Climate and Energy

According to the report of the UN Intergovernmental Panel on Climate Change (IPCC) presented in early 2007, the world's climate has warmed by an average of
0.7 ºC over the last hundred years. A leading factor in this has been anthropogenic emissions of greenhouse gases, particularly CO2 from the combustion of fossil fuels. Without wide-ranging measures to reduce greenhouse gas emissions, the IPCC scenarios predict ever-accelerating warming. The consequences of this would include more frequent extreme weather events such as heatwaves and flooding.

To keep global warming within the "safe" limit of approximately two degrees, it will be necessary to undertake a drastic cut of between 50 and 85 percent in emissions between now and 2050. According to the IPCC this will require investment of up to 5.5 percent of world GDP. But as the researchers also point out, that will still be significantly lower than the cost of allowing warming to proceed unchecked.

The demand for mobility
In this respect the automobile industry is squaring up to its responsibilities. The transport sector as a whole produces roughly 14 percent of total global greenhouse gas emissions. Road transport's share of total emissions is around nine percent, of which approximately half is contributed by cars and approximately half by other forms of road transport. However, making vehicles more efficient will not in itself be sufficient to prevent a further increase in transport-related emissions. The reasons for this are partly the increase in freight traffic resulting from economic globalisation and partly the high level of demand for personal mobility, particularly in developing countries.

Global greenhouse gas emissions 2004

Risks and opportunities
While the direct physical risks to our plants from climate change are calculable, extreme weather events also pose an indirect risk to the automotive industry in that their impact on public opinion may prompt governments to adopt new regulatory measures. They may also influence energy prices and thus purchasing behaviour.

Closely related to the challenge of climate change there is also the debate on security of energy supplies. Currently, energy supplies are largely based on the combustion of fossil fuels such as oil, gas and coal. Oil supplies in particular are finite and geographically concentrated. Since the primary energy market is heavily dependent on the oil market, this increases the risk of price fluctuations. The continuing increase in the demand for energy means that the situation cannot be expected to ease in this market, even in the longer term. Mounting regulatory pressure to cut greenhouse gas emissions is a further burden for fossil fuel users.

However, increasing price- and risk-awareness on the part of fuel customers also presents the Volkswagen Group with a major opportunity. Efficient powertrains and lightweight design concepts, which remain a major development focus within the Group, are becoming a critical factor in consumer choice, while sustainable products and sustainable production are becoming a key competitive advantage in the wider market.

The challenges for the future will lie in developing renewable energy sources and suitably adapted even more efficient vehicle and powertrain concepts. This will help us to further increase our lead.

Measures to reduce energy consumption
By cutting energy consumption from production operations, we reduce not only emissions of carbon dioxide but also our operating costs and also reduce our exposure to fluctuating prices for energy and CO2 emissions rights. Regular energy audits are carried out by the Group to help further improve our energy management. At our German sites, our subsidiary Volkswagen Kraftwerk GmbH provides very efficient energy supplies.

An integral approach
By far the largest share of energy consumption and thus the largest share of CO2 emissions is accounted for by the vehicle’s service life. Compared with production, this stage involves a relatively large number of stakeholders. Along with the vehicle manufacturers themselves, these include the oil industry, the public policy-makers and, in particular, the drivers. To tie all these stakeholders into a set of measures for reducing CO2 emissions, calls for an approach that takes into account the interests of all parties. The task of the vehicle manufacturers is to develop and bring to market state-of-the-art, efficient technologies that strike the right balance between environmental protection, safety, comfort, functionality and costs.

There are no universal global solutions when it comes to tackling climate change. Within the EU, the main emphasis is on vehicle and fuel taxes, which in some cases are based on CO2 emissions. Manufacturers face different regulations on fuel consumption or CO2 emissions in different major markets. In the emerging economies, the main focus of attention is on initial motorisation, road building and supplies of acceptable-quality fuel.

The public policy-makers must ensure that the regulatory environment allows innovative vehicle technologies to be brought to market in an efficient manner. Within the framework of an integrated approach, all stakeholders – public policy-makers, the oil industry, car makers and drivers – must be involved in order to enable CO2 emissions to be reduced as cost-effectively as possible. The targets set for the automotive industry must encourage vehicle manufacturers to compete in developing the most innovative and efficient technologies without restricting manufacturer and product diversity.

As a high-tech group and leading innovator, we embrace this competition and see the challenge of climate change above all as an opportunity to offer environment-friendly powertrains and ensure their adoption, not least in high-volume market segments.