China the focus in clean cars race

By ELAINE KURTENBACH, AP Business Writer Fri Nov 16, 3:38 AM ET

ANTING, China - Automakers racing to find affordable ways to make cars environmentally sustainable are zeroing in on polluted, fuel-scarce China to help them take clean car concepts from the laboratory to the market.

Mounting alarm over global warming and soaring crude oil prices was evident among automakers showcasing their latest green technologies at the Challenge Bibendum, held this week in Shanghai's "Auto City" — an industrial zone to the west of the city.

At the 2004 Shanghai Bibendum, named after the puffy mascot of French tire-making sponsor Michelin, the talk was all of phasing in various technologies over decades.

Today, with crude oil prices encroaching on $100 a barrel, it's of moving ahead with all technologies as soon as possible, especially in China, where environmental crises and fuel shortages resulting from its embrace of the automobile make it a microcosm of global trends.

"We used to talk about timeframes of short-mid-long-term. Now all of them are in play to figure out what are the different options for the different markets," said Elizabeth Lowery, vice president for environment, energy and safety policy at General Motors Corp.

With its huge market and high velocity growth, China is "critical" to the effort to reduce dependence on petroleum and carbon dioxide emissions, Lowery said in an interview.

In both oil consumption and vehicle sales, China ranks second globally after the United States and is fast catching up. Vehicle sales jumped 25 percent last year to 7.2 million units, including trucks and buses.

Spurred by the country's growing dependence on oil imports, the government targeted cleaner cars as a priority in February 2006 as part of a broad range of efforts to reduce carbon emissions and improve energy efficiency.

It has promised grants and tax breaks to support industry efforts, and recently issued rigorous standards for makers of alternative fuel vehicles.

The urgent need for progress was evident outside the Bibendum venue, where a gray haze hung over the sleek concept cars whizzing around the parking lot.

Worldwide, automakers are investing billions of dollars to develop more eco-friendly vehicles to meet stricter standards on auto emissions and fuel efficiency, helped by recent advances in battery and fuel cell technology.

Late last month, GM announced plans for a $250 million alternative-fuel research center in Shanghai.

Both Toyota and Honda produce hybrid vehicles, which are powered by electricity and gasoline, in China and GM has said it plans to start selling a gas-electric hybrid here next year.

The challenge remains making the technologies affordable, and that hinges on boosting production volumes to reduce manufacturing costs per vehicle. Automakers are looking to the double-digit growth in China and other developing markets such as India to help realize those economies of scale.

"What really counts is applying the right technology on volume vehicles," said John Viera, director of sustainable business strategies at Ford Motor Co.

Herbert Kohler, chief environmental officer and vice president at Germany's Daimler AG, echoed that sentiment. "The number one issue is commercialization: To get the cost down."

Viera urged that Beijing promote clean cars, both hybrids and others, with tax breaks and other policy incentives.

"When we have government support, we shall launch these products for Chinese consumers," he said. "We need governments to be our partners."

So far, progress toward commercialization has illustrated the lack of a one-size-fits-all solution. For some countries, such as major biofuel producer Brazil, ethanol is a viable option. Others are increasingly relying on hybrids and other advances in traditional fuels while they experiment with fuel cell technology.

China has sought to curb an expansion in biofuel production to help protect food supplies and control prices. Thus automakers such as Ford, Daimler and Volkswagen AG are focusing on diesel, which can be processed from a variety of resources, including coal and natural gas.

"Our aim is to make diesel as clean as gas engines and gas engines as efficient as diesel," Kohler said.

Meanwhile, tire makers and chemicals manufacturers are developing new materials to reduce vehicle weight, wind resistance and ground friction — factors that can account for about a third of the carbon emissions that cause global warming.

Even road contractors have a crucial role to play in reducing pollution, recycling materials and using paving that can maximize efficiency, noted Jean Beauverd, chairman of the International Road Federation and president of road building company Colas Switzerland.

"There is a general agreement that business as usual is not an option," Beauvert said.