Lewis Booth, Executive Vice President of Ford of Europe and Premier Automotive Group, gave a speech at the New Powertrain Technologies Conference in Amsterdam on March 28th covering many aspects of carbon emissions, global warming, environmental policy and the automotive industry's part to play in all of it. Booth made the point that the automotive industry accounts for around ten percent of carbon emissions but receives more media attention than this fraction would seem to justify. In the future he sees a transparent, cross-region and cross-sector carbon trading program as evening up the balance but realises that this is a while away yet.
Reducing carbon emissions is difficult for the automotive industry when customer pressure to build larger vehicles and legislative rules to include more safety equipment effectively hamper carbon reduction efforts. Booth's answer is for affordable, "volume solutions that can be rapidly adopted" to drive "environmental motoring into the mainstream".

Looking to the future, Booth offered several examples of technology being introduced into advanced petrol engines such as direct high pressure injection; efficient turbo charging; advanced valve actuation; and stop-start technology, with re-start effected through fuel injection. These technologies should improve fuel efficiency and reduce carbon emissions by 20 percent in next generation petrol engines. CO2 savings will be compounded by the use of advanced, second-generation biofuels which can be used in the existing car fleet without special modification. To make this happen though, the fuel industry will need to work harder to offer such low-carbon fuels.

On the topic of hybrids and fuel-cells, Booth re-iterated Ford's commitment to both technologies but warned that battery technology has to improve further and the hydrogen economy is still a while away.

Analysis: The speech is definitely worth a read and clearly shows that Ford has bets down across the full range of next-generation technologies. Two that I was not aware of were the Powershift System advanced transmission which provides 10 percent better fuel economy than an automatic and the all-aluminium construction of the Jaguar XJ and XK.

Complete transcript of Lewis Booth's speech after the jump.

Related:
[Source: Ford press release]
REMARKS BY LEWIS BOOTH AT THE NEW POWERTRAINS TECHNOLOGIES CONFERENCE

Presentation given by:

Lewis Booth
Executive Vice President
Ford of Europe and Premier Automotive Group
Ford Motor Company

At:

Automotive News Europe
New Powertrain Technologies Conference
Amsterdam RAI convention Centre, 28 March 2007

Good morning, ladies and gentlemen.

Imagine if there was a new environmental technology which would save us substantial sums on our fuel bills... and make a massive contribution to the reduction of global CO2 emissions: a technology which is widely available and which has no major drawbacks. Yes, it would require consumers to make a modest, upfront investment, but that investment would be paid back many times during the product's life. Were such a wonder technology to exist, you might think it would enjoy enormous market success.

In fact, it already does exist. It's the low energy light bulb. It's been estimated that if every American replaced just one light bulb with a low energy bulb, it would result in CO2 savings equivalent to taking nearly eight hundred thousand cars off the road.

But despite these advantages, the low energy light bulb has enjoyed only modest success to date. Which is why government bodies around the world are now taking serious steps to legislate for their introduction.

So what does this show? Simply, that it's going to take more than technology to combat global warming: even when that technology is affordable. Innovative technologies are vital but without customer demand we will not make the required progress.

Global warming is one of the biggest challenges facing our planet. It's essential for our future that we stabilise man-made CO2 levels to around 550 parts per million. To tackle climate change effectively requires a mindset change in virtually every area of human activity that generates CO2.

It's also one of biggest challenges facing the car industry today. Figures vary but – as a rule of thumb – cars and trucks contribute around ten percent of man-made CO2 emissions, with another ten percent coming from other forms of transportation. That means about 80 percent of man-made CO2 emissions comes from non-transport sources, such as power generation, household energy use, industry and other CO2-intensive activities. However, I think you'll agree that we in the auto industry seem to get more than 10 percent of the blame for man-made CO2 emissions! So, while we undoubtedly have a responsibility in the auto industry to play our part in reducing CO2 emissions, we need to keep our contribution to the situation in context.

The good news is that the issue is firmly on the agenda... not just in society in general but also in the auto industry. The seriousness of the issue is gaining ground. Hardly a day goes by without some reference to climate change in the media or in political circles. The sense of urgency is growing around the need to address the issue in an effective way.

For example, last July I suggested in a speech that one day we will all know our individual carbon footprint. At the time, that sounded like quite a radical proposition. Today, many policy-makers are thinking about the possibility of using an individual's carbon footprint as a basis for future legislation.

In the long term, the most efficient means of doing this is to treat all CO2 molecules equally, and then create incentives and disincentives for the carbon intensity of human activities. However, this would require carbon trading – both cross-region and cross-sector – which is unlikely to happen quickly enough. Even with the sense of urgency we are now witnessing, I think it is still fair to state that to create and implement such a mechanism will take time.

Therefore, the near-term approach by many governments focuses on pro-rata reductions for different industrial sectors to deliver overall targets. This does not provide the most efficient solution for the planet in terms of technology development, speed of emissions reduction, or investment efficiency. But we recognize that this is the reality we face: at least for the next five, possibly 10 years.

The urgency of the challenge requires us to work within our sector; but the scale of the challenge also requires an integrated response if we are to maximise the opportunities to reduce CO2. In our sector that means a partnership between the motor industry, fuel suppliers, government and consumers.

In the auto industry, the truth is that climate change has already affected the way we do business. As an industry, we have made significant strides in fuel economy. Over the last decade, the improvements in CO2 emissions from cars in Europe have largely come through improved engine technology. In particular, continued improvements in diesel technology – combined with the right market conditions – have resulted in greater customer appeal and spawned a significant shift in consumer buying behaviour.

But these improvements have come at a price. Since the 1970s, and increasingly over the last decade, the auto industry has invested many billions of euros to improve the environmental performance of our products. That level of spend is growing. In fact, ACEA estimates it to be around 20 billion euros a year: or roughly five percent of the industry's turnover in Europe. Like many of our competitors, the largest proportion of our R&D spend at Ford is now on environmental matters. But as we continue to climb the mountain of CO2 reduction, so the slopes become steeper and steeper.

Every additional gramme of CO2 saved is costing more in terms of financial investment, and pushing the envelope of technological capability to the limit. We already know that the existing near-term target of 140 grammes per kilometre is very challenging. The Commission's proposal for 130 / 120 grammes per kilometre represents a very difficult goal, particularly if we are to maintain our competitiveness in the European industry.

And we do have conflicting objectives. Let me take you through this example of some of the advances and penalties we have experienced in the market in recent years. The current Ford Focus 1.8-litre diesel model has better performance, improved fuel economy, and produces 26 percent less CO2 than an equivalent model from 1998. This has been achieved through actions such as: significantly improved diesel engine performance; better transmission technology; improved ancillary systems, like power steering units and alternators; and lower resistance tyres.

But at the same time we've made improvements in vehicle technology, we've also been affected by other factors which are detrimental to CO2 performance. We've faced more stringent emissions regulations, a worsening of aerodynamic drag through legislated requirements, such as larger frontal area mirrors, and additional weight as our customers – who are becoming larger themselves! – want larger vehicles with more customer-focused features, and not forgetting the weight penalties associated with regulatory requirements.

Of course, we don't oppose safety requirements, nor do we want to avoid giving our customers the larger vehicles and improved feature-content they demand. But it must be understood that such regulatory and customer demands have a negative impact on our ability to reduce CO2 emissions from our vehicles. I think this "lesson learnt" is something that legislators at the national and pan-European level do not always comprehend.

Nevertheless, despite the often opposing customer and legislative requirements, I think at Ford – and in the European auto industry in general – we already have made significant progress in reducing CO2 to date. It's also true that climate change is stimulating one of the most exciting waves of creativity and innovation we've seen since the earliest days of our business. And I won't deny that enlightened self-interest plays a part. This is a major opportunity for companies to seize competitive advantage: and there's everything to play for.

Which is why we at Ford are investing in a range of technologies to reduce fuel consumption and emissions from our Ford and Premier Automotive Group vehicles. Last year, we announced a 1.5 billion euro investment in our environmental engineering in the UK, plus we also announced the creation of a new hybrid centre of excellence to be led by Volvo in Sweden, and we continue to develop new technologies though the Ford R&D centre in Aachen in Germany. Many others in our industry are also investing heavily in environmental technologies, not just the OEMs but also our suppliers and in the fuel industry.

As I've said, the challenge of global warming requires a broad and integrated response from many sectors. But let's now focus on what we in the auto industry can do. We should recognise that the customer will choose the solutions that best meet their needs. We do not exist in a command economy and it won't be the European Union, national governments, nor even OEMs that make the final decision. It will be our customers.

So we have to ensure that any solutions are acceptable for the customer. And first and foremost for the majority of customers, this means making sure that solutions are affordable. We also must recognise that iconic solutions do not address the overall CO2 problem. A few expensive hybrid cars with limited customer uptake concentrated in a few metropolitan areas is, quite frankly, no answer. That's a luxury neither we nor the environment can afford.

We need volume solutions that can be rapidly adopted. This remains Ford's thinking when it comes to CO2 reduction. Our aim is to bring environmental motoring into the mainstream and our product strategy firmly supports this goal.

But, unfortunately, despite external comment to the contrary, the there is no single solution: no "silver bullet" which alone will deliver the environmental benefits we need. Different driving conditions, different customer requirements, different fuel infrastructures all demand that we offer a broad portfolio of solutions. This is expensive but unavoidable.

To meet the CO2 challenge, we must move ahead with a range of technologies simultaneously. Only in this way will we be able to offer consumers around the world a range of products that meet their specific needs and circumstances.

Ford's investment in environmental technologies means that we will be offering customers more than 100 models and derivatives with improved CO2 or fuel economy performance over the next six years. But make no mistake. As I've just said, it will ultimately be our consumers who decide what technologies are accepted in which markets.

So let me tell you how we see powertrain technology evolving in the next three to five years as we set about even further reducing CO2 emissions. Where's our short-term focus?

When you look back, you see that the excellent improvements in CO2 emissions from cars in Europe over the last decade have largely come through improved engine technology. We believe this trend will continue to be the case for the foreseeable future, although the focus will shift somewhat from diesels to advanced petrol engines.

Diesel has made major advances in refinement and power in recent years, enabling them to be deployed in even the most luxurious cars, such as our Jaguars. It was only when we made significant technology improvements – combined with the right market conditions – that we triggered a significant shift in consumer buying behaviour for diesel. Superior fuel economy, low CO2 emissions, combined with high low-end torque and good Noise, Vibration and Harshness characteristics: these were the ingredients for customer acceptance of turbocharged direct injection diesels. The question is can we now see similar scale of revolution in petrol engine technology? We think the answer is "Yes!"

Within the next few years we plan to offer our customers a new generation of advanced petrol engines featuring, selectively, direct high pressure injection; efficient turbo charging; advanced valve actuation; and stop-start technology, with re-start effected through fuel injection. These will be petrol engines with low CO2 levels similar to diesels, and which offer great driveability. They will be fun to drive, with excellent torque over a wide rev band, and offer exceptional refinement. Critical to their success, these engines will be affordable, for both us, and even more importantly, for our customers. And they are deliverable very shortly.

The power and efficiency of these new generation petrol engines will mean we can downsize our engine families. Tomorrow's smaller, advanced petrol engines will deliver equivalent power to today's conventional petrol engines, but with significantly improved fuel economy and CO2 emissions. We believe we can see fuel economy and CO2 savings of around 20 percent through the use of this technology, and we consider that these new, advanced petrol engines will represent a completely new family of powertrain technology.

We estimate that five years from now advanced petrol engines will account for one-third of all European sales.

The other two-thirds will be accounted for by diesel engines and existing, more conventional, petrol engines which are likely to find their place as entry level derivatives.

Diesel will continue to benefit from further investment. At Ford, for example, we see considerable growth potential for small diesel engines. In fact, we plan to launch three advanced diesel engines in the next few years with further CO2 improvements of five to 10 percent, probably more with the addition of additional powertrain technologies, such as the Belt-Integrated Starter Generator system. But the challenge for diesel remains how to control tail-pipe emissions without ever-more expensive after-treatments which would erode affordability. Failure to solve this challenge will lead to a decline in diesel's market share.

So far I've talked about diesel and petrol. But where do bio-fuels and hybrids fit into this picture?

Bio-fuels are, of course, complementary with all three of the powertrain technologies I have mentioned. As an aside, it's interesting how the recent growth in bio-fuels is at last helping to fulfil the vision of some of the earliest pioneers of our industry. When, in 1898, Rudolph Diesel demonstrated his first engine at the Paris Exhibition, it ran on peanut oil. And let's not forget that Henry Ford's Model T was designed to run on ethanol from crop waste. So, if you'll forgive the pun, it looks as if we're returning to our roots!

However, it seems certain that in most markets bio-fuels cannot entirely displace fossil fuels. Even if demand was sufficient, we don't have the agricultural capacity to produce the necessary amounts of bio-fuel. At Ford we continue to work with partners, such as BP, to explore how we can get the most out of bio-fuels and reap their CO2 benefit. We look forward to advanced, second-generation bio-fuels which can be used in the existing car fleet without special modification. Future bio-fuels will resolve many of the sustainability questions by using feed stocks which can be grown non-intensively on marginal land. But we recognize that these fuels are unlikely to be commercially-available for some time.

In the short-term, we need to take advantage of existing bio-fuels – such as ethanol – to gain better customer awareness and acceptance in the market. Ford has already developed significant experience as a leading provider of ethanol Flexi Fuel vehicles globally. In Europe, the Ford brand is the volume FFV leader, and plans to offer an FFV derivative for every carline in its range. We also offer an expanding range of FFVs through our Volvo brand as well.

But we need the fuel industry to step up to the plate and implement what is already targeted in the European Union's Bio-fuels Directive which would provide a significant increase in the availability of low carbon fuels, such as ethanol. Implementing the Directive could deliver a CO2 saving equivalent to 20 grammes of CO2 per kilometre on current vehicle technology.

The powertrain technologies and fuels I have discussed so far can have a positive effect on the environment in the short term. But we also need to keep focusing on new technologies for the longer term. We know the benefits of hybrid technologies: indeed we were the first company to launch a hybrid Sports Utility Vehicle in the shape of the Ford Escape Hybrid. But hybrids are not suited to all driving conditions and, in full hybrid form, they are expensive to produce and therefore expensive for the consumer to purchase.

It only makes sense to apply hybrid technology to fuel-efficient engines, and so the advanced petrol and diesel engines I have talked of will provide a good platform for further hybrid development.

But we don't expect the mass uptake of petrol full hybrid systems, as these are unaffordable, especially in Europe where the benefits of modern diesels are already well understood by customers. Rather than full hybrids in Europe, we expect to see the widespread adoption of component parts of hybrid technologies. For example, stop-start systems and regenerative braking will provide a cost-effective way of better combating CO2.

Longer term, Plug-in hybrids are theoretically attractive and could help limit city pollution. The Ford Edge with HySeries Drive Concept is the world's first drivable fuel cell hybrid electric vehicle with plug-in capability. Its drive technology is able to operate using a fuel cell, or a small gasoline or diesel engine connected to an electric generator to make the electricity. The car features a lithium-ion battery pack which can be recharged overnight, and gives the vehicle a range of 25 miles in battery-only mode. When the battery is depleted, the car switches seamlessly to fuel cell mode, providing a further 200 miles of range.

But batteries are not yet an economic or efficient way of storing power, and the CO2 effect across the complete system must be considered. For example, a plug-in hybrid charged via electricity generated from a traditional coal-fired power station is quite a different proposition than the same plug-in recharged from a renewable source of electricity.

It's also been estimated that an electric vehicle needs to be able to run unassisted for a minimum of 40 miles if it is to be regarded as a viable personal transportation option for consumers. Today's plug-ins don't achieve that minimum hurdle, and so we still need to achieve considerably better battery performance before plug-ins become a truly viable proposition. We'll certainly be careful not to announce anything that we cannot deliver.

As you can see from the Ford Edge Concept, we're continuing to invest in hydrogen and fuel cell technology. In North America, we were the first to go into production with a hydrogen-based internal combustion engine, the E-450: a V10 supercharged shuttle bus that's leased to local authorities. It has a range of 180 miles and has undergone 7,000 hours of durability testing, so we know it works even if it's not yet a great design statement!

But we have only scratched the surface in terms of what can be achieved with hydrogen internal combustion engine technology, and Ford is serious about maintaining our edge in this field. For example, we have fleets of fuel cell Ford Focus cars operating around the world undergoing testing. So you can see that we are learning how hydrogen works in the real world, and we are ensuring we have the technologies available for when hydrogen technology becomes feasible to implement. But we believe that the hydrogen economy is a much longer term proposition.

Let me repeat, we believe that the best way we can contribute to the global priority of stabilising concentrations of CO2 in the immediate future is through more efficient powertrain technologies, plus an increasing contribution from bio-fuels as these fuels become more widely available and even more CO2-efficient on a well-to-wheel basis. This is where we need to focus our powertrain imagination, ingenuity, and investment in the near term.

But powertrain and fuel technologies are not the only drivers of fuel economy, albeit they are the most important. Reducing vehicle weight also improves fuel efficiency. Jaguar is a world leader in lightweight technologies, having introduced two of the world's first volume all-aluminium road vehicles: the XJ and XK. We made a 40 percent weight saving on the XJ's body shell by moving to aluminium, the equivalent weight of a baby elephant!

We'll be introducing a new generation of lightweight aluminium technologies in our premium brands in the future, plus taking action to reduce weight in our volume brands through the use of more intelligent design and advanced steel structure technologies.

Other technologies include advanced transmissions, such as the Powershift System, developed jointly with Getrag-Ford Transmission. This offers the driver the control of a conventional manual transmission, whilst providing the smooth and effortless two-pedal operation of an automatic, but with a 10 percent fuel economy saving versus existing automatic transmissions. We will introduce four such transmissions across our product ranges in the near future, and we'll be looking at other areas of vehicle design and components to reduce the amount of parasitic losses.

For example, we'll also be developing a range of other technologies to improve driver behaviour, such as driver information systems and selectable driving modes that will allow the driver to optimize the operation of the vehicle to maximize the benefits of the fuel economy technologies.

So what are the implications of all this for our industry? As I said at the beginning, there is a limit to what we can achieve on our own. We need to engage all stakeholders: the auto industry; fuel suppliers; government; and consumers in the integrated approach, as outlined in the European Commission-led CARS21 High Level Final Report.

I've talked about what we can do in the auto industry. I've also spoken about what the fuel industry can do in terms of improving the supply of bio-fuels.

But government also has responsibilities – and I'm speaking here about policy-makers in general at the national and supranational levels. We need to continue to engage with governments to achieve harmonisation of standards. If each market is different, our efforts become fragmented as we try to satisfy multiple niches with a series of unique solutions. This increases costs and inhibits the introduction of new technologies.

We also need policy-makers to focus on the outcome, not the technical solution. Government should not try to second-guess the motor or fuel industries as to specific technical solutions or customer preferences. For government to promote one technology over another would lead to market distortion and could stifle both innovation and customer acceptance.

I know that this is a principle accepted by some EU Governments. But other Member States do not seem to agree. Several countries have tax incentives for specific technologies, regardless of CO2 performance. For example, a hybrid vehicle with above average CO2 emissions in Sweden, Greece and Ireland receives substantial tax breaks, whilst non-hybrid vehicles but with lower CO2 emissions do not.

We also need greater clarity from policy-makers on whether their real intention is to change consumer behaviour or to punish the consumer. For example, the recent almost doubling of the Vehicle Excise Duty for the highest CO2 emitters in the UK generates a great headline but will do next to nothing to reduce CO2. Far more effective to encourage improvement across the vehicle parc to deliver a greater overall CO2 reduction.

Finally, all of this comes down to what the consumer and we as an industry can afford. Meeting the challenge of climate change is going to require a great deal of investment. To innovate on such a broad front as I have outlined today is inevitably expensive; and this at a time when our industry has never been so competitive.

This is why I am convinced that within our industry we need to explore new ways of working together for the benefit of our planet, our customers and, indeed, our shareholders. We all need to adopt a mindset change and put environmental concerns at the top of our agenda. The size of the challenge requires all stakeholders to work together like never before.

So let's all talk: the door is open. And the integrated approach must become a reality: not a dream!

As an industry we have achieved much so far but we cannot be complacent. The time to act is now and we must do it decisively and collaboratively.

Our planet demands nothing less from us.

Thank you.

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