About “The Next-Generation Vehicle

d F l I iti ti ”and Fuel Initiative”

Ministry of Economy, Trade and Industryy y, yManufacturing Industries Bureau

Automobile DivisionAutomobile Division1

Table of ContentsTable of Contents

1. Automobile Environment/Energy Control

f2. Action for Air Pollution Problem

3 Action for Global Warming Problem3. Action for Global Warming Problem

4. Action for Energy Controlgy

5. Summary

2

1.Automobile Environment/Energy Control

3

Expanding vehicle market

Others312万台

8%Japan

602万台North America

North America1,930万台

Others2 900万台

10% Japan-US-EU90%

New Forces40%

Japan-US-E60%○ Dominance of Japan-US-EU triad until the

1980s.(Japan-US-EU : Other = 9 : 1)

602万台15%

Europe1 381万台

1,697万台43%1987

４０mil cars

,27%

EuropeJapan

2,900万台41%

71 mil cars

( p )○ Shift to quadripartite structure with growth of newly emerging forces, e.g. China and ASEAN4 (Japan-US-EU : New Forces = 2 : 1)

2007

1,381万台35%

p1,718万台

24%

Japan535万台

8%

( p )

（millions)

7030 million more cars in the last 20 years

Where has the increase occurred?

Emerging markets

(millions)

70

60

50

Japan

Emerging markets50

40

30

N. America

Europe20

10

44

Structural Changes in International Energy MarketsStructural Changes in International Energy Markets○ The oil price marked the highest level in june 2008 Recently It fluctuate between $40 and $50 However this

[Long-term changes in oil prices and structural changes in international oil markets]

○ The oil price marked the highest level in june ,2008. Recently, It fluctuate between $40 and $50. However this price is still high level.

（unit: $/barrel)

100

110

120

130

140

Arabian Light price

（unit: $/barrel)

Oil price as of June 2008:$138.54/barrel (all-time high)

60

70

80

90

100

Highest price during 2nd oil crisis: $34/barrel

9.11.2001Terrorist attacks in the U.S.

Sep. 1980Iran-Iraq War

10

20

30

40

50

Highest price during 2nd oil crisis:$11.65/barrel

Highest price during Gulf War:$32.49/barrel

2.11 1979Interim Government of Iran

0

10

1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

Stabilized period$1~2/barrel

1st structural changeCounteraction to oil crisis

Stabilized period$13~19/barrel

2nd structural changeStructural tight demand

Mar. 2003US-led attacks on Iraq8.2. 1990

Iraqi invasion of Kuwait

Oct. 19734th Arab-Israeli War

$1~2/barrel・OPEC nations nationalized their oil industries,

and raised oil prices. ・Supply sources were diversified as a result of

expanded oil production in non-OPEC nations

・Markets were stable.・Slow investment in upstream

industry caused stagnated oil

・The share of coal and oil in primary energy was overturned.

・Oil supply was stable and economic, with low fixed prices and extensive

・Global energy demand entered a structurally tight phase due to structural changes caused by a

Counteraction to oil crisis $13~19/barrel Structural tight demand

nations・Energy efficiency and alternative sources of

energy like nuclear power and natural gas were sought.

・International Energy Agency (IEA) was founded, and consuming countries started stockpiling state oil

development.・Energy consumption went up

again.

use of large tankers. Oil was a driving force for high economic growth.

weak OPEC reserve capacity and a sharp rise in energy demand in nations such as China and India.

5

Three Actions Required for Environmental/Energy ControlThree Actions Required for Environmental/Energy Control

(1) Action for air pollution problem

Radical reduction of toxic substances in exhaust gas

Radical reduction of CO2 emission volume(2) Action for global warming problem

Energy countermeasures in the transportation sector

(3) Action for energy control

Energy countermeasures in the transportation sector dependent excessively on oil (Use of oil-alternative fuels, etc.)

Solving the three problems in balance is required. 6

2.Action for Air Pollution Problem

7

History of exhaust emissions regulationsExhaust emissions regulations have been tightened along with the deepening of the air pollution problem.Since 1990, exhaust emissions regulations have been tightened mainly on diesel vehicles.

Diesel vehicleGasoline vehicle Diesel vehicleExhaust emissions

regulations

Gasoline vehicleExhaust emissions

regulations

1973- Enactment of the M ki A t i th USA

1974

Event

Before 1990Regulation of 1973Muskie Act in the USA

- Identification of air pollution problems such as photochemical smog

1978Regulation of 1978

Regulation of 1974

1986Regulation of 1986p g

In the early 1990’s

- Introduction of ZEV law in CaliforniaI f i ll ti

1993Short-term regulation

19971990 s - Increase of air pollution lawsuits

2000N h t tN di l hi l

1997Long-term regulation

2000New short termNew short-term

regulation2000

New long-term regulation

- No diesel vehicle campaign in Tokyo Prefecture

- Settlement of

The late 1990’s to the early 2000’s

New short-term regulation

2000New long-term

regulationregulation

2009Regulation of 2009

Settlement of Amagasaki pollution lawsuit

early 2000’s

2009Regulation of 2009

regulation

8

Exhaust emissions regulations that trend to converge globallyMore tightened exhaust regulations such as the 2009 regulation in Japan (post new long-term regulation) and the Tier2bin regulation in the USA are expected to be enacted around the 2010. Exhaust emissions regulations tend to converge.

N ( /k ) PM ( /k )

0.9

1 JapanUSAEurope

Nox (g/km)

0.2

JapanUSAEurope

PM (g/km)Euro1

Short-term

0.7

0.8

0.15Euro2

0.5

0.6

Euro3Short-term

Tier0 Tier1 Euro1

Tier0

0.3

0.4

0.1

E 4

Long-term

New short-term

Euro2 Long-term

0.1

0.20.05

Euro4

Euro5New long-term

Post new long-term

Tier2Bin9

EURO6

Euro3

Euro4

Tier1

Tier2Bin9

Tier2Bin5

New short-term

N l t

01994 1999 2004 2009 2014

Year

01994 1999 2004 2009 2014

Year

Tier2Bin5 EURO6 Euro5 EURO6New long-term

Post new long-term9

3.Action for Global Warming Problem

10

Targets for the Kyoto Protocol Target Achievement PlanTargets for the Kyoto Protocol Target Achievement Plan

In the Kyoto Protocol, Japan promised to reduce its greenhouse effect gas emissions by 6% from 1990 to 2010.In order to achieve this target, Japan has to knock the increase in CO2 emissions from the energy sector down to0 6% 19900.6% over 1990.In 2002, CO2 emissions from the transportation sector occupied 22% of CO2 from the total energy sector, reducingthe volume by 4.2% by 2010 is required.

Breakdown for 6% reductionCO2 reduction target for each sector

Industrial sector

Civilian sector

Transportation sector-0.6%

CO2, Methane , N2O+0.6% CO2 from the energy sector

Result for 2002 468 363 261

-4 2%-16 8%-7 1%3 9%

-0.3%

-0.9%

CO2 from the non-energy sectorMethane , N2O

Forest absorption

(22%)(31%)(40%)

Target for 2010 435 302 250

4.2%-16.8%-7.1%-3.9%+0.1%

-1.6%

Forest absorptionThree alternatives for chlorofluorocarbonKyoto mechanism, etc.

(Unit: 1 million tons-CO2)11

Overview of New Fuel Efficiency StandardOverview of New Fuel Efficiency Standard○ Target year is set for 2015, based on performance in 2004.○ Applicable to passenger vehicles, microbuses, small freight vehicles.○ F l ffi i i t t f hi l i 23 5% d t hi t b i 2004

F l ffi i

○ Fuel efficiency improvement rate for passenger vehicles is 23.5%, compared to shipment base in 2004.

Fuel efficiency improvement rate in relation to performance in 2004

Type of vehicle 2004Performance value2015

Estimated value

Fuel efficiency improvement rate

compared to performance in 2004

Passenger vehicle 13.6 (km/L) 16.8 (km/L) 23.5%

Microbus 8 3 (km/L) 8 9 (km/L) 7 2%Microbus 8.3 (km/L) 8.9 (km/L) 7.2%

Small freight vehicle 13.5 (km/L) 15.2 (km/L) 12.6%

Examples of types of vehicles*Values from ＪＣ０８ mode

Microbus Small truck Mini-vanPassenger vehicle12

Main features of Japanese Fuel Efficiency StandardTop Runner Approach

○ By target year, average fuel consumption must be higher than the best fuel efficiency in the base year.○ Standard will become high but reachable because target values are already achieved by actual vehicles in the base

year.

Specified equipment (21 devices)Example of Top Runner Approach

1. Passenger vehicle

2. Freight vehicle

12. Kerosene heater

13. Gas stove

Fuel consumption

(km/L)19km/L

3. Air conditioner

4. Television

5. Videocassette recorder

14. Gas-powered water heater

15. Electric-powered water h t

18km/L

17km/L

15km/L15km/L16

6. Fluorescent light tube

7. Copy machine

8 C t

heater

16. Electric toilet seat

17. Vending machine

14km/L

13km/LFulfillment determined by weighted average for

* What is Top Runner Approach?* What is Top Runner Approach?

8. Computer

9. Magnetic disk drive

10. Electric refrigerator

18. Transformer

29. Rice cooker

20. Microwave oven

Base year Target year

12km/Lweighted average for each category

Top runner approach is a method to set the Top runner approach is a method to set the efficiency standard higher than the energy efficiency standard higher than the energy efficiency of most efficient product currently efficiency of most efficient product currently available in the marketavailable in the market

11. Electric freezer 21. DVD recorder

13

High Efficiency of Regulation/Incentive CombinationHigh Efficiency of Regulation/Incentive CombinationGreen Tax has been periodically reviewed to promote development of a vehicle with better energy performance.

Consequently, mileage of passenger vehicles was significantly improved and the target originally set for 2010 has already b hi d fi li i 2005 b l

16.0

been achieved, five years earlier, in 2005 on balance.

Changes in fuel economy figures of gasoline passenger vehiclesNarrowing down of vehicles targeted for preferential tax treatment

Prospect for forward

15.0

15.1 15.1

Prospect for forward achievement of targetExhaust gas Fuel efficiency

standardTax reduction

Automobile tax

Automobile acquisition tax

Surpassed 2010 fuel efficiency standard by 20 % 300,000 yen

Exhaust gas Fuel efficiency standard

Tax reductionAutomobile tax

Automobile acquisition tax

Surpassed 2010 fuel efficiency standard by 20 % 300,000 yen

14.0

FY 2010Fuel target

er v

ehic

les

Low emission vehicle

20 % or more

Vehicle surpassing 2010 fuel efficiency standard by 20 % or more

Surpassed 2010

50 % reduction

300,000 yen deduction from acquisition value

er v

ehic

les

Low emission vehicle

20 % or more

Vehicle surpassing 2010 fuel efficiency standard by 20 % or more

Surpassed 2010

50 % reduction

300,000 yen deduction from acquisition value

13.0Pas

seng

e

(75 % lower than the 2005 emission standard)

Surpassed 2010 fuel efficiency standard by 10 % or more

Vehicle surpassing 2010 fuel efficiency standard by 20 % or more

25 % reduction

150,000 yen deduction from acquisition value

Pass

enge

(75 % lower than the 2005 emission standard)

Surpassed 2010 fuel efficiency standard by 10 % or more

Vehicle surpassing 2010 fuel efficiency standard by 20 % or more

25 % reduction

150,000 yen deduction from acquisition value

12.0

Formulation of fuel-economy standards

duty

veh

icle

s 10 % lower NOxor PM than new long-term requirement

C l d ith

Heavy-duty vehicles surpassing 2015 fuel efficiency standard

Vehicle that achieved fuel efficiency

2 % reduction

duty

veh

icle

s 10 % lower NOxor PM than new long-term requirement

C l d ith

Heavy-duty vehicles surpassing 2015 fuel efficiency standard

Vehicle that achieved fuel efficiency

2 % reduction

11.0 1998 2005 2010Hea

vy-d Coupled with

new long-term regulation

fuel efficiency standard in 2015

1 % reduction

Implementation period: 2 years (To the vehicles that will be registered in 2006 and 2007)

Hea

vy-d Coupled with

new long-term regulation

fuel efficiency standard in 2015

1 % reduction

Implementation period: 2 years (To the vehicles that will be registered in 2006 and 2007)14

CO2 Reduction in Transportation Sector○ CO2 emissions in the road transport sector in Japan have been on the decrease in the 21st century.

9

CO2 Emissions in Japan’s Transport Sector

1) Greater vehicle fuel efficiency

270

265 268 11

11 2) Improved traffic flow

3) More efficient use of motor

x 1 million tons

260

250 250

258

263 265 264 266 265268

264 262 262

257254

11 3) More efficient use of motorvehicles (ecodriving,more efficient goodsdistribution),use of alternative fuels

240

230229

233238

24０～243

220

210

200

217

15

2001990 1995 2000 2006 2010 (Projected)

Source: Ministry of the Environment (Japan)

Integrated Approach is Required for CO2 Emissions Reduction

○ Improving the fuel efficiency of vehicles alone is not enough to conserve energy and reduce CO2 emissions in the road transport sector. It is essential to implement an integrated approach, including the development of alternative fuels (e.g. biofuels), government-led improvements in transportation infrastructures and effective use ofalternative fuels (e.g. biofuels), government led improvements in transportation infrastructures and effective use of vehicles, while considering compatibility with economical growth.○ Collaboration of all stakeholders who make their best efforts within their responsibility is indispensable.

Automakers/ G t (f l

Government/Fuel suppliers/

Improvement in Improvement in F l Effi iF l Effi i

Diversification of Diversification of A t tiA t ti

Government (fuel efficiency standards, incentive, etc.)

ppAutomakers(Biofuel, etc.)

Fuel EfficiencyFuel Efficiency Automotive Automotive FuelsFuels

Government

Fleet operators/Vehicle users/G t

Improvement in Improvement in Traffic FlowTraffic Flow

Effective Effective Utilization of Utilization of

Motor Motor VehiclesVehicles

Government(ITS, upgrading road infrastructures, minimizing on-street

Government(Eco-driving, car sharing, efficient truck transport modal shifts

16

VehiclesVehiclesminimizing on street parking, etc.)

transport, modal shifts to cargo trains, etc.)

4.Action for Energy Control

17

Points of the Environmental Energy Strategy on VehiclesPoints of the Environmental Energy Strategy on VehiclesBased on three key phrases (cross-industry, cross-ministry and agency, and benchmark sharing), realizing three types of innovation (automobile, fuel and infrastructure) and solving three problems ( ) g p(energy security, environmental protection and competitiveness)

Automobile Fuel Infrastructure

“Integrated” combination2010

Sharing every 5 to 10 year-benchmark between a broad range of related industries

d t i2015

2020

and government agencies

Synchronizing the management strategy with political strategies

2030

political strategies.

Accelerating the innovation effectively by efficient competition

80％ oil dependence in transport

30% improvement in energy efficiency

18

2030 competition

The NextThe Next--Generation Vehicle and Fuel Initiatives (1)Generation Vehicle and Fuel Initiatives (1)○ The automotive industry, oil industry and the Ministry of Economy, Trade and Industry have established a comprehensive strategy.

Five Strategies to Achieve: →Three Innovations

(1) Batteries(2) Hydrogen/fuel cells Automobile

(4) Biofuels

( ) y g(3) Clean diesel

Fuel( )

(5) World’s friendliest motorized society Infrastructure

A cutting-edge vision to pursue energy security, environmental protection and competitiveness simultaneouslyprotection and competitiveness simultaneously

19

(2) Hydrogen/fuel cell(1) BatteryThe NextThe Next--Generation Vehicle and Fuel Initiatives (2)Generation Vehicle and Fuel Initiatives (2)

(2) Hydrogen/fuel cell(1) Battery

○ The cleanest energy of all in the long run○ The issues are lighter hydrogen tanks and longer life fuel cells

○ Basic technology common to future automobileenergy ○ Technology development project for next-

cells.○ Hydrogen cars are important as a step to a fuel cell and hydrogen society.

generation batteries○ The issues are battery performance and cost.

Mitsubishi i-MiEVFHI R1e

Mazda RX-8 Honda FCX

○ Better fuel efficiency than gasoline vehicles by about 20%.

(3) Clean diesel

(4) Biofuel○ Advantages of the world’s cleanest diesel oil, produced in Japan, can be used.○ The issue is to develop low-cost exhaust gas purification technology.○ A i t t t b id GTL d i th

○ Effective for reducing CO2 emissions as an alternative fuel to petroleum, ○ Assessing the optimum amount of use is important.○ Biotechnology using cellulose uncompetitive with food is

(5) World’s friendliest motorized society

○ An important means to bridge GTL and various other fuels.

○ Biotechnology using cellulose, uncompetitive with food, is to be developed.

Nissan X-TRAIL (5) World s friendliest motorized society

○ Establishment of a next-generation, congestion-freemotorized society using IT. 20

①① Batteryy

- 2010 - 2030- 2020Current Status

[Electric vehicle (EV) Eliica]

Improvem

decline i

[Compact EV]

[Standard-sized EV][More efficient compact EV]

○Zero CO2 emission○Short mileage○0.2 billion yen per EV

ment of battery

n cost ○Placed on the market in 2010○130 km mileage per one charge○Target price is 3 million yen

○200 km mileage per one charge○Target price is 2 million yen

3 time

perfor

2 time

1/4 coy p

[The first PRIUS]

y performance

[High performance HV]○500 km mileage per one charge○Target price is 3 million yen

[Plug-in HV]

es battery rm

ance, 1/5 co

es battery perfoost

○Placed on the market in 1997○2/3 CO2 emission

e and

○Placed on the market in 2007○Target CO2 emission is 1/2

○Target to place on the market in around 2015○Rechargeable HV○ 1/3 CO2 emission

ost

ormance,

○ Start of R&D project for next-generation vehicle batteries

Action Program

○ Start of R&D project for next generation vehicle batteries○ Establishment of the system for battery-charger stands and to secure safety 21

②②Hydrogen/fuel cell vehicleHydrogen/fuel cell vehicle- 2010 - 2030- 2020Current Status

②②Hydrogen/fuel cell vehicleHydrogen/fuel cell vehicle

[The first FCX] [fuel cell vehicle] [Next-generation fuel cell vehicle]Weight sav

Extension

[Next-next-generation fuel cell vehicle]

○Zero CO2 emission○Limited sale in 2008○570 km mileage○Seating capacity is 4 ○Further lower price

ving of hydroge

offuel

cellli

○Further lower price

1.5 times f

1.5 times fu

○Zero CO2 emission○Started lease sales in 2002

(10 million yen per year)○Short mileage (300 km)○Actual seating capacity is 2

[Hydrogen vehicle]

en tank

fe fuel cell life, 1/

uel cell life, 1/4

○Started lease sales in 2006 (5 million yen per year)○Can run on gasoline as well

/5 cost

4 cost

○ Enhancement of R&D for fuel cells

Action Program

○ Enhancement of R&D for fuel cells○ Establishment of hydrogen infrastructure

22

③③ Clean diesel

- 2010 - 2030- 2020Current Status 2010 20302020Current Status

Esta

exhatech

[Clean diesel vehicle]

Sa

in t ablishment of lo

aust-gas purificnology

[Old-generation diesel] [Clean diesel vehicle]

Evolution for diesel hybrid

les of the cleathe w

orld

ow-cost

cation

○3/4 CO2 emission○Problem with emission

performance

○Placed on the market in 2010○Emission performance as high

as gasoline vehicle○3/4 CO2 emission

nest gas oil

Biodiesel, GTL, etc. are acceptable

Action Program

○ Establishing the clean diesel popularization and promotion strategy○ Establishing the clean diesel popularization and promotion strategy

23

④④Biofuel

- 2010 - 2030- 2020Current Status

[Grain-type bio-ethanol]

[Cellulosic bio-ethanol](straw, stubs and branches after logging)S

ofoo[Biogasoline](corn, sugarcane)

○Targeted production cost2015 ¥100/lit (R i i t i l f l b ill t t )

lution of comp

od, cost reduct

[Biogasoline]

2015: ¥100/lit. (Remaining materials of lumber mill, straw, etc.)[Biomass Nippon]

¥40/lit. [Case of technological innovation](Energy recovery 35%)2020: ¥100/lit. (Remaining materials in the forests, resource

farm products , etc.)[Biomass Nippon]

[Biodiesel] [Second-generation biodiesel]

etition with

ionQuality

improvem

e n [Biomass Nippon]¥40/lit. [Case of technological innovation]

(Energy recovery 35%)

nt

Action Program

○Establishment of the biofuel technology innovation plan○ stab s e t o t e b o ue tec o ogy o at o p a○Establishment of the system for quality and fair tax collection

24

⑤⑤World’s Friendliest Motorized SocietyWorld’s Friendliest Motorized Society- 2010 - 2030- 2020Current Status

[Urban transportation

Verifthe ci

[Environment-friendly electric personal vehicle]

Deve

[Traffic congestion][Urban transportation

innovation]

fication of pities w

ith go

personal vehicle]Lane for slow

vehicles

Double t

＋

elopment o personal veh

ood infrastr

[Technologies for automatic driving and driving in ranks by using IT]

L f

the average

of automati

Tokyo: 18 km/hParis: 26 km/h

Average speed[Distribution innovation]

hicles and drructure and o

Lane for convoys

e speed in u

＋

ic driving a [Networking for automobiles]Paris: 26 km/h riving in ranon expressw

→

urban areas

and IT tech

[ g ]

Action Program

nks in w

ays(Precise traffic information can be provided)

shnology

Action Program• Model-city and model-roads project that combines automobile technology, IT,

infrastructure 25

5.Summary

26

The Next-Generation Vehicle and Fuel Initiative is a milestone for “Beautiful Star 50”

○Gasoline vehicles and diesel trucks occupy 100%○100% oil dependence for fuel○ i i ffi i f i i i

C ur re nt S ta tu s

○Congestion in traffic infrastructure in cities

Execution of The Next-Generation Vehicle and Fuel Initiative

S d d i d N i Biofuel such World’s most friendly

○Realization of innovation by collecting Japanese technological strengthIndustry collaboration Government collaboration Industry-government-academia Collaboration

High-performance hybrid vehicle

Standard-sizedelectric vehicle

Next-next generationfuel cell vehicle

Biofuel suchas biogasoline

World s most friendly motorized society without

traffic congestion

CO2 emission：▲1/2 CO2 emission：▲3/4 CO2 emission：▲2/3CO2 emission：▲ 3%

CO2 emission：▲10%* Equivalent to 3% bio-ethanol mixture

The world “The Next-Generation Vehicle and Fuel Initiative” targets in 2030○ 80% oil dependence in transport sector○ 30% improvement of energy efficiency○ 30% improvement of energy efficiency

Reduction of CO2 in the world using Japanese technology, by developing the result of innovations27