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Ford To Pool With Competitors To Meet EU Emissions Regulations

What’s happening? Ford will pool its fleet with other automakers in a bid to bypass CO2 fines after it was revealed it will fail to reach European emissions limits this year due to plans to recall around 20,500 Kuga plug-in hybrid sport-utility vehicles (PHEV). Updated EU rules require carmakers to limit emissions to 95 grams of CO2 per kilometre. PHEVs are part of Ford’s $11.5bn plans to electrify its fleet. The firm has not yet identified the companies it will team up with to meet emissions restrictions and has not commented on plans to reach CO2 targets by itself in 2021.
 
Why does this matter? Transport emissions in the EU are sizeable, accounting for roughly 27% of the bloc’s total and, until recently, they've been growing. Road transport is by far the most significant contributor, making up around 70% of the EU’s total transport emissions.
 
To address this, the European Commission has implemented a programme forcing manufacturers to lower the average fleet-wide emissions of vehicles they are selling into the European market, with a target of 95 g of CO2 per km by 2021.
 
A number of flexible compliance mechanisms were introduced by the EU, however, one of which was to allow manufacturer pooling to meet the targets – which Ford is taking advantage of. A recent analysis puts Ford higher than most other manufactures for emissions from vehicles sold in Europe in 2019, due, among other factors, to the relative lack of electrification in its fleet.
 
Other manufacturers are also taking advantage of this controversial pooling flexibility, with SAIC joining a pool with Volkswagen Group, and Fiat Chrysler doing the same with Tesla last year. Analogous to the EU’s Emissions Trading Scheme, the compliance mechanism means manufacturers that will underperform can pay others to join a pool with them and avoid fines – the difference being this payment will not reach authorities where it could be used to support further low-carbon initiatives.
 
Pools or no pools, the sector as a whole has a lot of work to do. Recent analysis shows new cars sold in the EU in 2019 had average CO2 emissions of 122 g per km – one gram higher than 2018.
 
Further thought from Curation – Leaving aside the arguments around such watering down of rules letting manufacturers off the hook, Ford says had it not recalled its Kuga PHEVs it would have been on track for the target and would not have had to seek to pool.
 
Vehicle product recalls for safety issues have been joined over recent years by the notable examples of recalling due to misguidance on real greenhouse gas and air pollution levels, recently seen last year with Jaguar Land Rover.
 
Such recalls clearly will result in additional emissions in themselves, but as regulators continue to focus on improving estimates of vehicles’ real-world emissions, rather than those from old testing regimes that were not fit for purpose, could PHEVs be in for trouble? A recent study estimates their real-world emissions are over twice those advertised.

Lateral thought from Curation – While Ford is attributing failing to meet its emissions target on a recall of PHEVs, it should be noted that reducing carbon footprints is more complex than replacing ICE vehicles with EVs or hybrids. Research last year by MIT and Ford found that, in some locations, bigger reductions in emissions could be achieved by switching to cars with lightweight ICEs instead of EVs when taking into account driving behaviour and local generation mix. Taking such factors on board, therefore, could result in a more effective solution being found.

Nick Finegold is Founder & CEO of Curation Corp, an emerging and peripheral risks monitoring service.


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