WASHINGTON, D.C. - Companies selling autos in the European Union are not disclosing carbon dioxide (CO2) reduction commitments or strategies to comply with a seven-year-old European Union agreement, according a new analysis released today by the World Resources Institute (WRI) and the Sustainable Asset Management (SAM) Group.

"It is unacceptable that, with only three years left to comply with the ACEA Agreement, auto companies have done little to disclose in their annual reports to investors how they plan to meet this voluntary target," said WRI's Amanda Sauer, lead author of "Transparency Issues with the ACEA Agreement:Are Investors Driving Blindly?" "The problem with the ACEA Agreement is that nobody knows what the auto companies are planning to do to bring the industry to its 2008 target."

BMW has disclosed more of its CO2-reduction strategies than the other car companies analyzed, although it could be at risk of substantial future costs under the agreement because it appears to have the highest fleet-wide CO2 emissions in the industry. Yet the report finds that without disclosure on company commitments to meet the agreement, it is impossible to know the cost exposure for BMW or any other company, even though these costs could be significant.

The ACEA Agreement establishes industry-wide targets for average emissions from these vehicles to reach 140 grams of CO2 per kilometer (gCO2/km) by 2008, with the possibility of extending the agreement to 120 gCO2/km by 2012. The industry had reached a fleet average of 165 gCO2/km in 2002, meaning an additional 15 percent reduction is needed by 2008 to meet the target. Although the scheme is voluntary, the European Commission has repeatedly stated that it will formally regulate the industry if it fails to meet the 2008 target.

ACEA stands for les Association des Constructeurs Europeens d'Automobiles or, in English, the European Automobile Manufacturers Association. The agreement was signed in 1998 between the manufacturers association, the auto companies, and the European Commission.

The WRI and SAM report examines how this lack of disclosure around the ACEA Agreement could impact carmakers by using two possible scenarios to illustrate the range of costs companies could face. The companies analyzed are BMW, DaimlerChrysler, Ford, Volkswagen, Hyundai, Fiat, PSA Peugeot Citroën, Renault, General Motors, Nissan, Toyota and Honda. Aside from Sauer, the report is co-authored by WRI's Fred Wellington and the SAM Group's Philipp Mettler and Gabriela Grab Hartmann. The 12-page analysis can be downloaded from newsroom.wri.org.

"Along with adding more low-carbon vehicles to meet the 2008 regulations, companies will have to modify their existing models, including adoption of incremental technologies to improve fuel efficiency, along with the further penetration of diesels," Mettler said. "Without knowledge of how the commitment will be met, it is impossible for stakeholders to determine how cash flows and debt levels of each company will be affected."

The analysis evaluates the cost implications of two scenarios that ACEA could use to meet the industry-wide target in 2008. The two scenarios are:

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World Resources Institute

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