, whereas the CO2 emissions from cars in the real world have not changed.

2.10. Other Issues

Nothing to report.

3. KEY ASSUMPTIONS TO THE AGREEMENT

3.1. Availability of Enabling Fuels

3.1.1. Description of state of assumption

3.1.2. Statement on whether assumption is up-held or compromised

3.1.3. If necessary: Statement on implication for agreement and justification

Nothing to report.

3.2. Distortion of Competition - link to 4.7.1

3.2.1. Description of state of assumption

3.2.2. Statement on whether assumption is up-held or compromised

3.2.3. If necessary: Statement on implication for agreement and justification

Nothing to report.

3.3. Promotion of CO2 efficient technologies

3.3.1. Description of state of assumption

3.3.2. Statement on whether assumption is up-held or compromised

3.3.3. If necessary: Statement on implication for agreement and justification

Nothing to report.

3.4. Acceptance of innovation

3.4.1. Description of state of assumption

3.4.2. Statement on whether assumption is up-held or compromised

3.4.3. If necessary: Statement on implication for agreement and justification

Nothing to report.

4. OTHER ISSUES

4.1. New Measures affecting CO2 - and link to 3.3 (diffusion issues)

4.1.1. Description

4.1.2. Comment on impact of the issue and on implication for agreement

Nothing to report.

4.2. New regulatory measures

4.2.1. Description

4.2.2. Comment on impact of the issue and on implication for agreement

More stringent regulations of emissions, safety, and recycling can affect the effort to reduce CO2 emissions. For example, such regulations may contain legal, technical or procedural requirements which in practice could create technical or other impediments to the objective of reducing CO2 emissions. Compliance with such regulations may also increase costs for manufacturers, thereby affecting their financial situation and having an impact on the resources available for developing CO2 efficient technologies. KAMA member companies could not make use of the lean burn engines due to the stringent EU emission standards. However, no negative impact could be identified within the reporting period.

4.3. Fiscal Measures

4.3.1. Description

4.3.2. Comment on impact of the issue and on implication for agreement)

Nothing to report.

4.4. Breakthrough technologies - and link to 3.3 (diffusion issues)

4.4.1. Description

4.4.2. Comment on impact of the issue and on implication for agreement

According to KAMA the development costs for breakthrough technologies will be higher for KAMA members than other associations which have a higher sales volume in the European Union. In addition, there has been no diesel emission regulation for passenger cars (except for jeep-type 4WDs) in Korea. KAMA argues that the development cost per diesel powered car will be much higher compared to other automobile manufacturers that sell diesel cars in large volume in the EU.

4.5. Research Programmes

4.5.1. Description

4.5.2. Comment on impact of the issue and on implication for agreement

Nothing to report.

4.6. Other measures - telematics, infrastructure, education

4.6.1. Description

4.6.2. Comment on impact of the issue and on implication for agreement

Nothing to report.

4.7. Economic situation of the car industry (This includes, for KAMA only, a report on hampering measures)

4.7.1. Description

4.7.2. Comment on impact of the issue and on implication for agreement

At the end of 1997, the economic situation of Korea was weak and measures by the International Monetary Fund (IMF) were put in place. The Korean automobile industry was confronted with financial difficulties; therefore some automobile manufacturers had to be merged or are about to be sold through international bidding. Automobile industry in Korea is suffering rapid restructuring, budget cuts and reduction of engineers staff, which affects significantly the efforts in research and development of fuel-efficient cars. Therefore, the situation of the Korean car industry associated with the Commitment is quite different from that of other countries' car industries. The economy recently, however, shows signs of