The environmental index using a
points system

Taking the above considerations, it is
possible to create a quite straightforward index which captures some (though not all) of
the issues. Table 1 gives an illustration of such an index.

Table 4: An
environmental index using a points system

This is quite a simple basic index,
strongly orientated to the ‘popular’ concerns over emissions. The only area
where there is scope for improvement in the total score beyond a defined limit is fuel
economy. The vehicle manufacturers would gain credit for having their own manufacturing
processes ISO14000 tested. A problem could emerge if an engine plant lacked such
accreditation while the assembly plant has it for example. Equally, no attempt is made to
reflect the environmental performance of the materials and automotive components suppliers
to the vehicle manufacturers. The last two variables, covering the franchised dealer
network and vehicle recycling respectively, are the most difficult to measure. However,
the emphasis is on having a system in place (rather than actual ‘performance’
per se). With the franchised dealership networks comprising over 100,000 outlets in Europe
it is clear that the level and extent of environmental good practice is going to vary
widely by vehicle manufacturer and by country. With respect to recycling, the vehicle
manufacturers have in recent years undertaken a range of experiments on vehicle
disassembly. A useful measure therefore is whether a manufacturer approved disassembly
process exists and is documented / available to the recycling industry.

Elaborations on the environmental
index

The basic index could be elaborated or
expanded upon in all of the main lifecycle phases, as is shown in Table 2. This represents
a more detailed attempt to measure the environmental impact of a vehicle, and clearly
demands a higher level of data input. One problem with measuring the manufacturing
performance e.g. in terms of energy consumption per car, is that no account is made of
differences in vertical integration.

There are clearly several objections that
could be made to the above criteria in terms of data availability, the suitability of the
measure, and the relative weight accorded. Note there is no post-use measure. This is
because the issue is actually captured by the earlier measure on % recycled materials on a
new car. A theoretical measure of how recycleable a car is will be of little value to an
index. Whether recycling happens is the issue and this depends upon the economics of each
material and the availability of suitable processing technologies.

Should some sort of measure of recycling be
deemed necessary, there are several approaches which could be adopted. One is to estimate
how much of the car can be recycled under current technologies and economic conditions. An
alternative would be to give ‘credit points’ to the vehicle manufacturers in
proportion to the number of cars they disassembled. A third approach, as used in the
simple index, would be to ensure there is a documented disassembly process which seeks to
maximize the economic recovery of materials and components. A fourth approach would be to
base the index on the (current) scrap value of the materials which comprise it. An added
complication would be re-manufacturing. While not used in the automotive industry for the
supply of components to new cars, re-manufactured parts are used for aftermarket
components. All the vehicle manufacturers can point to many practical and technical
problems with trying to use re-manufactured parts on new cars, but in principle the re-use
of an existing component is better than making a new one.

An attempt has been made to integrate car
safety performance to the index. This is an important issue but difficult to measure. One
could include the relative availability of safety equipment (seatbelts, airbags, abs,
etc.) but the true ‘worth’ of all of these features can be debated. A better
approach would be to use insurance industry data (as happens in Sweden with Folksam, and
the US) to establish real life safety performance by which cars can be compared; while the
safety of other road users should also be addressed. Clearly, there would be an issue of
data availability here.

Table 5: Refinements or
elaborations to the index

Some approaches simply seek to count the
number of safety equipment features on a car (e.g. number and type of seatbelts, airbags,
etc.). This is rather unsatisfactory, especially when considering features such as active
cruise control, because the relative safety merit of equipment is highly debatable.

A contentious measure is that which seeks
to capture the relative efficiency of the vehicle in use. This is expressed as average
fuel economy (as measured in the EU test cycle) in km/l divided by mass in kg. In effect
it is a measure of how efficiently a car is able to move a mass over a distance. The
result would have to be multiplied up to be compatible with the other index variables.
However, in principle it yields a higher score for cars that are lighter and / or more
fuel efficient. As a guide, a roughly average EU car achieves 9 km/l and weighs 1,300 kg.
This translates to a points score of 69.23 (9 divided by 1,300 and then multiplied by
1,000). A car which achieved the EU target of 30 km/l and weighed 1,000 kg would score 300
points. Clearly, any approach based on fuel economy would tend to favour diesel engines.
It could be argued that fuel economy alone is a sufficient measure as it inevitably
accounts for vehicle weight. However, an alternative view is that weight is a useful proxy
of the wider demands a car makes on the environment (see ESS below).

Segmentation is Essential
The problems with existing environmental rating systems illustrate the need for some sort
of segment-based approach. Without this, the smallest, lightest most fuel-efficient car
will always automatically win. However this ignores the importance to the customer of
other criteria such as safety, durability, the need to carry a large family or larger
loads, comfort on long distances and even such intangibles as prestige. These elements
play an even greater role within UK company car culture and it is important to develop a
system that company car users can relate to before attempting to ‘wean them off’
these other concerns. In truth, customers tend to choose not from the entire product
offering available in the market, but from a small selection, although this does not
always coincide with the segments as perceived by car makers or industry observers.

Price is often a key element in existing
segmentation systems, but has little relevance for environmental performance. In fact, it
could easily distort segments. In terms of price, for example, the Lotus Elise might be in
the same segment as the Land Rover Discovery, however few buyers would have both on their
shortlist, while they vary dramatically in terms of their environmental performance. For
these reasons we are proposing an environmental segmentation system, which will allow the
totality of vehicles in the market, or even the parc, to be grouped according to a basic
set of environmental criteria. We at CAIR tried a number of approaches, but for the sake
of simplicity and availability of data we settled on a simple proxy formula representing
the impact made by a vehicle on the environment, which is proving surprisingly robust.
Further information on the formula is available from CAIR.

Finally, it is worth considering the value
of the Volvo ELU system (Volvo 1991) in creating an environmental index. While it is clear
that this is not the purpose of the ELU system, the approach has some merit. If each
material can be given an ELU score, then the relative environmental performance on a per
car basis is simply a matter of multiplying the weight of each material by the ELU figure.
Obviously, a heavy car will have a higher ELU score than a light car. There are some
problems of course. First, the ELU/material figure assumes that all materials producers
are the same in terms of the environmental cost of production. This is clearly not the
case. Second, it assumes a given level of fuel consumption per km in use together with a
given distance travelled. While these assumptions may be valid at the material
specification stage for a given model, they will not be for the wide diversity of cars
produced fulfilling a wide range of functions. As a simple illustration, BMW have released
data to show that their cars have a much higher ‘motorway content’ (as well as
higher overall distances travelled) than the average car, and thus to use the EU average
fuel economy figure as a basis for measuring the performance of BMW cars is misleading.
Still, the approach has some merit and, as the materials producers themselves conduct
comparable life-cycle analyses, so data which could input into this approach will become
available.

The issues are complex, however it is
increasingly important to make available some sort of eco-rating for cars. Both private
car users and fleet buyers are beginning to expect it, while EU and individual country
legislation and taxation is increasingly relying on environmental criteria and the
European Commission is committed to producing some form of eco-rating for cars soon.
Besides it is important to move away from the narrow emissions-only view of the
environmental impact of cars, as we have argued previously (Nieuwenhuis et al. 1992;
Nieuwenhuis & Wells 1994).

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Dr Paul Nieuwenhuis & Dr Peter Wells