Introduction
The complexity and diversity of cars means that conventional eco-ratings such as those
used for white goods, present insurmountable difficulties. A number of environmental
ratings systems for cars are currently in use, notably in Germany (VCD Auto Umweltliste;
Auto Motor u Sport), Sweden (Rototest), but also in the UK (Environmental Transport
Association Car Buyers Guide). These are all primarily aimed at private consumers.
However, they miss out a number of key indicators. In addition, the European Commission
has announced it will introduce its own eco-rating for cars by 2000. This is likely to be
based on CO2 emissions, although a more comprehensive system will be introduced in due
course (Aea 42,1998, 13-16).

The system we are developing at the Centre
for Automotive Industry Research (CAIR) in collaboration with a European car producer, is
aimed at corporate fleet buyers, who are facing the increasing pressure of their own
company’s environmental performance and image. In the UK market, fleet or corporate
sales represent between 50% and 70% of all new car sales, depending on the definition one
uses. In 1997, for example, 1,018,419 cars were registered to businesses (Fleet News
16/1/98).

As UK companies are forced to take an
interest in their environmental performance by various stakeholder groups – particularly
customers – and are introducing environmental auditing systems, they are increasingly
facing the fact that their large fleets of company cars – in scale at least a uniquely UK
phenomenon – present a problem. Some such as MARKS AND SPENCER have started to encourage
employees to opt for more fuel efficient models as a first step (What Company Car? 1998,
15). Others are showing an interest in alternative fuels (ibid. 42-3). Some have sought
help from CAIR.

Given the fact that few UK firms consider
the abandoning of their company car fleet as an option at this stage – the company car
culture is deeply embedded in UK corporate life (cf. Wells and Hutchings 1998) – the
challenge is to optimise its environmental performance. The systems being developed by
CAIR and its partners are a first step in this direction. It is by no means
straight-forward to rate the performance of a car. It is easy in this area to err on the
side of either oversimplicity or overcomplication and we will highlight some of these
issues. A range of systems can provide fleet managers as well as ‘user-choosers’
among company employees with a simple basis for comparing the cars available to them.
However as yet there is no clear concensus on the parameters to include.

In addition we are addressing some of the
flaws of the existing systems by taking into account issues such as product durability,
but also by incorporating a segmentation system allowing a more meaningful comparison of
competing products to be made.

Overview of Existing Environmental
Ratings Systems for Cars

A number of organisations produce comparative environmental ratings systems for cars for
the use of prospective car buyers. We will assess four systems for their effectiveness,
the UK-based Environmental Transport Association (ETA) produces a ratings guide every few
years. We look at the 1995 edition. Another guide is the more comprehensive German VCD
Auto-Umweltliste, we consider the 1996 edition. Next we will assess the Swedish Rototest
system. In addition to these dedicated lists, the German car magazine Auto Motor und Sport
has started to include an environmental rating in its road test reports, which we will
assess.

ETA
The Environmental Transport Association first published its guide in 1994 (ETA 1994) and
this was updated in 1995. The 1995 edition of the ETA Car Buyer’s Guide (ETA 1995)
rates some 350 models and relies on voluntary returns by car manufacturers and importers.
As an example we give its rating for the Volvo 850:

Table 1: ETA Environmental
Rating Volvo 850

The points scoring system excludes the
yes/no categories and the type approval-based emissions data. They are based on an average
of the models listed so have the sophistication of accommodating an overall improvement
over time. The star rating has a maximum of 5 stars and a minimum of no stars, as follows:

The best 10%: 5*
The next best 10% : 4*
21% – 50% : 3*
51% – 80% : 2*
The next worst 10% : 1*
The worst 10% : no stars

So, the Volvo 850 comes in the 51% – 80%
category. However the system clearly favours small, light fuel efficient cars, as the top
ten illustrate:

Best Ten
Fiat Cinquecento
Fiat Punto 55
Fiat Panda Selecta
Fiat Uno 1.0
Subaru Vivio 2WD
Peugeot 106 diesel
Suzuki Swift 1.0
Nissan Micra 1.0L
Ford Fiesta 1.1cfi
Citroen AX Debut

The system excludes the crucial
environmental factor of durability, while the parameters for production (use of asbestos,
cadmium, etc.) and recycling (availability of manual) seem too simplistic. In the case of
recycling what matters is not so much whether a car is recyclable per se. Any visitor to
the third world will testify to the fact that all cars can be virtually completely
recycled given a need. What matters more is the extent to which cars are actually
recycled. However, the ETA must be congratulated for attempting such an excercise in the
first place.

VCD
The Verkehrsclub Deutschland’s Auto-Umweltliste (auto-environment list) is not unlike
the ETA version. It rates cars according to a series of parameters and then comes up with
a number. Unfortunately where manufacturers or importers do not respond they are allocated
0 score for that parameter and this leads to some peculiar results. The ETA uses a
weighted average in these cases. The higher the score, the more environment friendly a car
is considered to be. The parametres scored are as follows, with ratings for the Volvo 850
2L 10V:

Table 2: VCD Environmental
Rating Volvo 850

* this is a score which starts with 100
basic points, to which are added or subtracted points from the categories: power, top
speed, CO2 equivalent, noise, HC+NOX and particulates.

** This category seeks to assess to
what extent a manufacturer can be said to have a general interest in environmental issues.
It is rated out of 50, but non-respondents (such as Volvo Deutschland) get a 0 score.

The VCD also incorporates a manufacturing
score, which takes into account the following categories: paint sludge processing,
water-based paint, high solid content paint, catalyst recycling, CFC-free production
processes, formaldehyde-free production, closed loop water system, suppliers supply more
than 50% by rail or water, supply to dealers more than 50% by rail or water,
avoidance/replacement of combined materials, use of renewable raw materials, fewer plastic
variants than a year ago, use of plastics compared with 1 year ago, dealer training in
environmental protection, cold start technology built into all/some models, heated
lambda-sensor standard, alternative fuel versions (AFVs) available, same environmental
standards in non-EU as in EU plants, environmental report published, EMAS in some plants,
information policy, fuel consumption according to new EU standards available, emissions
values supplied on request, supportive of legal reduction of benzene to 1%.

Each of these categories gets a score
varying from 1 to 5 points. These categories give an additional score with a maximum of 50
and a minimum of 0. Volvo Deutschland provided no reply and accordingly scored 0. The two
sets of points are then added together to provide an overall rating with a maximum of 335.
The authors recommend buying cars which rate at least 180 and advise against buying any
car with a score of less than 60.

Many of the categories outlined by both
systems are increasingly the subject of EU regulation and scoring them becomes irrelevant
over time. At least where the is a binary answer: e.g. asbestos removed from brake/clutch
linings: yes/no. Where the legislator sets minimum standards to be met, as in emissions,
individual products can clearly exceed the standard. The inclusion of top speed or power
output also appear less than relevant. Few people drive their car at or near their top
speed and the fact that a car is capable of a high top speed does not automatically make
it less environmentally sound than a slower car. Similarly with power output. The VCD
published a new updated list in 1998, but we have not yet seen this.

Rototest
The Swedish Rototest rating system is deliberately narrower in focus in that it limits
itself to exhaust emissions. It is described (What Car 1998, 61) as an Environmental
Pollution Index, so excludes all other factors. It can be compared with the Euro NCAP
crash test (Daniels 1998) in that it deviates from established EU emissions test cycles in
favour of a system which Rototest considers gives a more realistic assessment of vehicle
emissions in real use. In order to do this they have developed their own test cycle, which
includes, for example testing at full engine load. The test does not include diesel
engined cars and considers the regulated toxins, HC, Nox and CO, as well as CO2.

The test then allows Rototest to come up
with a single figure, the Environmental Pollution Index (EPI) for each vehicle. From this
the cars are ranked. The lower the EPI, the better. Among the cars tested in the 1998
edition, the VW Polo 1.4i achieved the lowest EPI of 67, while the Chrysler Grand Voyager
3.3 LE had the highest EPI of 223. Although again perhaps too limited in ignoring most
environmental impact factors, it at least has the advantage of simplicity and as such
would be a useful tool for UK fleet buyers.

AMS
Auto Motor und Sport introduced its new environmental categories to its comparative road
tests in March 1997 (Fischer 1997). The categories considered are as follows and are taken
from a comparative road test of the VW Polo Sdi, Peugeot 106 1.5D and Ford Fiesta 1.8D,
published in the issue of 12 December 1997:

Table 3: AMS
Environment Rating

Details of how the scores are arrived at
were not available, but the format fits into AMS’ existing test scoring system and is
incorporated into the other elements to arrive at an overall score for each car of which
the environmental rating is but one element. The AMS rating has a number of advantages,
chief among these is its simplicity. Comparison with test results for larger cars also
shows that these are not penalised unduly, each comparative test primarily scoring the
cars tested relative to each other. A comparative test of the Mercedes E 55 AMG against
the Jaguar XJR from the same issue, for example came up with ratings for these two cars of
77 and 67 points respectively. However in this case perhaps not enough attention is paid
to the relative environmental impact of different sizes of car. Similarly, neither of the
German systems take durability into account.

These ratings systems do raise the question
of the validity of unofficial standards. It could be argued that EU regulation does not
satisfy many EU citizens, expecially in the more environmentally aware countries such as
the Nordic members, Netherlands, Germany or Austria. Such dissatisfaction can lead to a
new unofficial set of standards being set as happened with Euro-NCAP or the AMS off-set
frontal impact test. Daniels (ibid) warns against the dangers of such a development. On
the other hand, there is an apparent need among consumers for such stricter standards. It
is another example of the industry increasingly losing control of the debate. Although it
is increasingly successful at lobbying government and the European Commission, it is
undermined by NGOs, such as consumer groups, environmental groups and independent research
institutes. Increasingly from such developments we can discern how ‘The debate has
moved outside the direct control and influence of the automotive industry’
(Nieuwenhuis and Wells 1997, 12).

CAIR Proposal for an Environmental
Rating System

Basic Principles
There is much confusion and misunderstanding of the environmental ‘performance’
of cars. Environmental issues are diverse, wide-ranging and often contradictory. It must
be recognised that private consumers do not place environmental issues highly on their
purchasing criteria list, and that companies purchasing fleets of cars are only just
beginning to do so. Despite this, there have been a number of attempts to define an
environmental index for cars as we have seen. To be a practical proposition, the
environmental index should:

  • Be simple to understand in itself
  • Allow comparisons to be made between models
    and manufacturers
  • Use data which are already available, or
    could easily be made available
  • Be robust and difficult to challenge
  • Allow improved environmental performance to
    be reflected in the index score
  • Encompass the life cycle of the car

These considerations suggest that the
environmental index should therefore have the following characteristics.

A weighted points system
The index should be a composite of several performance criteria. The environmental
performance of cars is not reducible to a single factor such as fuel consumption in use. A
total lifetime energy consumption measure has some value (i.e. lifetime carbon cost per
car), but again would fail to capture all the issues. The composite should combine all the
factors to give a final figure. Improved environmental performance should be reflected in
an improved index figure. This is the approach we have also taken with our Environmentally
Optimised Vehicle framework (cf. Nieuwenhuis & Wells 1997, Ch7). It should always be
possible to improve the index score – that is, there should be no fixed ceiling or
standard to be attained (though there could be a baseline minimum if the index were to be
used as a regulatory measure).

A life-cycle based system
It is an important principle of environmentalism that the whole life cost should be
established. That is, the index should capture the resource and pollution costs of
manufacture, use and disposal. In principle, renewable resources are to be preferred, as
is reduced material consumption generally. As an extension of this idea, the index should
reflect and reward instances where vehicle manufacturers, their suppliers and the
franchised dealer network have environmental accreditation (e.g. ISO 14001, EMAS, etc.).

Again it could be argued that vehicle
weight be used as a proxy measure of resource consumption. That is, within a given size
segment a lighter vehicle is to be preferred over a heavier one. However, lighter does not
necessarily mean that fewer resources have been consumed – it may mean that different
materials have been used. Measuring resource consumption by weight disadvantages steel and
cast iron compared with aluminium, magnesium or plastics. As we will see below, our ESS
captures this well as in the example of the Audi A8. This positively affects use, but
ferric materials may have other environmental advantages in production, for example, which
need to be captured somewhere in the system; so weight should not be the sole criterion.

Product Durability
Another important environmental principle is that products should be durable, because this
saves the environmental cost of disposing of and then replacing the product. While it is
the case that durability has to be set against the continuous improvement in product that
arises from innovation, product improvement is not in itself a justification for making
products which are less durable. The index should therefore reward those vehicle
manufacturers whose products have a record of longevity. Clearly, this is difficult to
apply to all vehicle manufacturers – new entrants can have no record to point to. Equally,
it could be argued that some vehicle manufacturers will be penalised by the retrospective
application of a criterion which did not apply when their vehicles were originally
manufactured and sold. Generally speaking, the products of the specialist vehicle
manufacturers have longer average lifespans than those of the volume vehicle
manufacturers. Longevity is partly a function of quality and design, partly a function of
price / value. The higher the value of the car, the more worthwhile the investment to keep
it on the road. Longevity also varies by market, a factor which complicates any assessment
of the durability of the products of a particular vehicle manufacturer. However the
necessary data can probably be obtained from most national registration authorities.

An alternative approach could be to reward
those vehicle manufacturers who undertake to support the product (through spares, service,
etc.) beyond the statutory minimum required (currently 10 years after the cessation of
production of the model). The German ELV self-regulatory regime commits manufacturers to
take back their products back only up to 12 years. German producers or importers who
improve on this, by for example extending the free take-back to 15 or 20 year old cars
could be rewarded in some way. Longevity is perhaps one of the most important
environmental criteria, yet largely ignored by an industry driven by consumerism (cf.
Deutsch 1994; Nieuwenhuis 1994).