Externalities of the car industry and the road to a more sustainable mobilityEsternalità nell'industria automobilistica e i possibili interventi per una mobilità più sostenibile

CHAPTER I 
THE ENVIRONMENTAL AND SOCIAL EXTERNALITIES OF OUR MOBILITY 
1.1 The car industry: an industry in distress or transition? 
Coordinated production of cars is more than 100 years old. Starting in Germany and France, it 
came of age with the mass production techniques of Henry Ford. Vehicle volumes, efficiency, 
safety, features and choice have grown steadily throughout the industry's history. It is so 
synonymous with 20th century industrial development, and so intertwined with its twin 
marvels, mass production and mass consumption, that it has been called the "industry of 
industries." 
But, all is not well in the automotive world. Worldwide, average margins have fallen from 20% 
1
in the 1920s to 5% now, with many companies losing money. This poor profitability 
performance is reflected in the industry's market capitalization: despite its huge revenues and 
employment, the automotive industry accounts for only 1.6% of the stock market in Europe, 
2
and 0.6% in the U.S. 
The overall performance of the industry can be traced to overcapacity and mature markets in 
developed countries. In the U.S., Europe and Japan, which account for 80% of world sales, 
growth has been stalling for many years. But things got worse over the last two years. At the 
moment global automotive industry faces a double challenge: it has to invest billions of euro to 
shape the transition from combustion engines to alternative drive systems. But it is also heavily 
affected by the current economic recession and the dramatic decrease in sales. 
Not only the economic recession and poor margins are bothering the car industry. The most 
important issue is the road to more sustainable mobility. We believe that those manufactures 
1 OICA Production Statistics (2007).Turnover in Automotive Industry and Economy.Retrieved 14th March 2009,from http://oica.net/category/production-statistics/2007-
 statistics/
 2 Y. Papatheodorou, M.Harris (2007, 27th October). The Automotive Industry: Economic Impact And Location issues. IndustryWeek online.
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that are able to make the shift towards more sustainable mobility will outperform their 
competitors in future. 
The number of cars on the road and thus pollution is increasing rapidly. In 1950, the world’s 
automobile population numbered about 70 million. Today, the figure is about 900 million, and 
2 billion vehicles are expected for the year 2050 (Van den Heuvel, 2009). Car manufacturers 
and society are facing enormous challenges by this immense growth. Individual mobility and 
goods transport are prerequisites for growth and prosperity in every society. But with depleting 
natural resources and increasing environmental externalities, the only way to do so will be by 
means of sustainable mobility. With the words of Erik Van den Heuvel, Director Press and 
Communications of Mercedes-Benz Benelux, the road to more sustainable mobility is about 
“making use of natural resources to fulfil diverse human requirements without restricting the 
actions of our children and grandchildren. We translate this vision by making our current engines 
more efficient, by reducing significantly all type of emissions throughout a vehicle’s lifecycle, by 
making careful use of materials that we use in manufacturing cars, vans, trucks and buses. It also 
means developing alternatives to traditional fuels, and giving thought to new drive concepts and 
the future of our transportation systems.” (Van den Heuvel, 2009) 
1.2 The externalities of our mobility 
Since World War II, cars and transport have had a heavy impact not only on our lifestyle but 
also on the environment and our health. Various studies have been carried out in order to 
assess and quantify car externalities and concerning costs. Among the issues that car industry 
faces are safety and security on the road, the use of environmental unfriendly raw materials in 
the assembly process (such as aluminium, titanium, carbon fibres, polymers, etc.), and disposal 
of old cars, batteries and their components. 
The average fuel consumption per year per car is around 1401 litres of fuel, assuming an average 
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annual distance driven per car of 17862 Km and a fuel consumption of 12.75 Km per litre. 
Naturally these figures are questionable, but since today there are around 1.023 cars per person 
3 International Road Federation, Australian Bureau of Statistics (2009), from http://www.abs.gov.au/ausstats/
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in USA (but only 9 cars for every 1000 people in China) and given the fact that demand from 
China and India, the most populated countries, is going to increase significantly, we may have a 
rough idea of the extent of the issues. 
Pollution 
The most known issue is that of air pollution: only in the EU, passenger cars alone are 
responsible for around 12% of CO₂ emissions. (Markovic-Chenais, 2001, p.12) Although there 
have been significant improvements over recent years in vehicle technology - particularly in 
fuel efficiency, which translates into lower CO₂ emissions – these have not been enough to 
neutralize the effect of increases in traffic and car size. In general one can state that the bigger 
the car, the more pollution it releases in the air, due to the more amount of fuel it needs to 
burn in order to produce mechanic energy. Pollution derives also from air conditioning system, 
that often is an optional required by consumers when they buy a new car; urban trips cause a 
much higher impact than rural trips, mainly because the higher population density in urban 
areas results in more people being exposed to the health effects of air pollution. They depend 
also upon geographic and climatic conditions. 
Substances emitted into the atmosphere, called greenhouse gases (GHG), are the cause of many 
current and potential environmental problems, such as climate change and health problems; 
the most dangerous of them is CO₂, because it is the main contributor to climate change, and 
fossil fuel burning has produced approximately three-quarters of the increase in CO₂ from 
human activity in last 20 years. Though CO2 seems to have become the main focus of 
environmental actions, it is not the only polluter associated with our transport. And moreover, 
people tend to forget that transport is only responsible for a small about one fifth of total CO2-
production. So one important challenge for the future is how to reduce the other 80 % 
effectively as well. According to the Intergovernmental Panel on Climate Change, 
anthropogenic CO2 emissions – those caused by human activity – are one cause of global 
warming along with other so-called greenhouse gases. Road traffic worldwide accounts for 
around 20 % of these anthropogenic CO2 emissions. The remaining approximately 80 percent 
of worldwide CO2 emissions derive from other sources. 
4 Observations on the U.S. Automobile Fuel Consumption Debate, 2007 November 23, from http://abcnews.go.com/
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As these figures show, the problem cannot be solved by focusing on the automotive sector 
alone. Nowadays the focus is mainly on the car industry, which tries with all technical and 
economically feasible measures to reduce its share of CO2 emissions. However, it can only 
influence global warming if all other parties responsible for emissions play their role as well. 
(Van den Heuvel, 2009) As figure 2 shows, the projected increase in C02-emssions from the 
emerging markets are quite dramatic and need to be addressed as well, since it makes no sense 
that the West reduce C02-emissions at high cost, when at the same time a few thousand 
kilometres further there are still electricity plants on charcoal without filters. 
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Fig.1: Sectorial CO2-emissions (Source : IEA, 2004) Fig. 2: CO2-emissions growth ( www.theoildrum.com,2009) 
The other pollutants from petrol, diesel and alternative fuel engines are mainly: carbon 
monoxide, oxides of nitrogen, un-burnt hydrocarbons and fine particles. The first three are 
gases and are invisible. Unlike CO₂, emissions of these pollutants are not directly linked to fuel 
consumption. Pollutant levels are more dependent on vehicle technology and the state of 
maintenance of the vehicle. Other factors, such as driving style, driving conditions and ambient 
temperature also affect emission of pollutants. Emissions of the above pollutants are being 
reduced by improving the quality of fuels and by setting increasingly stringent emission limits 
5The Oil Drum website, 2009http://www.theoildrum.com /story/2005/12/12/18171/178
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for new vehicles. As an example, it would take 50 new cars to produce the same emissions per 
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kilometer as a vehicle made in 1970. 
Compared to improvements in the emissions of toxic pollutants, there has been less progress 
on reducing CO₂ from cars. For a given type of fuel the CO₂ emissions of a car are directly 
proportional to the quantity of fuel consumed. Until recently the average fuel consumption of 
new cars was unchanged relative to that in the mid 1980’s. However, in the last few years, 
average fuel consumption has begun to drop in response to voluntary agreements by vehicle 
manufacturers to reduce CO₂ emissions and government incentives and tax punishments. 
Average CO2-emissions of new cars in Belgium dropped 17 % over a ten year period form 186 to 
154 gr./km. (FEBIAC, 2007, p. 10) 
Fig. 3: Carpark, total distance and CO2-emissions in Belgium (1990=100) (Source: FEBIAC, 2007, p. 6) 
Fig. 4. The evolution of CO2-emissions of new cars in Belgium (Source: FEBIAC, 2007, p. 10) 
Health issues 
6 Carfuel Data, official UK source for Car Fuel Consumption and Exhaust Emissions Figures, 2009, http://www.vcacarfueldata.org.uk/information/cars-and-air-pollution.asp
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