Throughout this report, we refer to Ford’s climate goals as “science-based” – specifically, based on the science of climate stabilization. An advantage of this approach is that it gives us an objective, long-term goal focused on an environmental outcome – the stabilization of carbon dioxide (CO2) in the atmosphere. A disadvantage is that the goal can be difficult to explain and communicate. In this section, we delve into our science-based goal by discussing what stabilization means, how we use “glide paths” to align our product plans with emission reductions, and how our CO2 model works and how we use it in our planning.
The stabilization-based goal had its start in 2004, when Ford’s internal Climate Change Task Force faced a dilemma. After an extensive study, it was clear to the cross-functional group of senior executives that several forces were converging to fundamentally change vehicle markets, especially in North America and Europe. Current and anticipated greenhouse gas and fuel-economy regulation, rising fuel prices and growing consumer awareness of the climate change issue all pointed to a shift in sales toward cars rather than trucks and toward smaller and more fuel-efficient vehicles. We needed to rapidly reorient our product offerings.
But what should drive new product goals? As a practical matter, the Company needed to be able to meet new regulatory mandates. Beyond that imperative, we had taken to heart our responsibility to contribute to meeting the challenge of climate change. So, Task Force members decided to base product planning on the goal of climate stabilization, and they asked Ford’s in-house scientists to devise a way to test scenarios for meeting that goal.
Ford researchers have played a leading role in scientific research to understand and quantify the contribution of vehicles to climate change. We have also worked with a variety of partners to understand current and projected manmade greenhouse gas (GHG) emissions and the steps that can be taken to reduce them. Many scientists, businesses and governmental agencies have concluded that stabilizing the atmospheric concentration of CO2 at approximately 450 parts per million (ppm) may help to forestall or substantially delay the most serious consequences of climate change (see chart below).
Ford has committed to doing our share to stabilize atmospheric CO2 at 450 ppm. Using a science-based CO2 model (see The “CO2 Model:” The Science Behind Our Scientific Approach), we have calculated the amount of light-duty vehicle (LDV) CO2 emissions that are consistent with stabilizing the concentration of CO2 in the atmosphere at this level. We then calculated the long-term, sustained reductions in the CO2 emission rate (g/km) from new LDVs that would be needed to achieve 450 ppm atmospheric CO2, based on projections of vehicle sales and scrappage. Plotting these emission levels over time yields the “CO2 glide paths” that drive our technology plans.
We have calculated region-specific CO2 glide paths for North America, Europe, Brazil and China. The glide paths take into account the effects of regional differences in vehicle size and fuel consumption, government regulations and biofuel availability. Although the initial (current) CO2 emissions rate varies considerably by region, to provide the significant emission reductions needed, all regions need to move toward similar targets. For the light-duty vehicle sector to meet the 450 ppm CO2 emissions limits, all automakers must reduce their LDV emissions by the same proportion as prescribed by the CO2 glide paths (see chart below). We have shared our thinking behind the development of these industry-average targets with interested stakeholders and have received positive feedback.
In 2010, we applied the CO2 glide path methodology to develop CO2 targets for our commercial vehicles and facilities as well.
We believe that a science-based approach is the right way forward, and Ford’s sustainability plan is based on these science-based emissions targets. We compare the glide paths to competitive and regulatory factors in each region to inform long-term technology plans and identify opportunities and risks.
We caution that while our product development plans are based upon delivering long-term reductions in CO2 emissions from new vehicles that are similar to those shown for the industry-average glide paths, we anticipate that the year-over-year reductions will vary somewhat from the glide paths. In some years the reductions will be greater than those shown in the glide paths and in other years they will be less. That is because delivering on these targets will be dependent to some degree on market forces that we do not fully control (e.g., changes in energy prices and changes in the mix of vehicles demanded by the consumers in the markets in which we operate). Furthermore, our product strategy is based on multiple inputs, including regulatory requirements, competitive actions and technology plans.
We annually review the assumptions and input data in the CO2 model. Because of the long-term view of the model, we only update the glide paths on a five-year basis. In 2012 we completed the first update since the glide paths were implemented. As part of this review, we assessed our glide path analysis methodology and incorporated new forecasts for vehicle sales and the latest data on the CO2 intensity of fuels. The adjustments to glide paths based on these changes were minor.
Climate change is a long-term challenge that demands long-term solutions. We believe a philosophy of continuous improvement implemented over the long term is the correct solution to this challenge. Following the CO2 reductions called for in our glide path assessment is a significant challenge. It is a commitment that we do not undertake lightly. However, we believe that dramatic reductions in CO2 emissions are required over the long term to forestall or substantially delay the most serious consequences of climate change, and we are committed to doing our part.
Ford’s leadership in using climate science to set our CO2 targets has been recognized externally. In 2012 we received a Goal-Setting Certificate at the U.S. Environmental Protection Agency’s Climate Leadership Awards Ceremony and Conference for our global CO2 strategy.
To explore which vehicle and fuel technologies might be most cost-effective in the long-term stabilization of atmospheric CO2 concentrations, we have worked with colleagues at Chalmers University in Gothenburg, Sweden. Specifically, we are working together to include a detailed description of light-duty vehicles in a model of global energy use for 2010 to 2100. Several technology cost cases have been considered. We found that variation in vehicle technology costs over reasonable ranges led to large differences in the vehicle technologies utilized to meet future CO2 stabilization targets. We concluded that, given the large uncertainties in our current knowledge of future vehicle technology costs, it is too early to express any firm opinions about the future cost-effectiveness or optimality of different future fuel and vehicle powertrain technology combinations.2 This conclusion is reflected in the portfolio of fuel and vehicle technologies that are included in our sustainability strategy. We are continuing to develop the global energy model with researchers at Chalmers. We believe the model will provide valuable insights into cost-effective mobility choices in a future carbon-constrained world.