Fleet Management and the Environment

November 2000

Environmental Policy Statement

AƒMA recognises the adverse impact of the fleet industry on the environment. The Association wishes to be part of the solution to the environmental impacts from transport and will seek to include Fleet Managers, Governments, the Community and the automotive industry in any discussions on the issue.

AƒMA will support initiatives which provide practical solutions for the reduction of emissions from vehicles, and will assist its members to apply these to their individual fleet needs.

Impact on Air Quality

Today the internal combustion engine is recognised as a major contributor to urban air pollution. It represents a problem that is estimated to be killing up to 8,000 people per day worldwide.

Contained within the exhaust emissions of vehicles is a cocktail of toxic gases. The need to reduce the internal combustion engine exhaust emissions was asserted over a century ago. However, in the rush and enthusiasm for this then new means of transport, such negativity was ignored.

Greenhouse Gas Emissions

Greenhouse gas emissions are generally accepted as being contributions to increased Greenhouse effect and climate change.

Today, just over 17 per cent of Australia's total 71 million tonnes of net greenhouse gas emissions comes from the Australian transport sector. About 87 per cent of these emissions are attributed to road transport, including cars, trucks and buses.

To make matters worse the transport sector greenhouse gas emissions are also the fastest growing of any sector, rising by 15 per cent from 1990 to 1996. Without reduction measures the Bureau of Transport Economics projects that emissions from the transport sector will rise by 38 per cent between 1990 and 2010.

The Kyoto Protocol

International negotiations to put in place a post 2000 global response to help address the threat of climate changes were successfully concluded at Kyoto, Japan in December 1997. Australia has not yet ratified the agreement.

For the first time developed countries have made legally binding commitments to reduce their greenhouse gas emissions. As a result of the Kyoto Protocol, developed countries as a whole will reduce their greenhouse gas emissions by at least five per cent by 2008-2012.

In recognition of the fact that all developed countries have different economic circumstances and differing capacities to make emission reductions, each developed country has its own specific target.

Because of its particular characteristics Australia, as it specialises in the production of energy and greenhouse intensive goods - more than 80 per cent of our goods are greenhouse gas intensive - has been permitted a greenhouse gas emissions increase to eight per cent above 1990 levels. This represents about a 30 per cent reduction against business-as-usual projections of greenhouse gas emissions for 2008-12.

Collectively the European Union has agreed to a target of eight per cent below the 1990 levels.

Vehicle Emission Standards

There are a number of ways in which the impact on the environment can be reduced, these are: - - Equipment design - Fuel development - Modifying user choice and behaviour.

We look to the automotive suppliers to achieve optimum levels of emissions out of their design and equipment, to government to set the guiding rules and the fleet manager and the individual to modify their behaviour and reduce the negative impact to the environment.

There is a sort of chicken and egg situation between the government legislation and the equipment makers and fuel suppliers. Both the equipment suppliers and fuel suppliers produce their products within an existing legislative system and strive hard to gain a competitive advantage.

Every so often the government signals the introduction of major changes. The Federal government has announced its intention to adopt the European system for vehicle emission standards.

These standards referred to as "Euro 1, 2, 3, and 4" are designed to progressively reduce the level of the substances that create much of the adverse environmental impact. Basically these adverse environmental effects take the form of chemical outputs from the vehicle.

*Introduction date refers to the actual or proposed adoption by the European community. (for Australian standard targets see below) Source: Delphi Automotive reprinted by Top Gear Magazine UK August 1998

While adopting some modification to the Euro standards the federal government has advised its position is to harmonise the Australian standards with the Euro standards to the following timetable: -

- Petrol standards with Euro 2 in 2002 and Euro 3 in 2005; and
- Diesel standards with Euro 2 in 2002 and Euro 3 in 2006 (except for sulphur in diesel which harmonises with Euro 4 in 2006).
Exceptions to this approach occur where: -

- Standards have been set to lock in air quality gains already achieved by current industry performance.
- Flexibility is required in the transitional period (2002 to 2005/6); and
- The Australian market needs differ from those in Europe.

Two States, namely Queensland and Western Australia, have already passed legislation to reduce the sulphur content in diesel fuel and to achieve Euro 2 standards.

In some ways the fleet industry has to operate with what is available. While it has some choices, in general it cannot influence to any great extent the legislative regime or the manufacturing process reflecting its requirements.

Fleet Managers are obliged to select a vehicle that is "Fit for Purpose." This involves a balance of any or all of the defined job requirements, work characteristics, economic, social and industrial issues and Whole of Life Costing (WLC) calculations.

One aspect often overlooked in vehicle selection is environmental considerations. While the overriding issue should always be the objective of ensuring that the selection is fit for purpose there is no reason to exclude environmental considerations.

A further complication in the acquisition process is the established or traditional culture and attitude in many organisations to vehicle selection and allocation, as well as approaches to such issues as salary sacrificing and vehicle novation.

There are a number of ways in which the consideration of environmental issues can benefit organisations. Such considerations can sometimes achieve the dual objective of both a cost benefit and environmental friendliness. The perception that environmental considerations automatically translate into an additional cost impost for the organisation has long been discredited.

The selection process requires careful consideration and analysis. While it is true to say that in general, four cylinder cars consume less fuel than six cylinder cars we need to consider the fit for purpose element of the equation. There may be little or no cost saving after a switch to four cylinder cars if the driver is required to push the car harder to do the job.

AƒMA encourages fleet managers to examine closely fuel consumption figures. There are a number of differing sources for fuel use data such as those supplied by manufacturers, government agencies and organisations such as the NRMA's Annual Vehicle Operating Costs Guide for passenger cars and light commercials. Road tests published by newspapers and a variety of vehicle related magazines such as Business Motoring are often providers of useful information.

Model specific fuel consumption labelling effective 1 January 2001 will be of practical assistance in making informed purchasing decisions by purchasers.

There are also alternative fuel options providing a continual improvement in service performance, whilst costs are reduced. The use of liquid petroleum gas (LPG), installed in the factory or as an aftermarket option, has been commonplace for a long period.

Manufacturers now indicate major savings to Whole Life Costs calculations whereby additional purchase costs in dedicated LPG vehicles are recovered in as little as 20,000 to 22,000 kilometres.

Recent developments have seen the introduction of hybrid vehicles, dedicated LPG vehicles and the emerging use of alternative fuels such as Compressed Natural Gas.

Of course each type of alternative fuel comes with its own characteristics and requirements. However, fleet managers should consider the merits of alternatively fuelled vehicles as they are comparatively environmentally friendly and have a lower fuel cost than the traditionally fuelled vehicle.

In considering hybrid or LPG dedicated vehicles, fleet managers should take into account all associated costs such as a possible need for more frequent refuelling or for how long and what distance the vehicle can actually run on the cheaper fuel.

AƒMA accepts that in many instances there are additional costs associated with the purchase of environmentally friendly vehicles. The benefit for organisations that make the decision to go the greener route is often associated with the pursuit of being a better corporate citizenship.

What is the Greenhouse Effect?

The greenhouse effect is a naturally occurring process. Sunlight shines through the atmosphere and is absorbed by the earth's surface. The earth then releases infrared or heat energy back into the atmosphere.

Some of this energy is released to outer space, but some is trapped in the atmosphere by various (greenhouse) gases. This trapped energy keeps the planet warmer than it would otherwise be.

The rapidly increasing use and production of greenhouse gases from human activity is causing increased atmosphere warming and global warming.

AƒMA's Commitment to the Greenhouse Challenge

AƒMA was amongst the first 100 enterprises to enter into a cooperative agreement with the Commonwealth Government to address the problem of greenhouse emissions.

In taking up the challenge AƒMA has acknowledged that proper management of the fleet industry should be part of the solution. While industry and government also have a major role to play AƒMA accepts that there are initiatives the individual and the organisation can take to reduce their impact on the environment.

AƒMA is committed to working together with industry members to reduce the industry's contribution to greenhouse gases.

AƒMA has actively promoted best practice through the provision and promotion of industry awards, educational programmes and publications, and encourages member organisations to make their own commitments to the Greenhouse Challenge.

AƒMA Fleet Environment Protection Award

This award, sponsored by the Australian Greenhouse Office, is presented to an organisation for outstanding achievement in corporate fleet environment practices.

Greener Motoring Guide

In response to the fleet industry needs for information on how the individual and the organisation could modify its emissions of greenhouse gases AƒMA published the Greener Motoring Guide.

It has a single focus. The Guide was designed to provide practical advice on how drivers may take positive steps to reduce their impact on the environment and show how they can assist the environment merely through small modifications to their approach and driving behaviour. Visit the website

Government Initiatives

The Australian Government is undertaking a range of initiatives through the Australian Greenhouse Office and the Commonwealth Government's 1999 Measures for a Better Environment. They are initiating a range of measures; these include: -

- A Compressed Natural Gas Infrastructure Program that provides funding for the establishment of publicly accessible refueling facilities - The Alternative Fuel Conversion Program, which provides grants for purchasing or converting buses and other commercial vehicles over 3.5 tonnes GMV to use compressed natural gas or liquid petroleum gas fuels - Diesel and alternative Fuel Grant Scheme, which maintains the current price relativities between diesel and a range of alternative and renewable transport fuels.