Isolated car manufacturers? The political positions of the automotive industry on the Real Driving Emissions regulation

Keywords:

Abstract:

In Europe as in the US, air pollutant emissions regulations evolved strongly since the 70’. Such evolutions are intimately correlated with technological evolution. On one hand, public bodies tighten the laws when modern technologies allow to overtake existing limits, and on the other hand, regulation are set to force industry to adopt such technologies. In this view of technology forcing standards, scholars demonstrated that as in US as UE, industry lobbies regulators to design the air pollutant emissions in a such way that the implementation of catalyst convertors in car is forced (Berg, 1985; Gerard & Lave, 2005; Lee, Veloso, Hounshell, & Rubin, 2010).
Since the middle of the 2000’, the European Commission started to work on Real Driving Emission regulation (RDE). This regulation will control NOx and particulates emissions from cars on the road during the type-approval. Current Euro 6 regulation allows car manufacturers to implement two kind of technologies coupled with Exhaust Gas Recirculation (EGR): lean nox trap (LNT) or selective catalysts reduction (SCR). However, at this technological stage, SCR seems more efficient to target the RDE limits. But SCR is more costly and difficult to implement in smaller car (Yang, Franco, Campestrini, German, & Mock, 2015).
As regulations are shaped by technological evidence, and then force technologies to be implemented, catalysts manufacturers seem to have a key role in the regulation evolution. Catalysts manufacturers participate at the various regulation working group, as the FTSs and OEMs federation. The three industries occupy separate places along the “emission controls” value chain. In this respect, their respective positions on RDE should greatly differ.

Questions

The aim of this paper is to develop a framework based on market relationship and governance of value chain to interpret the political position of catalysts manufacturers, FTSs and OEMs on RDE.

Design

The methodology used in this paper is a qualitative analysis of position papers, recent hearings at various parliaments and materials brought by industrial federations at the various working group on RDE at the European level. In a first part, we characterize the respective arguments in focusing on technological implication of RDE. In doing so, we highlight the main differences of each actors. In a second part, we use statistical evidences to characterize the position of actors along the value chain.

Findings

There are strong evidences to consider that OEMs are facing two constraints: they are responsible to comply with the regulation, as they are responsible of the value-creation of the product. On the other end of the chain, catalysts manufacturers and FTS are more and more dependent on regulation, as their emissions control activities take greater and greater shares in their global industrial activities. Such dependence on this market, coupled with the commercial relationships with OEMs, could explain the proactive position of FTS and catalysts manufacturers on this regulation. On the other hand, the difficulty to create value from such technologies and the diversity of OEMs’ profit strategies implies that OEMs’ federation position is more careful, in aiming to comply with the same technologies for all, but as the lowest possible cost. Beyond position in value chain, we also show that a diversification strategy (regarding engine technology) could also be a reason for implementing pro-active political actions.

Practical implications

In this paper, we aim to open the “black box” of the “industry position” on regulation issues that is often used in regulation capture theories. In such models, industry position is compared to consumers (or NGOs) position, in considering the economic repartition of output. Starting with a description of market relationships, this paper is an attempt to produce a systemic analysis on industrial architecture and political position of stakeholders regarding the air pollutant emissions regulation. Considering industry as heterogeneous in their activities, market, and commercial relationships leads to a deeper understanding of the political construction of regulation.

References

Berg, W. (1985). Evolution of Motor Vehicle Emission Control Legislation in Europe-Leading to the Catalyst Car? (SAE Technical Paper No. 850384).
Gerard, D., & Lave, L. B. (2005). Implementing technology-forcing policies: The 1970 Clean Air Act Amendments and the introduction of advanced automotive emissions controls in the United States. Technological Forecasting and Social Change, 72(7), 761‑778.
Lee, J., Veloso, F. M., Hounshell, D. A., & Rubin, E. S. (2010). Forcing technological change: A case of automobile emissions control technology development in the US. Technovation, 30(4), 249‑264.
Yang, L., Franco, V., Campestrini, A., German, J., & Mock, P. (2015). NOx Control Technologies for Euro 6 Diesel Passenger Cars. Market Penetration and Experimental Performacce Assessment (White Paper). Berlin: Internation Council of Clean Transportation.